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PETITIONER: PILIBHIT ELECTRIC SUPPLY CO.(P) LTD. & ANR.

       Vs.

RESPONDENT: SPECIAL OFFICER (ELECTRICITY) & ANR.

DATE OF JUDGMENT:       09/10/1996

BENCH: N.P SINGH, S.B. MAJMUDAR

ACT:

HEADNOTE:

JUDGMENT:                       J U D G M E N T S.B. Majmudar, J.      The  appellant  Electric  Supply  Co.  has  brought  in challenge the  judgment and  award  dated  31st  March  1980 rendered by Special Officer under Section 7-A as substituted in the Indian Electricity Act, 1910 (hereinafter referred to as ’the  Act’) by  U.P.  Act  14  of  1976.  The  appellant, original licensee,  under the  Act  had  sought  appropriate compensation under  the aforesaid provision from the Special Officer entrusted  with the task of determining the purchase price of  the appellant’s Undertaking acquired under Section 6-A  as   inserted  by   the  very  same  Act  of  the  U.P. Legislature. This  appeal by  grant of  special leave  under Article 136  of the Constitution of India was pressed at the time of  final hearing  by their learned senior counsel Shri Salve and  learned  counsel  Shri  Gupta  on  the  following grounds:      1. In  the  impugned  award  the  Special  Officer  had erroneously excluded  supervision charges  actually incurred by the  appellant from  the book  value  of  the  assets  as defined by the Explanation to Section 7-A(2).      2. The  Special Officer  had erroneously  deducted from the book  value of  the assets of the appellant an amount of Rs.2,48,718/- being the purported depreciation on works paid for by the consumers.      3. The  Special Officer  had  erroneously  deducted  an amount of  Rs.2,67,622/- pertaining  to  variations  in  the energy  bill  raised  by  the  Board  which  were  seriously disputed by  the appellant. In the aforesaid item ultimately the claim was reduced to Rs.60.603.78.      4. The  Special Officer  had erroneously  deducted from the amount  payable  to  the  appellant  an  amount  of  Rs. 92,727/- on account of the purported balance in the Consumer Rebate Reserve  Account and  an  amount  of  Rs.46,826/-  on account  of   the  purported  balance  in  the  Tariffs  and Dividends Control  Reserve Account.  So far  as this item of claim is  concerned ultimately  the learned  counsel for the appellant  confined   the  claim  to  the  total  amount  of Rs.76,423/- being  the purported  inflated  balance  in  the Tariffs  and   Dividends   Control   Reserve   Account   and

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Rs.38,211/-  being  such  balance  in  the  Consumer  Rebate Reserve Account.      In  the   special  Leave   petitions   originally   two additional  claims  were  also  put  forward  as  item  no.2 consisting  of   Rs.35.483/-and  item   no.5  consisting  of Rs.1,15,111/- but  at the  time of  hearing of  this  appeal these two  claims were  not pressed.    We  are,  therefore, concerned with  the  aforesaid  four  claims  surviving  for consideration. Backdrop facts      Before we  deal with these claims. It will be necessary to note  a few  relevant background  facts.   The appellant- licensee was  functioning under the provisions of the Indian Electricity Act,  1910 having licence to generate electrical energy for  being supplied  to consumers in Pilibhit town of Uttar Pradesh.   It  was a  purchaser of the licensee rights from the  earlier licensee  named  M/s  Champion  Electrical Engineering works.   The  said license  had got  its licence form 1935.   On  1st  April  1954  M/s  Champion  Electrical Engineering Works  transferred to  the appellant its licence to generate    electricity  in  Pilibhit  town.    Thus  the appellant became  a  transfere-licensee  and  held  Pilibhit Electric Licence,  1935   from first  April 1954.   The said licence was  revoked as  per the provisions of clause (3) of U.P. Ordinance 1937 of 1975 in exercise if the powers vested in the U.P State under Section 6-A of the Indian Electricity Act, 1910  as inserted  in the  aforesaid Act  by  the  said Ordinance Pursuant to the said revocation of the appellant’s licence and  acquisition  of  its  assets,  the  U.P.  State Electricity Board  took over  the electrical under taking of the appellant  at 00.00  Hrs. On  1st December 1975. On such acquisition of  the assets  of the  appellant and the taking over of  the electrical  undertaking of the appellant by the U.P. State  Electricity Board  and as the Undertaking of the appellant-licensee  stood   statutorily  acquired   for  the purpose of  State Electricity Board under Section 6-A of the Act,  the   question  arose   regarding   determination   of appropriate  compensation   to  be  paid  to  the  erstwhile Licensee for  acquisition of  its assets under the Act.  The determination  of the amount was to be made under Section 7- A as  substituted by  the U.P.  Amending Act.  That task was statutorily assigned  to a  Special Officer.    The  Special Officer  after  hearing  the  appellants  representative  on diverse claims  put forward  under the  said  provision  for determination of  appropriate amount  of compensation passed the impugned award 31st March 1980.      The aforesaid  award is  brought in  challenge  by  the appellant ex-licensee  by filing  this appeal  in  quest  of additional compensation.   At  this stage  it may  be stated that  direct   writ  petitions   under  Article  32  of  the Constitution  of   India  Challenging   the   constitutional validity of  section 7-A  of the  parent Act were pending in this  Court   since  1972.     Consequently   the  appellant challenged the  impugned award  directly in this Court after obtaining special  leave as  stated above.   A  constitution Bench of this Court in the case of Tinsukjia Electric Supply Co. Ltd.  v. state of Assam and Ors. 1989 (2) SCR 544 upheld three vires of the said provision.  Consequently this appeal survived  for   consideration  of   the  payment  of  proper compensation to  the appellant ex-licensee whose licence was also revoked  and whose  undertaking got  acquired under the said Section  7-A as  substituted in  the state  of  U.P  by Amending Act 14 of 1976. Statutory background      Before adverting  to  the  aforesaid  four  claims  for

