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PETITIONER: GUJARAT ELECTRICITY BOARD

       Vs.

RESPONDENT: GIRDHARLAL MOTILAL AND ANR.

DATE OF JUDGMENT: 06/08/1968

BENCH: HEGDE, K.S. BENCH: HEGDE, K.S. BACHAWAT, R.S.

CITATION:  1969 AIR  267            1969 SCR  (1) 589  CITATOR INFO :  R          1975 SC  32  (6)  R          1990 SC 153  (17)

ACT: Indian Electricity  Act, 1910, s. 6(1)--as amended by Act 32 of    1959--   notice  to  exercise   option   to   purchase undertaking--requirement as to calling upon licensee to sell undertaking--if mandatory for exercising power to purchase.

HEADNOTE:     The respondent held a licenee granted by the  Government of  Baroda  under the Baroda Electricity Act 1  of  1964  to supply  electric energy within certain defined  territories. On June 23, 1961 the appellant, which was constituted  under s. 5 of the Indian  Electricity  (Supply) Act,  1948, served a notice on the respondent to the effect that in exercise of the  powers  conferred  on  it by virtue of  s.  71  of  the Electricity (Supply) Act, 1948 read together with section  6 Qf  the  Indian Electricity Act,’ 1910, as  amended  by  the Indian   Electricity  (Amendment)  Act  32  of   1959,   the appellant.  had decided to and would exercise the option  to purchase  the respondent’s undertaking on 3-1-1963 i.e.  the date  on  which   the  licenee  was  due  to  expire.    The respondent  challenged the validity of this notice  and  the High Court held the notice was invalid. On appeal to this Court.     HELD:  The  High  Court was right in  holding  that  the impugned notice Was invalid and by virtue of that notice the appellant  could  not  compel the  respondent  to  sell  the undertaking. [594 A]     Before  the  option to purchase the undertaking  can  be exercised,  the State Electricity Board must call  upon  the licensec  by means of a notice in writing within the  period mentioned in s. 6( 1 ) to sell the undertaking to it on  the expiration  of the period for which the licenee  was  given. The impugned notice did not require the licensec to sell the undertaking.  It  merely notified the  respondent  that  the appellant  Board has decided to exercise and would  exercise the  option of purchasing the  respondent’s  undertaking  on the date of expiry of the licenee. [592 D-E]     Nazir  Ahmad  v. King Emperor, L.R. 63 I.A.   372:   and Ballavdas Agarwala v. Shri S.C. Chakravarty, [1960] 2 S.C.R.

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739; referred to.     There  was  no force in the contention that  the  notice complied substantially with the requirements of the law  and should therefore be given effect to. The issuing of a notice strictly  in  accordance with the  provisions      s.  6(1), which prescribes that the notice must specifically call upon the  licensec  to  sell  the  undertaking,  is  a  condition precedent  to  the exercise of the power  conferred  on  the State   Electricity  Board  to  purchase  the   undertaking. Furthermore,  on reading the impugned notice,  the  licensec could  not  have been definite whether the  appellant  Board purported  to exercise the power under the law as it was  on the date of the notice i.e. the Indian Electricity Act. 1910 as  amended  by  Act 32 of  1959, or as  it  was  under  the unamended  act. The rights and liabities of the  Electricity Board  and  the licensee before Act 32 of  1959  came   into force   were ,SUbstantially different from those  after  the amendment. [593 C-G]

