Abu Road Electricity and Industries Co. Ltd. , Abu Road v. The State of Rajasthan
1977-07-30
M.L.JAIN
body1977
DigiLaw.ai
JUDGMENT 1. - The facts are that the Darbar of Sirohi granted a licence on May 25, 1975, to M/s Chandra Shekhar Yodha & Shivprasad P. Acharya having their registered office at Mehsana to run a power house and supply electric energy in Abu Road town under Sirohi State Electricity Act (the Indian Electricity Act of 1910 duly amended). Clause 38 of the licence also gave monopoly to them for manufacturing office during and throughout the subsistence of the said licence. It was also provided by clause 31 that after 30 years and on expiration of every subsequent period of ten years the Darbar or the Municipality may elect to purchase the undertaking on payment of a fair-market value of all lands, buildings, works, material and plant of the licensee suitable to and used by them for the purpose of the undertaking including to the licensee which shall form part of the undertaking for the purposes of the purchase. 2. It appears that in pursuance of clause 30 of the Licensees floated a limited company for the undertaking and the petitioners, namely, the Abu Road Electricity and Industries Company Ltd. was incorporated on 31-5-45 and the aforesaid licence was acquired by the said company. It is alleged that the State of Sirohi (now the successor State of Rajasthan) held 25% shares of the Company and had two nominated members on its Board of Directors. 3. On 31st Match, 1948, the State of Sirohi granted a `Patta' of a plot of 1 and to M/s. Yodha and Company, Managing Agents of the Abu Road Electricity and Industries Company Limited for power house in pursuance of their application dated, 25-4-1945 for grant of land for construction of the power house and the ice-factory. After the word `ice factory'; the patta contains one or two letters which it is not possible to decipher properly. The petitioners contend that this letter signifies "etc." and the patta was granted for power house, ice-factory etc. The State charged a price for the land and the land was declared to be the property of the grantees and their successors. They were also allowed to alienate the same except to certain specified categories. The plot was 10 Bigha and 16 Biiwas in size. 4.
The State charged a price for the land and the land was declared to be the property of the grantees and their successors. They were also allowed to alienate the same except to certain specified categories. The plot was 10 Bigha and 16 Biiwas in size. 4. The objects of the Company broadly speaking, were to carry on mainly the general business of supply of electrical power and several other businesses including manufacture of electrical goods, ice-making, ginning, spinning, theatre, restaurant, mining etc. The Company being conscious of 'the fact that the business of supply of energy was being placed in the public sector and that its licence would not be renewed, began to take steps to diversify its activities. The Company amended its objects by a special resolution 29th January, 1972 which were approved by the Company judge, on 29th August, 1972. These included the business of metallurgy, sanitary goods, coal mining, iron foundries, mechanical implements, tools and quarries etc. On 13 June, 1972 the Board of Directors presided over by one Shri M.N. Mathur, a nominee of the Government adopted a plan to separate the ice unit and to advocate land well, and some quarters for the said ice unit. They also resolved that a sub plot be formed out of the existing properties to be called, the Abu Road Industries Ice Unit Properties. On 29th September, 1972 the Managing Director placed before the Board of Directors a plan separating a plot of size 110' x 150' comprising the power house building with office, stores, buildings, water pond, pump room of crude oil, Chowkidar's room and its compound. The Board of Directors approved the plan as per Ex 2 B. 5. On 30th September, 1973, the Board of Directors in pursuance of the diversified object resolved to enter the business of stone, marble and granite etc. under the name of the "Abu Road Industries Marble Unit". Accordingly, constructions of building 30' x 100' for Marble and Mint Unit and 100' x 50' for mechanical and tin factory were commenced. The buildings had been constructed upto the plinth level when the Rajasthan State Electricity Board took possession of the same. 6. A special resolution was sought to be placed at the Ordinary General Meeting of the Company to be held on 13th Jan.
The buildings had been constructed upto the plinth level when the Rajasthan State Electricity Board took possession of the same. 6. A special resolution was sought to be placed at the Ordinary General Meeting of the Company to be held on 13th Jan. 1974, for the purposes of starting manufacture of electrical goods under the name of "the Abu Road Industries Electrical Unit " On 30th, June, 1974, the Company adopted a resolution resolving to establish "the Abu Road Industries Re-rolling Mill Unit", and "the Abu Road Industries Marble Polishing Unit". 7. The Rajasthan State Electricity Board (hereinafter called the `Board') issued a notice exercising its option to purchase the undertaking under section 6 (1) of the Indian Electricity Act, 1910, with effect from May 19, 1975. On March 8, 1975, some officers of the Board prepared an inventory of the assets of the undertaking. 8. At this stage, an Ordinance, namely, the Rajasthan Industries Private Electric Supply Undertaking (Acquisition) Ordinance, 1975 was promulgated on 21st April, 1975 providing for the acquisition of the 'Udaipur, Mount Abu and Abu Road electricity supply undertakings. The Government in pursuance of this Ordinance, notified April 21, 1975, as the date on which the said undertakings shall vest in the Government. By an order of the same date, the Government transferred the undertaking so vested to the Board. The Ordinance has since then been replaced by the Rajasthan. Private Electric Supply Undertakings (Acquisition) Act, 1975. 9. In pursuance of the aforesaid notifications, an officer of the Board arrived in the premises of the Company and took possession of the power house plot, the Generating Plant and the Account Books, Receipts, Ledgers, Stationery etc. He did not take possession of the rest of the properties. He gave a notice to the petitioners to hand over the office building, rest house, Engineer/Manager's residence, staff quarters etc. On 28-4-1975, the Chairman of the Board came down to Abu Road and at his instance, forcible possession was taken of all that stood on the four plots A, B, C & D separated as aforesaid except the house in which the Managing Director was living. 10. The Board also took possession of the distribution lines.