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compensation it  will be  necessary  to  note  the  relevant statutory provisions.   The  Indian  Electricity  Act,  1910 deals with  supply of  energy  and  licences  1)  connection therewith.   As per  section 3  of the  said Act  the  state Government said  on application  made in the prescribed form and on  payment of  the prescribed  fees, if any grant after consulting the  state  Electricity  Board,  Licence  to  any person to  supply energy  in any specified area, and also to lay down  or place  electric supply-lines for the conveyance and transmission  of energy   ’State  Electricity Board’  as defined by  Section 2(11)  of the  Act, in  relation too any state means the state Electricity Board, if any, constituted for the  state under  Section 5  of the Electricity (Supply) Act, 1948  (54  of  1948),  and  includes  any  Board  which function in  that state  under sections  6 and 7 of the said Act.   The appellant was the transferee-licensee functioning under the  said Act  and was  entrusted with  the  right  to generate electricity  through its undertaking functioning at Pilibhit in  U.P. State.   It  is this  undertaking  of  the appellant which came to be acquired under Section 6-A of the Act as  inserted by  Section 3  of the  U.P. Act 14 of 1976. Said Section  6-A dealing  with ’Revocation  of licences and acquisition of  undertaking’ along  with its  relevant  sub- sections reads as under:      "6-A   Revocation of  licences  and      acquisition of  undertaking.-(1) In      this section  ’appointed day’ means      in relation to licensees other than      local authorities, December 1, 1975      and   in    relation    to    local      authorities being  licensees,  such      date as  may be  specified  by  the      State Government by notification in      that behalf,  and  different  dates      may be specified for different such      undertakings.      (2)      Notwithstanding   anything      contained in Sections 4, 4-A, 5 and      6,    the    licence    of    every      undertaking, unless  revoked before      the  commencement   of  the  Indian      Electricity (Uttar  Pradesh  Second      Amendment)   Ordinance, 1975, shall      stand revoked  with effect form the      appointed day.      (3)   On revocation  of the licence      under    sub-section    (2),    the      following  provisions   shall  have      effect, namely:-      (a) every  undertaking the  licence      in  respect of which stands revoked      shall by  virtue  of  this  section      stand and  be deemed  to have stood      transferred  to  and  vest  and  be      deemed to  have vested in the State      Electricity Board,  hereinafter  in      this  section  called  "the  Board"      free from  any  debt,  Mortgage  or      similar obligation  of the licensee      attaching to the undertaking:      Provided  that   any   such   debt,      mortgage  or   similar   obligation      shall attach  to the amount payable      for the undertaking as mentioned in      clause (h):

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    (b)... ... ... ...      (c)... ... ...      (d)... ... ...      (e)... .. ...      (f)... ... ...      (g)... ... ...      (h) the  Board  shall  pay  to  the      licensee an  amount  determined  in      accordance with  the provisions  of      Section 7-A:      Provided that the licensee shall be      in  addition   to  the   said,   be      entitled to interest thereon at the      Reserve Bank  rate  ruling  at  the      appointed day  plus one  per centum      for the  period from  the appointed      day to  the date  of payment of the      said amount."      It is  not in dispute between the parties that pursuant to the  said provisions  the appellant’s  undertaking  stood statutorily acquired  by the  respondent- Bard  with  effect from the  appointed day, that is, 1.12.1975.  So far as form the question  of compensation  to be  paid to the appellant- licensee for the aforesaid acquisition of its undertaking is concerned, Section  7-A  is  required  to  be  noted.    The relevant provisions  of the said Section 7-A in the light of which the  controversy in  the present  case will have to be resolved read as under:      "7-A. Determination  of amount.-(1)      Where an  undertaking of a licensee      had been  purchased  by  the  Stare      Electricity Board in consequence of      revocation  of  his  licence  under      sub-section (20  of Section 4 or is      sold  under  sub-section  5  or  is      purchased  under   Section   6   or      acquired  under   Section  6-A  the      amount  payable   therefore   shall      determined as hereinafter provided.      (2)   The gross  amount payable  to      such   licensee    shall   be   the      aggregate  value   of  the  amounts      specified below-      (1) the book value of all completed      works in  beneficial use pertaining      to the  undertaking and  taken over      by the  State Electricity Board the      State    Government     or    local      authority,  as   the  case  may  be      (excluding works constructed at the      cost of  local  bodies  for  street      lighting  and  works  paid  for  by      consumers),    less    depreciation      calculated in  accordance with  the      Sixth  Schedule   read   with   the      Seventh  Schedule  the  Electricity      (Supply) Act, 1948:      ii) the  book value of all works in      progress  taken   over,   excluding      works paid  for by the consumers or      prospective consumers:      (iii) the  book value of all stores      including spare parts      taken over,  and in  the case    of      used stores  and  spare  parts,  if

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    taken over,  such  sum  as  may  be      decided upon by the Special Officer      referred  to   in  sub-section  (6)      (hereinafter  referred  to  as  the      Special Officer):      (iv) the  book value  of all  other      fixed assets  in use on the date of      vesting  under   Section   6-A   or      Section 7,  hereinafter referred to      as  the  vesting  date,  and  taken      over, less  depreciation calculated      in   accordance   with   the   said      Schedules:      (v) the  book value  of all  plants      and  equipments   existing  on  the      vesting date,  if taken over but no      longer in  use owing  to  wear  and      tear or  to  obsolescence,  to  the      extent  such  value  has  not  been      written of  in  the  books  of  the      licensee,     less     depreciation      calculated in  accordance with  the      said Schedules:      Explanation-  The  book  value  any      fixed  asset   means  its  original      cost, and shall comprise-      (1) 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 in      to beneficial  use as  shown in the      books of the undertaking;;      (ii)  the   cost   of   supervision      actually    incurred,    but    not      exceeding fifteen  percent  of  the      amount referred to in paragraph(1):      Provided that  before deciding  the      amount  under   this  section,  the      licensee   shall    be   given   an      opportunity by  the Special Officer      of being  heard, after giving him a      notice  of   at   least   15   days      therefor.      (3)... ... ...      (4)... ... ...      (5)     The  purchaser   shall   be      entitled to  deduct  the  following      sums form  the gross amount payable      under the  foregoing sub-section to      a licensee-      (a) the  amount,  if  any,  already      paid in advance:      (b)  where  the  purchaser  is  the      State Electricity  Board the amount      due,  if  any,  including  interest      thereon, from  the licensee  to the      Board, for  energy supplied  by the      Board before the vesting date:      (c)... ... ...      (d)... ... ...      (e)... ... ...      (f)... ... ...      (g).. ... ...      (h)  the   amounts   remaining   in