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2526 of 1966. 590      Appeal  from the judgment and order dated  October  30, 31,  1963  of  the  Gujarat  High  Court  in  Special  Civil Application .No. 1098 of 1962.,      C.K.  Daphtary, Attorney-General and 1. N. Shroff,  for the appellant.      M.C.  Chagla,  R.M.  Vin  and  R.  Gopalakrishnan,  for resportdent No. 1. R.H. Dhebar and S.K. Dholakia, for respondent No. 2. The Judgment of the Court was delivered by      Hegde,  J.   The  only question for  decision  in  this appeal is whether the notice issued by the appellant on June 23,  1961 under s. 6 of the Indian Electricity Act, 1910  as amended by Act 32 of 1959 (to be hereinafter referred to  as the  Act)  is  valid.   The  High  Court  has  come  to  the conclusion that it is  not  a   valid notice.      On 4th January 1923, the father of respondent No. 1 was granted a licence to supply electric energy within ’the area consisting of municipal limits of Dabhoi and the territories comprised  within  half  mile  radius  from  the   municipal boundary lines by the Government of Baroda under the  Baroda Electricity  Act  Samvat  1964 (Act 1 of  1964).   The  said Company  was   known      as   Dabhoi  Electricity  Company. Respondent No.  1  was  at   all  material times the  holder of this licence.     The  said licence conferred an option on the  Government to purchase the undertaking in accordance with the terms  of the  licence.  Clause 26(a) of that licence is material  for our present purpose.  That clause reads:                      "The  option of purchase given by s.  8               of  the  Act  shall  be  exercisable  on   the               expiration  of  40  years  computed  from  the               commencement  of .this licence and  thereafter               on  the expiration of every subsequent  period               of  8  years during the  subsistence  of  this               licence  ......  "      On  the merger of Baroda State with the then   Province of  Bombay, the Indian Electricity Act, 1910 and the  Indian Electri city (Supply) Act, 1948 were made applicable to  the territories   of  the  former  State  of  Baroda   and   the corresponding Baroda Act was repealed with the saving clause that  the  licenoes  issued under  the  repealed  Act  shall

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continue  to  remain in force until the  expiration  of  the period of licence as if they were issued under Act of 1910.      In  exercise  of the powers conferred by s. 5   of  the India        Electricity  (Supply)  Act,  1948,  the   State Government  constituted  the  appellant  Corporation.    The appellant served upon resport- 591 dent  No.  1  a notice on June 23,  1961.   That  notice  is important for our present purpose.  Hence we shall quote the same in full. It is as follows :-- "THE GUJARAT ELECTRICITY BOARD  Kothi Building,  Raopura Road, Baroda Dated 23 June, 1961. Regd. A.D. Ref. No. PLE.BRD.7(A) 19648. To The  Dabhoi  Electric Power Supply Co. C/o  Shri  Girdharlal Motilal  Contractor  (Sheth),  Ajit  Bungalow,   Pratapnagar Society, Baroda. SUB:  (i) Notice under section 6 of the  Indian  Electricity Act,  1910  and  exercise of option vested  in  the  Gujarat Electricity Board to purchase your undertaking. (ii)  The   Dabhoi  Electric Licenee  1923  granted  by  the Government of Baroda under the State Electricity Act, Samvat 1964. Dear Sir,     In  exercise  of  the powers conferred  on  the  Gujarat Electricity  Board  by virtue of s. 71  of  the  Electricity (Supply)  Act,  1948, read together with section  6  of  the Indian  Electricity  Act,  1910, as amended  by  the  Indian Electricity  (Amendment) Act, 1959 (32 of 1959) this  is  to give  you  notice  that the Gujarat  Electricity  Board  has decided  to  exercise  and  shall  exercise  the  option  of purchasing  your undertaking on 3-1-1963, the date on  which the  license  granted  to you by the  Government  of  Baroda expires.   The  receipt  of  this  notice  may   please   be acknowledged. Yours faithfully, Sd/- Secretary, The Gujarat Electricity Board." As this notice was issued after the Indian Electricity  Act, 1910  was amended by Act 32 of 1959, we have to see  whether that notice complies with the requirements of s. 6(1)(a)  of the Act which says:                      "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 (Amend-               592               ment)  Act,  1959 on the expiration  of  each,               such   period   as   is   specified   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 requiting the licensee’to  sell  the               undertaking  to  it  at  the  expiry  of   the               relevant  period  referred  to  in  this  sub-               section." These  provisions  confer a power on the  State  Electricity Board  to  purchase the property of the  licensee  but  that

