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1968 DIGILAW 67 (GAU)

Silchar Electric Supply Ltd. v. Secretary to the Government of Assam, Power (Electricity), Mines and Minerals Dept, Shillong

1968-09-20

M.C.PATHAK, P.K.GOSWAMI

body1968
PATHAK, J.: By this writ petition under Article 226 of the Constitution of India, the petitioner has challenged the notice dated 16-10-67 to show cause against the revoca­tion of the Silchar Electric Licence, 1928 and the order of revocation dated 26th March 1968 which was communicated by a telegram dated 26-3-1968. The show-cause notice is annexure II to the petition and the telegram conveying the Government's Order is annexure IV to the petition. 2. The revocation order dated 26-3-1968 which was published in the Assam Gazette, Extraordinary, dated 27th March, 1968, is as follows:- Government of Assam Orders by the Governor Power (Electricity), Mines and Minerals Department Notifications The 26th March 1968 No. PEL. 68/61/423. - Whereas tike Governor of Assam is of opinion that it is required in the public interest to revoke the license of the Silchar Supply Ltd.; Now, therefore, in exercise of the powers conferred by sub-section (1) of Section 4 of the Indian Electricity Act, 1910, the Governor of Assam after fulfilling the re­quirements as laid down in sub-section (3) of the said section is pleased to revoke the Silchar Electric License, 1928 due to the following grounds:- (1) failed for more than ten years to main­tain adequate plant and machinery required for regular, constant and sufficient Supply of electrical energy for all purposes; (2) failed for more than ten years to meet the demand for power in his licensed area; (3) failed to maintain stand-by generating s«ts to avoid hardship to the consumers as par terms of license; (4) failed to maintain continuous supply for 24 hours to all consumers as per terms of license; (5) failed to take speedily the bulk sup­ply from the Assam State Electricity Board in spite of all helps offered by the Board, which could have eased the situation; (6) failed habitually to report the failure of supply: And whereas the prolonged defaults of the licensee in complying with the barest needs of the Silchar town indicate that the licensee is not able financially or otherwise, fully and efficiently to discharge the duties and obligations imposed on him by his license. T. S. Gill, Secy, to the Govt. T. S. Gill, Secy, to the Govt. of Assam, Power (Electricity) Mines and Minerals Department." la pursuance of the above order, another order under Section 5 (1) of the Indian Electricity Act, 1910, hereinafter called 'the Act' was passed by the Government on 26th March 1968, which is as follows: The 26th March 1968 No PEL. 68/61/424. - Whereas the Governor of Assam has been pleased to re­voke the license of the Silchar Electric Supply Ltd., hereinafter referred to as the "Licensee", under sub-section (1) of Sec­tion 4 of the Indian Electricity Act, 1910; Now. therefore, in pursuance of sub-sec­tion (1) of Section 5 of the aforementioned Act, the Governor of Assam is pleased to serve the notice of revocation upon the licensee fixing the 1st April, 1968 as the date on which the revocation shall take effect and that the licensee shall sell the undertaking to the Assam State Electricity Board who shall purchase the undertaking at the market value to be determined in ac­cordance with Section 7-A of the aforemen­tioned Act. T. S. Gill Secy, to the Govt. of Assam, Power (Electricity), Mines and Minerals Deptt. This order was also published in the Assam Gazette, extraordinary dated 27th March, 1968. The said two orders which have been in fact challenged in this writ petition have not been made annexures to the petition. This may perhaps be due to the fact that the petitioner obtained the rule on 29-3-1968 before it received the Gazette notifi­cation. Since the petition is mainly against these two orders, the petitioner ought to have filed copies of the said two orders in Court subsequently even and it was not proper for the petitioner to wait till the date of hearing of the petition for produc­tion of the said two orders. It was also not proper for the Respondents in not annexing the copies of the said orders to their affidavit-in-opposition. Anyway at the time of hearing the rule, a copy of the Gazette Notification containing the above two orders was produced before us. 3. The petitioner company was grantee by the Government of Assam "The Silchaj Electric Licence, 1928" under the provisions of the Indian Electricity Act, 1910 01 terms and conditions mentioned in the said licence, a copy of which has been annexure as annexure I to the petition. 4. 3. The petitioner company was grantee by the Government of Assam "The Silchaj Electric Licence, 1928" under the provisions of the Indian Electricity Act, 1910 01 terms and conditions mentioned in the said licence, a copy of which has been annexure as annexure I to the petition. 