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    Tariffs   and   Dividends   Control      Reserve, Contingencies  Reserve and      the Development Reserve, insofar as      such amounts  have  not  been  paid      over  by   the  licensee   to   the      purchaser.      (i)... ... ... ...      (6)   The  State  Government  shall      appoint, by  order in  writing ,  a      person  having  adequate  knowledge      and experience  in matter  relating      to accounts,  to be Special Officer      to assess  the net  amount  payable      under this section to the licensee,      after   making    the    deductions      mentioned in this section.      (7) (a)  The  Special  Officer  may      call for  the  assistance  of  such      officers and  staff  of  the  State      Government or the State Electricity      Board or the licensee as he may dem      it  in  assessing  the  net  amount      payable.      (b) The  Special Officer shall have      the same  powers as are vested in a      Civil Court under the Code of Civil      Procedure, 1908.  (Act V  of  1908)      when trying  a suit,  in respect of      the following matters-      (i) enforcing the attendance of any      person and examining him on oath:      (ii) compelling  the production  of      documents; and      (iii) issued  commissions  for  the      examination of witnesses.      The Special Officer shall also have      such  further   powers  as  may  be      specified by  the State  Government      by notification in the Gazette."      The  other  relevant  statutory  provisions  which  are required to  be noted  are found  in Electricity Supply Act, 1948. [hereinafter  referred to as the Supply Act’] which is an Act  to provide for the rationalisation of the production and supply of electricity, and generally for taking measures conducive to electrical development.  U.P. State Electricity Board is constituted under Section 5 of the Supply Act.  The State Electricity  Board is  enjoined by  Section 18  of the Supply Act  to arrange  in co-ordination with the Generating Company or  Generating companies,  if any  operating in  the State for the supply of the electricity that may be required within the  state and  for the transmission and distribution of the  same, in  the most  efficient and economical manner. As per Section 2 sub-section(6) of the Supply Act ’licensee’ means a person licensed.  Section 57 of the Supply Act deals with ’licensee’s  charges to consumers’ and it provides that the provisions  of the  Sixth Schedule shall be deemed to be incorporated in  the licence  of every licensee, not being a local authority  and the licensee is required to comply with the provisions  of the said schedule.  The Sixth Schedule to the Supply  Act as  it stood  on the  appointed day when the appellant’s undertaking  was acquired will be referred to by us at  an appropriate  stage  while  we  will  consider  the aforesaid four  claims for  additional compensation  as  put forward by the learned senior counsel for the appellant .      In the background of the aforesaid statutory provisions

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we now  proceed to  consider the  four claims for additional compensation pressed for our consideration. Claim No. 1      This claim  is based  on Section  7-A  sub-section  (2) Explanation (ii)  extracted earlier.  The appellant contends that as  per the  aforesaid provision  the gross  amount  of compensation payable to the appellant-licensee has to be the aggregate value  of the  amount specified in section 7-A (2) and which would include book value of all completed works in beneficial use  pertaining to the undertaking and taken over by the  state Government as in the present case.  As per the Explanation the  book value  of any  fixed asset  means  its original costs  and shall  also  comprise  of  the  cost  of supervision actually  incurred but  not exceeding the amount referred to  in paragraph  (i) of the said Explanation.  The appellant submits  that it  had incurred  form year  to year larges amounts  of supervision  charges paid  to  the  staff engaged for  having supervision  over these fixed assets and the  said  claim  was  wrongly  disallowed  by  the  Special Officer, even  though the appellant was entitled to at least 15%/ of  the cost  of supervision  actually incurred  by the appellant as  permissible under  Explanation (ii) to section 7-A(2).   A look  at the  relevant part of the Award on this aspect shows  that according to the appellant the salary and wages paid  to the  officers and  supervisory staff  of  the undertaking were debited to the Revenue Account and the cost of the  assets amounting  to Rs.25,58,581/-  as shown in the audited  Balance   Sheet  was   required  to  be  raised  by Rs.3,82,737/- being  the supervision  charges at the rate of 15%/ of  the total supervision charges actually incurred for supervising and  maintaining these  assets.   This claim was rejected by  the Special  Officer on  two counts:(i) that as per the  provisions of  the Sixth Schedule to the Supply Act these supervision  charges had  to  be  capitalised  by  the appellant forum  year to year when they were incurred and as that was  not done  these supervision  charges could  not be awarded: and  (ii) in  any case  there was no clear evidence led by  the appellant in respect of the said claim.  Learned senior  counsel   appearing  for  the  appellant  vehemently submitted that  both these  reasons  given  by  the  Special Officer were erroneous.  In that connection it was submitted that Section  7-A sub-section  (20 Explanation  (ii) nowhere laid down  that the  costs of  supervision actually incurred should   be capitalised  the licensee  form  year  to  year. Reference to  the Sixth  Schedule to  the Supply  Act showed that ’original  cost’  of  the  asset  was  defined  as  per paragraph XVII  clause (6)  to mean  in respect of any asset the cost  of the  assets to  the licensee  to which a proper addition on account of supervision cost not exceeding 15/ of the cost  of referred  to in  sub-para (a)  was to  be made. That this  original cost  of  the  asset  was  meant  to  be calculated in  connection with  the operation  of the  Sixth Schedule which operated of its own even independently of the acquisition proceeding  and prior  thereto and  had a direct linkage with paragraph I of the Sixth Schedule as applicable at  the   relevant  time    which  clearly  laid  down  that notwithstanding   anything    containing   in   the   Indian Electricity Act, 1910 and the provisions in the licence of a licensee, the  licensee shall  so  adjust  by  enhancing  or reducing them  that his  clear profit in any year of account shall  not,  as  far  as  possible,  exceed  the  amount  of reasonable return and that for deciding whether the rates of electricity charged  by the  licensee resulted  in his clear profit in  any year  if  account  exceeding  the  amount  of reasonable   return or not.  The concept of clear profit has

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to be  kept in  view of  ascertaining the  lightly of tariff charges.   That the  concept of reasonable return is defined in sub-para  (9) of  paragraph XVII  of Sixth  Schedule.  It encompassed in  respect of  any year  of account, the sum of the amounts  mentioned in  clauses (a)  to (e) thereof.  For finding out  whether clear profit in a given accounting year exceeded reasonable  return as  laid down  in paragraph I of Sixth Schedule  reasonable return  had to  be calculated for the year.   For  determining reasonable  return capital base has to  be ascertained  as required  by clause  XVII(9) (a). For finding  out the  capital base,  original cost  of fixed assets was  required to  be computed  as per clause XVII (i) (a) and for that purpose original cost was to be ascertained as per  clauses XVII(6)  (a) and  (c).   Thus definition  of original cost  of fixed  assets for  the purpose  I of Sixth Schedule had  an entirely  different purpose  to achieve and had nothing  to do  with Explanation (ii) to Section 7-A (2) of the  Act.  We find considerable force in this contention. The  aspect  of  original  cost  which  may  include  proper addition on  account of supervision not exceeding 15/ of the cost referred to in sub-para (a) of clause (b) of definition paragraph XVII  of the Sixth Schedule had nothing to do with the  computation  of  proper  compensation  payable  to  the licensee as  per Section  7-A  sub-section  (2)  Explanation (ii).   It is  also pertinent  to note  that the  scheme  of compensation reflected by the aforesaid provisions indicated that cost of supervision actually incurred up to the ceiling of 15/  of the  amount referred  to in  paragraph (i) of the Explanation to  Section 7-A  (2) had to be straightway added to the  book value  of fixed assets which was to be paid for by the acquiring authority.  On the other hand the provision of computation  of original  cost as found in paragraph XVII clause  (6)  of  the  Sixth  Schedule  referred  to  ’proper addition on  account of supervision’ which left a discretion regarding computation  of the  amount of supervision and the said provision  did not  contain phraseology  like ’cost  of supervision actually  incurred’ as  found in  the  aforesaid Explanation to  Section 7-A(2).   It was, therefore, rightly contended that  concept of  capitalization of  the  cost  of supervision for computing the original cost of the asset for the purpose  of paragraph  of the Sixth Schedule had nothing to do  with the  cost of supervision actually incurred which had to be considered as an addition to the book value of the acquired  fixed  assets  for  computing  compensation  under Section 7-A sub-section (2).      Learned senior  counsel Shri  Sen  for  the  respondent vehemently submitted  that the cost of supervision mentioned in the  Explanation to  Section 7-A  (2) has  necessarily  a linkage with the Sixth Schedule and Section 57 of the Supply Act as  the Sixth  Schedule becomes a part and parcel of the very licence  issued to  the licensee  and that  is why  the Special Officer  was justified  in insisting that in absence of capitalization  of costs of supervision from year to year by the appellant the claim was not maintainable for addition of supervision  charges.   It is  not possible to accept the aforesaid contention of the learned senior counsel Shri Sen. In our  view the  provisions of Sixth Schedule to the Supply Act are  general provisions  which were  enacted to lay down guidelines for  fixation of  licensee’s charges to consumers as provided  in Section  57 of  the Supply  Act and also for supplying guidelines  to the  Rating Committee under Section 57-A and  for that  purpose various paragraphs of Schedule 6 have been  enacted and  are made  a part  and parcel  of the terms and  conditions of  the licence.   But  so far  as the question of  compensation is  concerned, Section  7-A of the