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right  can be exercised only in the manner provided  in  the Act  and not in any other way.  It must be  remembered  that the  provisions  in question empower the  State  Electricity Board to interfere with the property rights of the licensee. Therefore  such a power will have to be strictly  construed. The legislature has prescribed a mode for the exercising  of that  power  and hence that power can be exercised  only  in that manner and in no other manner.  See Nazir Ahmad v. King Emperor(1)   and    Ballavdas   Agarwala    v.   Shri   S.C. ChakravartY(2).    Before   the  option  to   purchase   the undertaking  can be exercised, the State  Electricity  Board must call upon the licensec by means of a notice in  writing within  the  period  mentioned  in s. 6 (1  )  to  sell  the undertaking to it on the expiration of the period for  which licence was given.  The impugned notice does not require the licensec  to  sell the undertaking. It merely  notifies  the respondent that the appellant Board has decided to  exercise and shall exercise the option of purchasing the respondent’s undertaking  on  3-1-1963,  the date on  which  the  licence granted to him by the Government of Baroda expired.     It  was  contended by the  learned  Attorney-General  on behalf  of  the appellant that in matters like  these  rigid compliance with the provisions of law should not be insisted upon.   According  to  him if  the  legal  requirements  are substantially  satisfied the validity of the  notice  given, should be upheld.  Proceeding further he urged that so  long as  the notice given by the Electricity Board is  sufficient to  intimate  the licensee the intention of the  Board,  the mandate  of the law is complied with; in a notice  under  s. 6(1)  what is of the essence is the substance of the  matter mentioned therein and not the manner in which the notice  is worded.  He urged that the licensee must have imported  some commonsense into the notice received by him and he could not be  allowed  to’  riggle out of  his  obligation  by  having recourse to technicalities.In advancing these arguments. the learned  Attorney-General  overlooked the fact  that  notice required  by  s. 6 (1 ) is not a notice of an action  to  be taken or merely a procedural step. It is a mode (1) L.R. 63 I.A. 372.   (2) [1960] 2 S.C.R. 739. 593 of  exercising the power conferred on the State  Electricity Board  by the exercise of which the property rights  of  the licensees can be affected.  Section 6( 1 ) confers power  on the State Electricity Board to take away the property of the licensec.   Such  a  power must  be  exercised  strictly  in accordance  with  law.  The legislature has  prescribed  the manner of its exercise.  It must exercise in that manner and in  no other way.  It must also be seen that the  Parliament deliberately changed the form of the nonce to be given  from what  it  was  before  Act 32  of  1959  was.  enacted.   It prescribed  that the notice must specifically call upon  the licensee to sell the undertaking.  The mandate of the law is clear and it must be obeyed.  We agree with Mr. M.C.  Chagla learned  Counsel  for  the licensee that the  issuing  of  a notice strictly in accordance with the provisions of s. 6  ( 1  ) is a condition precedent to the exercise of  the  power conferred  on  the State Electricity Board to  purchase  the undertaking.  That being so, we must hold that s. 6 (1 )  is mandatory and it must be strictly complied with.     In this case we are not satisfied that the  requirements of  law  have  at least been  substantially  complied  with. Obviously the person who issued the notice was not  familiar with  the  legal  position.   He appears  to  be  under  the misapprehension that s. 71 of the Electricity (Supply)  Act, 1948  was  still in operation when he gave the  notice.   He

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appears to have been in two minds.  He was not sure  whether he  should issue the notice under the provisions of the  Act as  they stood’ on the date of the notice or  in  accordance with  the provisions as they were prior to the  coming  into force  of  Act 32 of 1959.  At the top of the notice  it  is mentioned that it is given under s. 6 of the Act but in  the body  of the notice it is purported to be given in  exercise of the power available under s. 71 of the Indian Electricity (Supply) Act. Again the contents of notice indicate that  it is  a  notice under s. 7 ( 1 ) read with s. 7 ( 4 )  of  the Indian  Electricity Act, 1910 as they stood prior  to  1959. Quite  clearly the notice speaks in two voices.  It  is  the product  of  a  confused  mind.  We  fail  to  see  how  any commonsense can be read into it.  On reading that notice the licensec  could  not have been definite  whether  the  State Electricity Board purported to exercise the power under  the law as it was. on the date of the notice or as it was  under the   unamended   Act.   Rights  and  liabilities   of   the Electricity  Board  and  the licensec before Act 32 of  1959 came  into  force  are substantially  different  from  their rights  and  liabilities  under the  Act.   On  reading  the impugned notice it could not have been clear to the licensee that  he  had been called upon to sell the  .undertaking  in accordance with the law as it then stood.  We are unable  to accede to the request of the Attorney-General to read   into the notice words which are not there. 594     For the reasons mentioned hereinbefore we agree with the High Court that the impugned notice is’invalid and by virtue of  that notice the appellant cannot compel the  respondents to sell the undertalcing in question. Accordingly  this  appeal fails and the same.  is  dismissed with R.K.P.S.                                   Appeal dismissed. 595