4. The petitioner's case in brief is that in accordance with the terms and condi­tions of the licence, it duly deposited the security money of Rs. 5000/- within the time prescribed and at the initial stage installed two generating sets of 128 K. W. only and after laying transmission, distribu­tion and service lines for supply of electri­cal energy within the licensed area, it start­ed supplying electrical energy to the con­sumers in accordance1 with the directions of the authorities issued from time to time. During the course of the last 10 years, the petitioner company installed three generat­ing sets from time to time in order to cope with the sudden and unexpected increased demand for power due to the influx of re­fugees from East Pakistan in the town of Silchar. Out of the aforesaid three generat­ing sets, one was 250 K. W. set in D. C. and the other two sets were in A. C. As the Assam State Electricity Board did mot favour the extension of D. C. system, the petitioner company made arrangement for the purchase of a third bigger A. C. gene­rating set and approached the Government for the import of the said third set, but the Assam State Electricity Board did not re­commend the import of the said set on the ground that power from Umium would be available in the Cachar area earlier than one year's time, and therefore the petitioner Under those circumstances could not and did not take further steps for the purchase of any more sets. The petitioner Company as desired by the Assam State Electricity Board to their letter dated 12-6-64 submitted application dated 23-6-64 for obtaining bulk supply from the Assam State Electricity Board, but it did not get the first grid connection earlier than 15-7-67. That the petitioner company all along rendered prompt and efficient service to the consumers who in general were fully satisfied with the service of the company and it never failed to dis­charge its duties and obligations to the licensees. That the petitioner company all along rendered prompt and efficient service to the consumers who in general were fully satisfied with the service of the company and it never failed to dis­charge its duties and obligations to the licensees. Thereafter the authorities of the State Government requested the petitioner company to hand over the undertaking to the Government and a discussion in that re­gard was held at Silchar with the Minister-in-charge of Industries, Power (Electricity, etc.), Assam and during the course of the said discussion, the petitioner company agreed to hand over the undertaking to the Government on terms and conditions to be mutually agreed upon. The petitioner company passed necessary resolution for handing over the undertaking and informed the Government about the said decision of the company on 5-10-67. Thereafter the petitioner-company received on 20-10-67 the notice dated 16-10-67 issued by the Government, asking the petitioner to show cause as to why the Electric Licence of the peti­tioner company should not be revoked under Section 4 (1) of the Act. The show cause notice is annexure II to the petition which is in the following terms: "Whereas in the opinion of the Governor of Assam the licensee, viz., the Silchar Elec­tric Supply Limited has- (i) failed for more than ten years to main­tain adequate plant and machinery required for regular, constant and sufficient supply of electrical energy for all purposes; (ii) failed for more than ten years to meet the demand for power in his licensed area; (iii) failed to maintain standby generating set to avoid hardship to consumers in case of breakdown; (iv) failed to maintain continuous supply for 24 hours to all consumers as per terms of license; (v) failed to take speedily the bulk supply from the Assam State Electricity Board in spite of all helps offered by the Board which could have eased the situation; (vi) failed habitually to report the failures of supply; A«d whereas the prolonged defaults of the licensee in complying with the barest needs of the Silchar town indicate that the licensee is not able financially or otherwise, fully and efficiently to discharge the duties and obligations imposed on him by his license; Now. therefore, in pursuance of subsec­tion (3) of Section 4 of the Indian Electri­city Act, 1910, the licensee is hereby called upon to show cause within 3 months from the date of issue of this notice, why his license should not be revoked under sub­section (1) of Section 4 of the Indian Elec­tricity Act, 1910." 