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Act represents  a complete  circle.  When  we  turn  to  the Explanation to  Section 7-A(2)  for computing the book value of any  fixed asset, it original cost has to comprise of two ingredients the  purchase paid by the licensee for the asset and secondly 15 % addition to the said purchase price by way of cost  of supervision  actually incurred on such an asset. It  is   almost  analogous   to  solatium  to  be  paid  for acquisition of land under Land Acquisition Act.  No question of capitalization  of such  supervision charges from year to year is  contemplated by  the said Explanation.  All that is required to  be shown  by the  licensee is  whether  it  had actually incurred  the supervision  costs in connection with the staff engaged for supervision the concerned fixed assets which  were   sought  to  be  acquired  form  the  licensee. Consequently the  first ground  put forward  by the  Special Officer for rejecting this claim cannot be sustained.      However, learned senior counsel for the respondents was on a firmer ground when he submitted that even on the second ground also  the Special  Officer was justified in rejecting the claim. The special Officer had taken the view that there was no  clear evidence  led by the appellant to sustain this claim on  merits. A  mere look  at the  explanation  (ii) to section  7-A(2)   shows  that  before  claiming  permissible supervision costs not exceeding 15% of the purchase price of the asset  it has  to be  shown by the appellant that it had actually incurred  supervision costs  by engaging  staff for supervising these  fixed assets.  In this connection learned senior counsel  for the  appellant submitted  that  all  the relevant documents  were in  the custody  of the Board which could have been easily called for by the Special Officer for his scrutiny.  Even that apart the balance sheets which were available on  the record  of the Special Officer showed that the appellant  had bifurcated  various casts incurred on the staff and  one of  the specified  items was  the cost of the specified items  was the  cost of supervisory staff incurred by the  appellant during the year. A mere look at a specimen of one  such balance sheet shown to us indicated that a lump sum figure  was shown  in the  balance sheet  as the  amount spent on  supervisory staff.  It is  difficult to appreciate how this  lump sum  amount could  be treated  as the cost of supervision actually  incurred by  the appellant  by way  of meeting the  wages of  the staff engaged for supervising the concerned  fixed   assets  which   were  subject-matter   of acquisition. It  is easy to visualise that supervisory staff may be  engaged by the licensee not only for supervising the fixed assets  but also  the office  staff. Even  that  apart there would  be a watchman kept for supervising not only the factory premises consisting of the relevant fixed assets but also for  supervising the  cash  room,  compound  and  other properties  of  the  licensee.  Unless  clear  evidence  was available on  record pointing  to the  actual amount of cost incurred by  the licensee  form year to year for meeting the wage bill  of supervisory staff which was entrusted with the sole duty  of supervising  over the  concerned fixed  assets which ultimately  vested in the State and Electricity Board, it could  not be said that the appellant had made out a case for grant of costs of supervision actually incurred by it in maintaining these fixed assets and that it had satisfied the requirements of  the Explanation  (ii)  to  Section  7-A(2). Therefore the  second ground  on which  the Special  Officer rejected the  claim cannot be found fault with. Consequently the first  claim for  additional compensation is found to be devoid of any substance and is, therefore, rejected.      That takes us to the consideration of claim No.2. Claim No.2

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    So far  as  this  claim  is  concerned  that  appellant contended that  as per  Section 7-A(i) the book value of all completed  works   in  beneficial   use  pertaining  to  the undertaking and  taken over by the State Government or local authority, as  the case  may be, had to be computed but that computation must  exclude the  words constructed at the cost of the  works paid  for by the consumers. Thus the works for which payment  emanated from  the consumers  were not  to be taken into  consideration while  computing the book value of the completed  works which were taken over from the licensee by the  acquiring authority.  Having computed  the same, the question of  deduction from  the said computation would fall for consideration  as per  Section 7-A(2)(i)  which provided that from  this total  amount of book value of the assets so computed depreciation  calculated  in  accordance  with  the Sixth and Seventh Schedules to the Electricity (Supply) Act, 1948  had  to  be  deducted.  That  would  necessarily  mean depreciation on  the computed  book value  of  the  acquired assets which  have entered the computation of the book value as per  the first  part of  Section  7-A(2)(i).    What  the Special  Officer  has  done  is  that  while  computing  the depreciation on  fixed assets for deducting it from the book value of  all completed  works as  per Section  7A(2)(i) the depreciation claimed  by the  assessee on  works paid for by the consumers  has also been deducted. That this is contrary to the  express language  of Section  7-(2)(i). On the other hand learned  senior counsel  for the  respondents submitted that when the legislature has clearly provided for deduction of depreciation  from the  book value of all completed works as per  the Sixth Schedule read with the Seventh Schedule as applicable in  1975 when  the  appellant’s  undertaking  was acquired would also be relevant. The entire paragraph XII of the Sixth  Schedule along with the proviso had to be kept in view and was rightly kept in view.      In order  to appreciate  the rival  contentions on this claim it is necessary to refer to the relevant provisions of the Sixth Schedule that applied in 1975 when the appellant’s undertaking was acquired with effect from 1st December 1975. The  relevant  provisions  for  depreciation  are  found  in paragraphs VI  to XII of the Sixth Schedule as applicable at the relevant time. They read as under:      "VI. (i)  There shall be allowed in      each    year    in    respect    of      depreciation   of    fixed   assets      employed   in   the   business   of      electricity supply  such an  amount      as would,  if  set  aside  annually      throughout  the  prescribed  period      and   accumulated    at    compound      interest at 4 per centum per annum,      produce   by   the   end   of   the      prescribed period  an amount  equal      to 90 per cent of the original cast      of  the  asset  after  taking  into      account the  sums  already  written      off or  set aside  in the  books of      the undertaking. Annual interest on      the  accumulated  balance  will  be      allowed as  an expense from revenue      as well  as the  annual incremental      deposit:      Provided that, within 3 months from      the   date    upon   which    these      principles are  enacted, a licensee

