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
DigiLaw.ai
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.