5. On receipt of the said notice, the petitioner company showed cause within the time prescribed therein contending inter alia that the grounds alleged for revocation of the licence were absolutely baseless and had no connection whatever with facts. A copy of the objection filed by the petitioner company has been annexed as annexure III to the petition. Thereafter the petitioner company received on 18-12-67 a telegram dated 16-12-67 by the Power Department of the State Government whereby the peti­tioner company was requested to be pre­sent at Shillong on 20-12-67 for discussion with the Chairman of the Assam State Elec­tricity Board in connection with the taking over of the Silchar Electrical undertaking. The Manager of the petitioner company ac­cordingly reached Shillong on the due date for discussion and during the discussion it was pointed out on behalf of the petitioner company that discussion for taking over the undertaking on terms mutually agreed upon and the proceedings for revocation could not proceed simultaneously and that the show cause notice issued for revocation of the licence should first be withdrawn so as to enable the company to have further dis­cussion for handing over the undertaking on the basis of the terms and conditions already submitted to the Government. Under the circumstances, no further discussion could be held for handing over the under­taking on the basis of the mutual under­standing and agreement. 6. Thereafter the petitioner company re­ceived a telegram dated 26-3-1968 from the State Government whereby the petitioner company was informed that revocation notice under Section 5 of the Indian Elec­tricity Act, 1910 had been issued on that date fixing 1st April, 1968 as the date of revocation. In the said telegram, it was further mentioned that the State Electricity Board would be taking necessary action. The revocation notice said to have been sent by registered post had not reached the petitioner company till then. A copy of the said telegram dated 26-3-68 is annexed as annexure IV to the petition. In the said telegram, it was further mentioned that the State Electricity Board would be taking necessary action. The revocation notice said to have been sent by registered post had not reached the petitioner company till then. A copy of the said telegram dated 26-3-68 is annexed as annexure IV to the petition. On receiving the said telegram, the petitioner company moved the writ petition and obtained the Rule on 29-3-1968 from this Court. 7. An affidavit has been filed on behalf of the Respondents 1, 2 and 3 sworn by the Joint Secretary to the Government of Assam in the Power (Electricity), Mines and Mine­rals Department, Shillong. The case of the respondents is that the petitioner-company failed to maintain the adequate supply of power to the consumers as required under the licence and failed to take any effective steps for improvement of the power supply to the consumers. Regular complaints were received from the consumers including the Silchar Bar Association and the Silchar Municipal Board, copies of which are an­nexed as Annexures C, B and B-l to the affidavit-in-opposition, regarding the inade­quacy of supply and frequent failure of supply of electricity by the petitioner com­pany. Accordingly the Senior Electrical In­spector visited Silchar Electric Supply Com­pany in 1959 and after due inspection of the same he submitted his report giving de­tailed accounts about the failure of the com­pany to maintain the supply of electricity. A copy of the said report is annexed as Annexure A to the affidavit-in-opposition. The petitioner company failed to maintain supply of power as required under the conditions of the licence to the consumers and there was considerable public dissatis­faction and complaint. In order to help the petitioner company in making necessary improvement the Government decided that the company might be given some financial assistance by the Assam Financial Corpora­tion in order to make the necessary impro­vement and accordingly the petitioner com­pany was given a total sum of Rs. 5 lakhs in two instalments in 1962 and 1966, but in spite of the said financial help the com­pany failed to make the necessary improve­ment and also failed to meet the growing demands for electricity by the consumers. 5 lakhs in two instalments in 1962 and 1966, but in spite of the said financial help the com­pany failed to make the necessary improve­ment and also failed to meet the growing demands for electricity by the consumers. That the Minister-in-charge of Power (Elec­tricity) during his visit to Silchar in the month of August 1967 was apprised by the public in general of the unsatisfactory condition of power supply by the petitioner company and the Minister took the oppor­tunity to discuss the matter with the re­presentatives of the petitioner company with a view to obtain first hand knowledge about the complaints made to him vis-a-vis the working of the petitioner company. That as the petitioner company utterly failed to maintain the power supply in the licensed area and also failed to make any improve­ment the Government considered the whole matter and came to the conclusion that since the company was neither able to make the proper and adequate supply nor was willing to make any improvement the licence of the petitioner should be revoked in the best interest of the public and the undertaking should be taken over by the Assam State Electricity Board. Accordingly a notice under Section 4 (3) of the Act was issued to show cause as to why the licence should not be revoked under the provisions of sub-section (1) of Section 4 of the Act. That the petitioner submitted its reply to the show cause notice which was duly con­sidered by the Government but the expla­nations given in the said statement were not satisfactory and the same could not be ac­cepted and as a result the Government took the decision to revoke the licence and the impugned orders were passed. 