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    may elect  to  adopt  the  straight      line   method    of    depreciation      accounting in  lieu of the compound      interest method  above  prescribed.      Straight-line       method       of      depreciation accounting  means  the      method whereby an allowance is made      in  each   year   in   respect   of      depreciation   of    fixed   assets      employed in the business of such an      amount as is arrived at by dividing      ninety percent of the original cost      of  the  asset  by  the  prescribed      method in respect of such asset.’      (2) The  year in  which  any  asset      becomes available  for use  in  the      business  and   the  relative  cost      thereof shall,  in the  absence  of      satisfactory record,  be determined      by the  State Government.  All sums      credited  to  depreciation  account      shall  be   invested  only  in  the      business of  electricity supply  of      the undertaking  or where it is not      practicable to  so invest  them  in      investments approved  by the  State      Government.      (3)   Any    sums    invested    in      investments approved  by the  State      Government under  sub-paragraph (2)      shall, as  soon as  practicable, be      utilized   in   the   business   of      electricity    supply     of    the      undertaking and  if such  sums  are      not so utilized they shall not form      part  of  the  capital  base  under      clause (d)  of sub-paragraph (1) of      paragraph XVII.      VII.  (1)  Where  any  fixed  asset      ceases  to  be  available  for  use      through  obsolescence,  inadequacy,      superfluity  or   for   any   other      reason, it  shall be  described  in      the books  of the  licensee  as  no      longer  in   use  and   no  further      depreciation  in   respect  thereof      shall  be   allowed  as   a  charge      against revenue.      (2) The  written down  cost of such      fixed  asset   shall   be   charged      against the Contingencies Reserve :      Provided     that     where     the      accumulations in  the Contingencies      Reserve  are   not  sufficient   to      permit the  charging of  the entire      written down cost of the asset, the      excess amount  may, be  included in      the capital base for the purpose of      clause (a)  of sub-paragraph (1) of      paragraph XVII.      (3) The  amount for  which any such      fixed asset  is sold  or the amount      of its  scrap value  when  actually      realised shall  be credited  to the      Contingencies Reserve.

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    VIII.  When   any  asset  has  been      written down  in the  books of  the      undertaking to  10 percent, or less      of its  original cost,  no  further      depreciation shall  be  allowed  in      respect of that asset.      IX. When  any fixed  asset is  sold      for an amount exceeding its written      down   cost    the   excess   after      deducting all taxes payable thereon      shall   be    credited    to    the      Contingencies Reserve.      X. Except with the previous consent      of the  State Government,  no  sums      shall  be   carried  forward  to  a      reserve and  no dividends in excess      of 3 percent shall be paid on share      capital and  no other  distribution      of profits  shall be  made  to  the      shareholders in respect of any year      of account  so long  as any  of the      following sums remain to be written      off   in    the   books    of   the      undertaking, namely:-      (i)  normal  depreciation  due  for      that year  of account calculated in      accordance with  the provisions  of      paragraph VI;      (ii) equated  instalment in respect      of   arrears    of    depreciation,      computed  in  accordance  with  the      provisions  of  paragraph  XI,  for      that year of account;      (iii) arrears,  if any,  in respect      of normal  depreciation referred to      in clause  (i),  accumulated  after      the  date  of  application  of  the      provisions of the Sixth Schedule to      the licensee;      (iv) arrears, if any, in respect of      equated instalments      referred to in clause (ii).      XI.   Arrears    of    depreciation      calculated   in   accordance   with      paragraph VI  may be written off by      equated payments over the remainder      of the  prescribed period  and  the      amount so set aside in the books of      the undertaking  may be  taken into      account in  any year  as a  special      appropriation   for   purposes   of      assessing the clear profit.      XII. Where  contributions are  made      by consumers  towards the  cost  of      construction   of   service   lines      constructed after the date on which      this Act  comes into force only the      net  cost  of  such  service  lines      after deducting  such contributions      shall be  included in  the cost  of      fixed assets  for the  purposes  of      arriving at the capital base :      Provided that  for the  purposes of      depreciation  under  paragraph  VI,      the   total    original   cost   of

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    construction of  the service  lines      shall be taken into account."      It is,  of course,  true that as mentioned in paragraph XII of the Sixth Schedules while considering the question of total capital  base which  includes the assets consisting of service lines  for installation  of which  contributions are made by  consumer towards  the construction  of such service lines, the  net cost  of such  service lines after deducting such contributions  has to  be included in the costs of such fixed assets.  It i  also true  that, however, for computing the depreciation as per paragraph VI on such assets, wherein consumers have  contributed towards  their acquisition,  the total original cost of construction of the service lines had to be  taken into  account. The  Special Officer has applied paragraph XII  whole had  while deducting  the  depreciation from the  book  value  of  all  completed  works  which  are acquired from the licensee as per Section 7-A(2) (i). In our view the  said approach  of the  Special Officer is ex facie unjustified. The  reasons are  obvious. Paragraph XII of the Sixth Schedule  to the  Supply Act deals with a special type of asset,  namely, service  lines which are installed by the licensee wherein  the consumers have contributed towards the cost of construction of such service lines. For this type of assets, in  computing the  capital base of the licensee, the contribution by  the consumers  has to  be excluded  but for computing depreciation  under paragraph  VI for such assets, namely, the  service  lines,  the  total  original  cost  of construction of  service lines  has to be taken into account which may  include the cost of construction of service lines incurred by  the licensee  as well  as the other part of the component of the cost of construction of service lines which has come  from the  pockets of  the  consumers.  But  entire paragraph XII  deals with  only one  type of assets, namely, service lines  construction  cost  of  which  is  wholly  or partially borne  by the  consumers. Paragraph VI of Schedule VI, however,  is general  in nature  and covers all types of fixed assets  and the  method of computation of depreciation on these  fixed assets.  It is  axiomatic that  fixed assets employed in  the business  of electricity supply may consist of those assets which are wholly acquired at the cost of the licensee and  may also  include assets  like  service  lines which may  partly be  acquired and  installed at the cost of the licensee and partly out of contribution of the consumers who would  be interested  in getting  electrical  supply  at their own  premises and for that purpose they may be willing and may  be made  to pay  contribution towards  extension of service lines  to their  premises. Therefore,  reference  to service lines in paragraph XII of Schedule VI is with a view to finding out as to how depreciation has to be computed for such a  special type  of asset, namely service lines wherein consumers have  also contributed towards their installation. Consequently on  a conjoint  reading  of  paragraph  VI  and paragraph XII  of Sixth  Schedule the  depreciation on  such service lines  installed by  drawing upon  the contributions from the consumers is required to include the total original cost of  construction of  such service  lines and that would necessarily include  the component  of the  amount  of  cost contributed by the consumers. However that has nothing to do with the computation of depreciation on the assets which are acquired by  the acquiring  authority under Section 6-A read with Section  7-A(2)(i). It is now well settled that service lines whose  installation had been paid for by the consumers are not to be compensated for and they vest in the acquiring authority under  Section 6-A  read with  Section 7-A free of cost of  payment of  compensation to the licensee. The logic