8. Mr. Ghose, the learned counsel for the petitioner has submitted that the Gov­ernment when it exercises its jurisdiction under Section 4 (1) of the Act it exercises quasi-judicial functions and it must give reasons for the conclusions that have been arrived at by it for revoking the licence and reasonable opportunity should be given to the party against whom such action is taken. His further contention is that the opinion formed by the State Government under Sec­tion 4 (1; of the Act on the basis of which action was taken is an objective one which could be reviewed by this Court under Arti­cle 228 of the Constitution. His further contention is that the opinion formed by the State Government under Sec­tion 4 (1; of the Act on the basis of which action was taken is an objective one which could be reviewed by this Court under Arti­cle 228 of the Constitution. The learned counsel has submitted that there is a manda­tory provision in sub-section (3) of Sec. 4, making it obligatory on the part of the Gov­ernment to issue a notice to the licensee in the manner provided thereunder and to give him an opportunity to show cause. There is also a further check provided in Section 4 (1) of the Act imposing an obli­gation on the part of the State Government to consult the State Electricity Board before revoking the licence. The learned counsel has submitted that the Government in the instant case has not complied with the statutory requirements of sub-sections (1) and (3) of Section 4 of the Act. 9. The first point that falls for deter­mination in this case is whether the State Government exercises quasi-judicial func­tions in its action by way of revocation of the licence under Section 4 (1) (a) of the Act and whether the grounds for this action can be reviewed by this Court 10. In the case of Narayanan Sankaran Mooss v. State of Kerala, AIR 1965 Ker 253 the same and similar points regarding the validity and interpretation of Sections 4 and 6 of the Indian Electricity Act (Act IX of 1910) arose for determination. In that case, as in the case before us, the learned coun­sel for the petitioner relied -on the decisions of the Supreme Court in the cases of Mine­ral Development Ltd. v. State of Bihar, AIR 1960 SC 468 ; Shjvji Nathubhai v. Union of India, AIR 1960 SC 606 ; Board of High School and Intermediate Education, U. P. Allahabad v. Ghanshyam Das Gupta, AIR 1962 SC 1110 ; and Board of Revenue, U. P. Allahabad v. Vidyawati, AIR 1962 SC 1217 . The learned Advocate General appearing in that case relied on the decisions in Hubli Electricity Co. Ltd. v. Province of Bombay, AIR 1949 PC 136; Mithoo Shahani v. Union of India, AIR 1964 SC 1536 ; Swadeshi Cotton Mills Co. Ltd. v. State Industrial Tribunal, U. P., AIR 1961 SC 1381 and Allcroft v. Lord Bishop of London Lichton, |(1891) 1891 AC 666. Ltd. v. Province of Bombay, AIR 1949 PC 136; Mithoo Shahani v. Union of India, AIR 1964 SC 1536 ; Swadeshi Cotton Mills Co. Ltd. v. State Industrial Tribunal, U. P., AIR 1961 SC 1381 and Allcroft v. Lord Bishop of London Lichton, |(1891) 1891 AC 666. The learned Advo­cate General of Assam appearing for the Respondents in the instant case has also relied on the said decisions. 11. After considering the above men­tioned cases in details, Vaidialingam, J. (as he then was), who delivered the Court's Judgment in AIR 1965 Ker 253 observed as follows: "These decisions clearly lay down, in our view, that when the Legislature has left it to the authority concerned to form an opi­nion on certain matters; the grounds for the formation of the opinion, or the correctness of the opinion so formed by the authority concerned, do not fall for consideration for review at the hands of the Courts so long as the authority has acted honestly and there were materials available before it, on the basis of which such an opinion could be formed." After considering the Supreme Court's deci­sion in the case of Province of Bombay v. Khushaldas S. Advani, AIR 1950 SC 222 and in the case of Radheshyam Khare v. State of Madhya Pradesh, AIR 1959 SC 107 the Kerala High Court in the said judg­ment held that "the mere circumstance that there is a provision like sub-section (3) Introduced into Section 4 of the Act, does not, in our opinion, in any manner alter the position namely that in taking action under Section 4 (1) (a) of the Act the Government is essentially discharging only an admini­strative act and not a judicial or quasi-judi­cial act." 12. We are in respectful agreement with the above views expressed in the said deci­sion of the Kerala High Court 13. Section 4 of the Act runs thus:- "4. Revocation or Amendment of Licen­ses. We are in respectful agreement with the above views expressed in the said deci­sion of the Kerala High Court 13. Section 4 of the Act runs thus:- "4. Revocation or Amendment of Licen­ses. (1) The State Government may, if