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underlying this  settled  legal  position  is  that  as  the licensee had  not spent  from his pocket for installing such an asset,  he was  not required  to be  compensated for that part of  the asset  which was  paid for by consumers. A mere look at  Section  7-A(2)(i)  shows  that  the  gross  amount payable to  such licensee  for acquiring  his assets amongst others has  to consist of an amount of the book value of all completed works  in the  beneficial use  pertaining  to  the undertaking. While  computing such  book value  of  acquired assets the  works paid  for by  the  consumers  have  to  be ignored  and  omitted  from  consideration.  Therefore,  the amount of  book value computed as per Section 7-A(2)(i) will consist of  only those works which are for beneficial use of the undertaking  which was  installed and  acquired  by  the licensee at  its own  cost. Having  computed this amount the next question  survives about  deducting the depreciation on such acquired  assets. That  would naturally imply deduction of depreciation  on such  assets from the amount so computed being the  book value  of the  completed works installed and acquired at  the cost  of the  licensee. If  these  are  the assets whose book value has to be computed as per Section 7- A(2)(i) the  question of  deduction from  that amount  would necessarily imply  deduction of  depreciation on  these very assets. In  other words  the field is clearly earmarked both for computation of the book value of the concerned assets as also  fro  deduction  of  depreciation  on  such  assets  as enjoined by  the second part of Section 7-A(2)(i) itself. It is axiomatic  that before  any depreciation is deducted from the computed  book value  of an  asset it  should be for the same asset  whose book  value has  been ascertained and from that value depreciation is to be deducted. It cannot be that for computing the book value of licensee’s assets only self- financed assets  are to  be taken into consideration and not the works paid for by the consumers but while deducting from this very  amount of  book value  the depreciation  is to be deducted qua  not  only  the  assets  whose  book  value  is computed but  also qua the assets belonging to somebody else like the  consumers who  have paid for the works. This would on the  face of  it be very anomalous and unfair. It is also pertinent to  note that  from the  book value  of the assets which were  financed by  the licensee  as  computed  as  per Section 7-A(2)(i) when a question arises about deducting the depreciation, only  the calculation  of such depreciation on the concerned  asset is  to be done in accordance with Sixth Schedule because the words advisedly used by the Legislature in  Section   7-A(2)(i)  in   this   connection   are   less depreciation  calculated   in  accordance   with  the  Sixth Schedule read with the Seventh Schedule. Therefore, only the method of  calculation of  depreciation has to be applied by way of  reference to  the Sixth  Schedule. But  the type  of asset for which depreciation has to be computed is not to be gathered from the Sixth Schedule. It has to be gathered from the very first part of Section 7-A(2)(i), namely, only self- financed fixed  assets whose book value is to be computed by the Special  Officer for  payment to  the licensee  and from that amount  depreciation is  to  be  deducted  which  would necessarily mean  depreciation on  the very same asset which has undergone  the book  valuation as per Section 7-A(2)(i). If for  calculating the  book value of such assets the works paid  for   by  the   consumers  are  to  be  excluded  they necessarily  cannot   be  included   for  the   purpose   of ascertaining  deductible   depreciation  on   such   assets. Consequently reference to paragraph XII Schedule VI would be totally out of picture and redundant so far as the scheme of Section 7-A  sub-section (2)(i) is concerned. It may be that

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the  licensee   might  have   obtained   benefit   of   such depreciation on consumer paid assets under Income Tax Act or any other statutory provision but that is totally irrelevant for  deciding   the  question   whether  the   deduction  of depreciation on  the concerned assets whose book value is to be computed as per Section 7-A(2)(i), paragraph XII of Sixth Schedule  could  at  all  be  pressed  in  service.  It  is, therefore, not  possible to  agree with  the  submission  of learned senior  counsel for  the respondents  and  also  the learned counsel  who appeared for the State of U.P. that for the purpose  of deducting  the depreciation the assets which are not  included in computing the book value as per Section 7-A(2)(i), namely,  the consumer-financed  assets also could be taken into consideration. In our view the Special Officer was patently  in error  when he computed the depreciation on the assets  under Section  7-A(2)(i) by adding the amount of depreciation on the service lines which were paid for by the consumers. Reference  to paragraph  XII of Sixth Schedule in this connection  was wrongly made and the said paragraph was wrongly pressed  in service  by the Special Officer. In this connection it has also to be kept in view that the amount of Rs.2,48,718/- being  the depreciation  amount on  the  works constructed at the cost of consumers was not disputed by the Board and  the only  contention of  the Board before Special Officer was  that as per paragraph XII of Sixth Schedule the said amount of depreciation was also to be deducted from the book value of the assets acquired by the Board under Section 6-A read  with  Section  7-A.  As  the  reliance  placed  on paragraph XII  of Sixth  Schedule by  the Special Officer is found  by  us  to  be  unjustified  and  as  the  amount  of depreciation deducted  from the  book value on this score is undisputedly  Rs.2,48,718,81  this  amount  of  depreciation deducted from  the book  value on this score is undisputedly Rs.2,48,718.81 this  amount must  be treated  to  have  been wrongly deducted  from the book value by way of depreciation on consumer-financed assets, namely, service lines.      Before parting with the discussion on this claim we may mention one impermissible exercise undertaken by the Special Officer. At  page 40  of the  impugned  Award  it  has  been mentioned that  the Special Officer having found that as the matter  was  of  considerable  judicial  importance  it  was considered  prudent   to  take   legal  advice   from  Legal Remembrance to  U.P. Government and as the legal Remembrance opined that  clauses XI and XII of the Sixth Schedule to the Electricity (Supply)  Act would seem to provide an answer to the question  raised they  had to  be kept  in view and that Special Officer  agreed with  the said  opinion of the Legal Remembrance. It  has to  be kept  in view  that the  Special Officer exercising quasi-judicial functions under Section 7- A of  the Act  who has  the same  powers as  are vested in a Civil Court  under the  Code of  Civil Procedure,  1908 when trying a  suit, in  respect of  the  matters  enumerated  in Section 7-A  sub-section 7(7)(b)  could not  have called for such an opinion of Legal Remembrance and even though Section 7-A clause  (7)(a) permits  the Special  Officer to have the assistance  of   such  officers   and  staff  of  the  State Government or the State Electricity Board or the licensee as he may  deem fit in assessing the net amount payable, it had to be  done in  presence of  the licensee and an opportunity should have  been given  to the  licensee to  meet  such  an opinion. As  that has not been done in the present case such an exercise  on the  part of  the Special  Officer  and  the reliance  placed   by  him  on  the  opinion  of  the  Legal Remembrance obtained behind the back of the licensee must be treated to  be  totally  an  incompetent  and  uncalled  for

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exercise and  such an  opinion should  have been  completely ignored by  the  Special  Officer.  The  second  claim  has, therefore, got  to be accepted. We accordingly hold that the Special Officer  has wrongly deducted from the book value of the assets  as computed under Section 7-A(2)(i) an amount of Rs.2.48,718.81 and  that amount is required to be added back to the  book value of the assets which is to be made payable to the appellant-licensee by way of additional compensation. Claim No.3      So far  as this  claim is  concerned, as noted earlier, the appellant  ultimately confined the claim on this head to Rs.60,603,78. This  claim refers  to the electricity dues on the electricity supplied by the Board to the licensee during the period  prior to  the appointed day. The fuel escalation clause binding  on the  licensee entitled the Board to claim this amount.  These  amounts  pertain  to  the  period  from October 1972 to November 1975. It is true that in connection with these amounts of claim various bills were issued by the Electricity Board  to the  appellant. At  page 69    of  the impugned Award  the entire  table has  been extracted by the Special Officer.  The said table shows that at serial nos. 1 to 8  different bills  were  issued  by  the  Board  to  the appellant between 25th July 1974 and 12th November 1975. But there are  last two  bills dated  24th March  1976  and  2nd September  1976   which  were  obviously  issued  after  the appointed day.  It was,  therefore, contended by the learned senior counsel  for the  appellant that  for  at  least  the amounts covered  by these  two bills  which consisted of Rs. 51,286,70   and    9,317.08   respectively    totalling   to Rs.60,603,78  the   appellant  could   not  have  been  made responsible as  the bills  were issued  after the take-over. Learned senior counsel for the respondent-Board on the other hand submitted  that these  two bills referred to the period prior to the take-over, namely, bill dated 24.3.1976 was for a period  form October  1974 to November 1975 and bill dated 2.9.1976  was   for  October  and  November  1975.  In  this connection he  invited our  attention to  Section  7-A(5)(b) which in terms provided that from the amount of compensation payable to  the licensee the Special Officer was entitled to deduct the  amount due  to the State Electricity Board which was predecessor  of the  undertaking for  energy supplied by the Board  to the  licensee before the vesting date. That as this energy  was admittedly  supplied to the licensee by the Board which  was the  predecessor of this undertaking before the vesting  date, that  is, 1.12.1975 the predecessor Board was entitled  to deduct the said sum from the amount payable to  the  licensee  for  such  acquisition  and  purchase  as computed under  Section 7-A(1) read with sub section (2). In our view  the aforesaid contention of learned senior counsel for the respondent is well sustained on the statutory scheme of Section  7-A(5)(b). The  Special  Officer  was  certainly entitled to  deduct from  the amount payable to the licensee for the acquisition of his undertaking the amount due to the Board by  way of  supply of  energy to  the  licensee.  Even though the bill might have been issued after the acquisition and the  appointed day  as the  bills referred to the period prior  to   the  appointed   day  in   connection  with  the electricity  admittedly   supplied  by   the  Board  to  the licensee, the  licensee was  statutorily bound  to reimburse the Board to the extent of these bills and that amount could be  legitimately   deducted  from  the  computed  amount  of compensation by  the Special  Officer as enjoined by Section 7-A sub-section  (5)(b). Consequently learned senior counsel for the  appellant was  not justified  in submitting that in such a  case the  Board should  have been  asked to  file  a

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separate suit and as such suit was not filed the Board could not have deducted this amount from the amount payable to the licensee under  Section 7-A(2)(i). This claim, therefore, is found to  have been  rightly refused  by the Special Officer and accordingly  it stands  rejected. That  takes us  to the consideration of the last claim. Claim No.4      As  noted   earlier  this  claim  now  is  confined  to Rs.76,423/-. It  consists of deduction of Rs.38,212/- by way of Tariffs  & Dividends  Control Reserve.  This deduction is effected by  the Special  Officer as  per Section  7-A  sub- section (5)(h). A mere look at the said provision shows that from the  amount of compensation payable to the purchaser to Special Officer  can deduct the amounts remaining in Tariffs and Dividends Control Reserve. Contingencies Reserve and the Development Reserve,  insofar as  such amounts have not been paid over  by the  licensee to  the purchaser. It is obvious that these  are trust  amounts in  the hands of the licensee which are ultimately to be paid over to the consumers and at the time of acquisition of its undertaking the said Reserves have to  be handed over to the purchaser, namely, the Board. But what  is to  be handed over to the Board by the licensee is the amount remaining in the Tariffs and Dividends Control Reserve. So far as the figures of the outstanding amounts in these reserves  were concerned  they were  supplied  by  the licensee to  the Special  Officer. Accordingly  an amount of Rs.8,615/- stood  credited  to  the  Tariffs  and  Dividends Control Reserve  while an amount of Rs.54,560/- stood in the Consumer Rebate  Reserve which  was also  part and parcel of Tariffs and  Dividends Control  Reserve. However  by a  very curious piece  of reasoning the Special Officer artificially inflated the  balances  of  these  reserves  and  held  that Tariffs and  Dividends Control  Reserve should be treated to be showing  the balance of Rs.46,826/- instead of Rs.8,615/- while the Consumer Rebate Reserve balance should be inflated to Rs.97,727/-  instead of Rs.54,560/-. The process by which this inflation  was done  for the purpose of deduction under Section 7-A(5)(h)  also makes  an interesting  reading.  The Special Officer  agreed with  the  appellant  that  for  the purpose of  computing depreciation of assets financed by the appellant which  had to  be deducted  from the book value of these assets  as per  Section 7-A(2)(i)  extra  depreciation charged by  the licensee  on  these  assets  and  which  was effectively got  considered by  the Income  Tax  authorities could not  be taken  into consideration  for the  purpose of Section  7-A(2)(i)  as  such  excess  depreciation  was  not contemplated  or   covered  by  the  Sixth  or  the  Seventh Schedule.  Having  accepted  this  contention,  the  Special Officer reduced  the figure  of deductible  depreciation  on these self-financed  assets under  Section 7-A(2)(i)  and to that extent  the book  value of the self-financed assets got inflated and that benefit became available to the appellant. But the  Special Officer  thereafter proceeded  to hold that because the  appellant had obtained this excess depreciation from the Income Tax authorities that would have got added to its revenue  in  the  relevant  years  and  this  additional benefit would have got added to its reserves and, therefore, the amount  of excess  depreciation which  was not  deducted from the book value of the acquired assets as per Section 7- A(2)(i) had  to be  added back  to the concerned Tariffs and Dividends Control  Reserve and  Consumer Rebate  Reserve and that is  how  he  ploughed  back  these  extra  depreciation amounts which could not be deducted under Section 7-A(5)(h). In our  view on the clear language of Section 7-A(5)(h) such an  exercise   is  not  contemplated.  While  deducting  the