in its opinion the public interest so requires and after consulting the State Electricity Board revoke a licence in any of the following cases, namely:- (a) Where the licensee, in the opinion of the State Government, makes willful and unreasonably prolonged default in doing anything required of him by or under this Act; (b) where the licensee breaks any of the terms of conditions of his license toe breach of which is expressly declared by such license to render it liable to revocation; (c) where the licensee fails, within the period fixed in this behalf by his license or any longer period which toe State Govern­ment may substitute therefor by order under Section 4A, sub-section (1) and be­fore exercising any of the powers conferred on him thereby in relation to the execution of works,- (1) to show, to the satisfaction of the State Government, that he is in a position fully and efficiently to discharge the duties and obligations imposed on nun by his license, or (ii) to make the deposit or furnish the security required by his license; (d) where in the opinion of the State Government the financial position of the licensee is such that he is unable, fully and efficiently to discharge the duties and obligations imposed on him by his license. (e) where a licensee, in toe opinion of toe State Government, has made de­fault in complying with any direction issued under Section 22A. (2) Where in its opinion toe public inte­rest so permits, toe State Government may, on toe application or with the consent of toe licensee, and after consulting toe State Electricity Board, and the Central Govern­ment where that Government is interested, and if the licensee is not a local authority, after consulting also the local authority, if any, concerned, revoke a license as to toe whole or any part of the area of supply upon such terms and conditions as it thinks fit. (3) No license shall be revoked under sub-section (1) unless the State Government has given to the licensee not less than three months' notice, in writing, stating toe grounds on which it is proposed to revoke the license and has considered any cause shown by toe licensee within the period of that notice, against the proposed revocation, (4) Where the State Government might under sub-section (1) revoke a licence it may instead of revoking toe licence permit to remain hi force subject to such further terms and conditions as it thinks fit to im­pose and any further terms or conditions so imposed shall be binding upon, and be ob­served by, the licensee, and shall be of like force and effect as if they were contained in the license." 14. In sub-section (1) the words 'if in its opinion the public interest so requires' appear. In clause (a) to sub-section (1) the words 'in the opinion of the State Govern­ment' appear. Clause (c) (i) of sub-sec. (1) of Section 4 puts an obligation on the licensee to satisfy the State Government that he is in a position to fully and effi­ciently discharge the duties and obligations imposed on him by his 'license. In Cls. (d) and (e) of sub-section (1) the words 'in the opinion of the State Government' appear. In sub-section (2) also the words 'where in its opinion the public 'interest so permits, the State Government may' appear. On a consideration of the language and the scheme of the section, it is clear that the legislature has deliberately left the matter of revocation and amendment of license to the subjective satisfaction of the State Gov­ernment. The grounds on which the license may be revoked are laid down in sub-section (1). But the authority to form the opinion is the State Government. In the case of (1891) 1891 AC 666, the House of Lords has unanimously taken the view that when once jurisdiction has been given to an authority to form an opinion, the grounds for the formation of the opinion so formed cannot certainly be canvassed be­fore the Courts. On a consideration of the law on the point, we are clearly of the opinion that when the State Government forms an opinion under section 4 (1) of the Act, there is no judicial process involved ,and the order must be held to be administrative and not quasi-judicial. 15. On a consideration of the law on the point, we are clearly of the opinion that when the State Government forms an opinion under section 4 (1) of the Act, there is no judicial process involved ,and the order must be held to be administrative and not quasi-judicial. 15. The next point urged by Mr. Ghose, the learned counsel for the petitioner, is that in the objection the petitioner prayed for allowing time to produce documents in support of its contentions made in the ob­jection and also prayed for allowing its law­yer to argue the case before the Govern­ment and since this was not allowed the cause shown by the petitioner was not con­sidered by the Government as required under sub-section (3) of Section 4 of the Act. The learned counsel's submission is that when the petitioner was not given time to substantiate his contentions raised in the objection by producing the documents etc. it cannot be said that the Government com­plied with the provisions of sub-section (3) which imposes a duty on the Government to consider the cause shown by the licensee. 