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depreciation from  the book value of the concerned assets as per Section  7-(2)(i) the amount of extra depreciation which is de hors the permissible scheme of the Sixth Schedule read with Seventh  Schedule of  the Supply Act has to be ignored. Once  that   is  done   Section  7-A(2)(i)  gets  completely exhausted and  complied with.  Upto that  stage the  Special Officer was  with the  appellant, but  then he  thought that this extra  benefit of  additional  depreciation  which  was already  earned   by  the  appellant  from  the  Income  Tax Department must  be deducted  from the purchase price as per Section 7-A(5)(h)  by artificially  inflating the balance of the concerned  Reserves. So far as this exercise, undertaken by the  Special Officer,  is concerned it is not permissible on the  express language  of  Section  7-A(5)(h).  The  said provision  clearly  indicates  that  whatever  amounts  have remained in the concerned Reserve Accounts with the licensee on the  date of  acquisition have  to be  paid over  to  the purchaser.  Thus   actual  balances  of  these  Reserves  as reflected from the books of accounts of the licensee, had to be handed  over to  the Board.  The said  provision  nowhere permits an  exercise of  artificially inflating the balances of these  Reserves which  are not  reflected by the books of accounts of  the licensee,  on the  supposition  that  these extra depreciations which the licensee must have earned from year to year on these assets and which is not covered by the Sixth or  Seventh Schedule  of  the  Supply  Act  must  have swelled the  revenues of  the licensee  under Income Tax Act and, therefore,  must necessarily have gone to the concerned Reserve Accounts.  Before that  stage is  reached it is just possible that  the license  might have  utilized  the  extra depreciation  earned   according  to   the  Income  Tax  Act provisions for swelling its own profits while might not have been diverted  to Reserves  but might have been utilized for other   purposes   including   giving   dividends   to   its shareholders or  in  purchasing  other  assets  which  would naturally get  accounted for under Section 7-A(2)(i) itself. There  are  number  of  contingencies  contemplated  in  the accounting  practices followed by the licensee in connection with its  business activities  which might  have utilized in diverse  ways  extra  depreciation  amounts  earned  by  the licensee from  Income Tax authorities. Therefore, it was not permissible  for   the  Special  Officer  to  conclude  that necessarily these extra depreciations earned by the licensee must have  been utilized  for swelling  the balances  of the concerned Reserves  and, therefore,  the actual balances did not reflect the real balances. It is also to be kept in view that balances  in these  concerned Reserves  would rise over number of  years during  which the  licensee carries  on its business and  they are  not necessarily confined to only one year or the last year when the acquisition takes place. They are a product of working of the concern  over years and also get reflected  by the  accounting practices and the business practices resorted  to and  adopted  by  the  licensee  over years. Consequently  there was  no material with the Special Officer to  come to  a definite  conclusion that  the  extra depreciations earned  by the  licensee over  years from  the Income Tax  Department must  have got channelised into these Reserves and,  therefore, the  apparent  balances  in  these Reserves were  not the  real balances and had to be inflated accordingly with  a view  to seeing  that what goes out from the deductible  depreciation under  Section  7-A(2)(i)  must necessarily get  deducted under  Section 7-A(5)(h).  In  our view, therefore, the Special Officer was clearly in error in deducting the total amount of Rs. 76,423/- consisting of the artificially inflated balances in the aforesaid two Reserves

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from the  amount of  compensation payable to the licensee as per Section 7-A(5)(h). The fourth claim, therefore, is found to be  well sustained  and must  be accepted by holding that the appellant  was entitled to an additional compensation of Rs.76,423/- on this count.      In view  of the aforesaid discussion on the main claims for additional  compensation as  canvassed before us it must be held  that the  appellant would be entitled to additional compensation on  Claim no.2  amounting to  Rs.2,48,718/- and Claim No.4  amounting to Rs.76,423/-. The total of these two figures works  out to  Rs.3,25,141/-. We are informed by the learned senior  counsel for  the  appellant  that  even  the awarded amount  has still  not been paid by the respondents. To recapitulate  the award  was passed  as early  as on 31st March 1980.  As per  Section 6-A  sub-section (3)(h)  of the Act, the  Electricity Board  is enjoined to pay the licensee an amount  determined in  accordance with  the provisions of Section 7-A  and as  per the  proviso to  that  Section  the licensee shall  in addition  to the said amount, be entitled to interest  thereon at  the Reserve Bank rate ruling at the appointed day  plus one  per centum  for the period from the appointed day  to the date of payment of the said amount. As even the  awarded amount as per the Award of 31st March 1980 is still  not paid  to the  appellant the  Board has  to  be directed to pay up to the appellant the amount as awarded by the Special  Officer by  his Award  with interest thereon at the relevant  Reserve Bank rate ruling at the appointed day, that is,  1.12.1975 plus one percent for the period from the date  of  award  to  the  date  of  actual  payment  to  the appellant--licensee.  In  addition  thereto  the  additional amount awarded  by our  present order, namely, Rs.3,25,141/- will also  have to  be paid  by the  respondent-Board to the appellant-licensee with interest thereon at the Reserve Bank rate also  from the  appointed date, that is, 1.12.1975 plus one percent  interest on the said amount for the period from 1.12.1975 till the date of actual payment of this additional amount of  Rs.3,25,141/-. All  the  aforesaid  amounts  with interest as  directed  hereinabove  shall  be  paid  by  the respondent-Board to the appellant-licensee on or before 31st March 1997. The demand for additional amount as reflected by claims  nos.   1  and   3  stand  rejected.  The  appeal  is accordingly allowed  to the  aforesaid extent. As cut of the four claims  for additional  compensation as  pressed for in this appeal  two are  granted by us and two are rejected and as the  success is  equally shared  by both  the sides there will be no order as to costs .