16. The learned Advocate General of Assam appearing on behalf of the respon­dents, submits that on a perusal of the cause shown by the petitioner which is annexure III to the petition, it will appear that it is in fact admitted that there has been pro­longed defaults of the licensee in comply­ing with the various needs of Silchar town which indicate that the licensee was not able financially or otherwise fully or effi­ciently to discharge the duties and obliga­tions imposed on him by his licence. The learned Advocate General placed before us the cause shown by the petitioner which is Annexure III to the petition and on a perusal of the same it cannot be said that in forming the opinion in the instant case the Government had no materials before them. From the admitted position in the cause shown by the petitioner also the Gov­ernment may form the opinion and there may not be any necessity for giving a personal hearing in this respect. From the admitted position in the cause shown by the petitioner also the Gov­ernment may form the opinion and there may not be any necessity for giving a personal hearing in this respect. In the cir­cumstances, we hold that in passing the order under Section 4 (1) of the Act, the State Government has complied with the requirements of sub-section (3) of Section 4 and in fact there has been no violation of the general principles of natural justice re­quired to be followed in the facts and cir­cumstances of the case. 17. The learned counsel for the peti­tioner also submitted that at one stage the Government required the petitioner to dis­cuss with the Chairman of the Assam State Electricity Board in connection with the taking over of the Silchar Electrical under­taking after issuing the show cause notice. But without waiting to have the full dis­cussion in the matter, the Government pass­ed the order of revocation and as such the order was malafide. We have already refer­red to the complaints made by the Silchar Municipal Board and Silchar Bar Associa­tion regarding the failure on the part of the petitioner to make regular and adequate supply of power in Silchar town. We have also referred to the report submitted by the Senior Electrical Inspector. After having considered all these matters and having given the petitioner-company an opportunity to discuss the matter with the Chairman of the Assam State Electricity Board regard­ing taking over of the Silchar Electrical undertaking, and after giving due consi­deration to the cause shown, the Govern­ment formed its opinion. In the circum­stances, the petitioner's allegation that the order was mat fide has no substance. 18. Lastly, the learned counsel faintly argued that there was no consultation with the Assam State Electricity Board as re­quired under sub-section (1) of Section 4. This ground has not been taken in the peti­tion. Moreover, from the petition itself in paragraph 12 it is found that the petitioner at the request of the State Government had discussion with the Chairman of the Assam State Electricity Board in connection with the taking over of the Silchar Electrical undertaking and the Manager of the plain­tiff-company made his submissions in this regard before them. Moreover, from the petition itself in paragraph 12 it is found that the petitioner at the request of the State Government had discussion with the Chairman of the Assam State Electricity Board in connection with the taking over of the Silchar Electrical undertaking and the Manager of the plain­tiff-company made his submissions in this regard before them. In the order dated 26-3-1968 passed under sub-section (1) of Section 5, it is found that the Assam State Electricity Board has been directed to pur­chase the undertaking at the market value to be determined in accordance with Sec­tion 7A of the Act. As the petitioner did not specifically raise this objection of lack of consultation with the Assam State Elec­tricity Board, it is submitted by the learned Advocate General, that they had no oppor­tunity to place facts in this respect in their affidavit and the Government may be per­mitted to file an affidavit swearing to the fact that there was in fact consultation with the Assam State Electricity Board. As pointed out earlier, the Assam State Elec­tricity Board came into the picture at seve­ral stages, it had been consulted regarding the taking over of the petitioner's electrical undertaking and it has also been directed to purchase the petitioner's undertaking in accordance with law» and from all those facts and circumstances we are of the opi­nion that there has been substantial consul­tation with the Assam State Electricity Board as required under sub-section (1) in the instant case. 19. In the circumstances, we hold that this petition has no substance and it is dis­missed with costs. The rule is discharged and the stay order is vacated. Advocate's Fee: Rs. 250. 20. P. K. GOSWAMI, J.: I agree. Rule discharged.