On 28-4-1975, the Chairman of the Board came down to Abu Road and at his instance, forcible possession was taken of all that stood on the four plots A, B, C & D separated as aforesaid except the house in which the Managing Director was living. 10. The Board also took possession of the distribution lines. But the petitioners allege that as it has done in case of other undertakings, the Board is not going to use the distribution lines and generation sets and was likely to sell them in the market at higher prices. Since the Board has commenced supply of electricity by Grid system, the machines are being utilised only as a stop gap arrangement. 11. The petitioners, have, by this petition, challenged the action of the State Government and the Board and have prayed that the notification dated 21st April, 1975 may be declared ultra vires the Ordinance and the respondent is be directed to hand over the petitioners all assets, taken over except the Power House. Plot and whatever may be, held by this Court to be the part of electric undertaking and, to return to the company all the accounts book, ledgers, bills, receipts, stationery, minute books of the share holders and the Board of Directors etc. taken over by them. The respondents may further be directed to hand over to the petitioners the land other than the one covered by the Power House Plot, and filled and empty barrels, damaged engines, alternators, scrap and buildings etc. which are not part of the electric undertaking. They may also be directed not to interfere with an amount of ` Rs. 50,000/- lying in the Banks. Section 11 (3) of the Act relating to employees be declared illegal. 12. At the time of the hearing, the learned counsel for the petitioners gave up the prayer for relief for declaring the notification dated April 21, 1975 and Section 11 (3) of the Act as ultra vires and illegal. They have also not urged anything regarding the retrenchment of their workmen alleged to have been carried on by the Board. Thus, the petitioners are only seeking a writ in the nature of mandamus asking the respondents to return to them the properties which they claim do not form part of the undertaking. 13.
They have also not urged anything regarding the retrenchment of their workmen alleged to have been carried on by the Board. Thus, the petitioners are only seeking a writ in the nature of mandamus asking the respondents to return to them the properties which they claim do not form part of the undertaking. 13. In their reply, the Board has, stated that the company adopted the aforesaid resolutions in order to usurp and grab as much land as possible not of the plot of land meant for the purposes of the construction of the Power House. "The entire plot' of land is apart of the undertaking and cannot be separated in the manner as the petitioners want to do. No plot in fact was separated, nor was any fencing placed in 1972 as alleged. Some barbed 'wires which were laid by the petitioners were removed by them after some time. No construction of any building for any of the purposes such as quarry, marble or mine was ever made, and no building was 'in existent, no machinery was acquired by the petitioners, and no construction was made nor any' manufacturing process commenced in pursuance of the aforesaid resolutions. The officer of the' Board took possession of the Power House, Books of Accounts etc. and the entire piece of land which was lying vacant. The petitioners did not vacate the staff quarters and the residence of the manager and office building. The Company has been directed to dismentle the Ice Factory and the Cold Storage and hand over the entire land to the respondent. Rs. 50,000/ were assets of the undertaking and the petitioner had no claim over that amount. The generating sets are needed as a stand by. As regards the distribution lines, the Board alleged that they were required for the purposes of electricity' supply are bring fully usilised and the supply has been made through these very transmission lines. There was no question of selling the copper wires or of replacing them by aluminium, wires as alleged. It is wrong to state that any other business of the Company has been taken over, as the Company was not carrying on any other business. The Ice-Factory was closed since 1-6-74 long , before the respondent took over the undertaking. The entire land is a part of undertaking and vested in the Board.
It is wrong to state that any other business of the Company has been taken over, as the Company was not carrying on any other business. The Ice-Factory was closed since 1-6-74 long , before the respondent took over the undertaking. The entire land is a part of undertaking and vested in the Board. The Government has taken over all the assets of the undertaking, namely; distribution lines, machineries, apparatus, land, building, stores, spare parts, oil & all other things. As regards the books, the Board stated that they will be necessary for determination of the compensation and other incidental matters but the petitioners are at liberty to inspect them the office, residential quarters, staff quarters and the Rest House are "necessary" for carrying on the distribution of electricity and are part of the undertaking. The Board prayed for the dismissal of the petition. 14. The State Govt has filed no reply. The petitioners, however, have filed a rejoinder. I have heard arguments. 15. The learned counsel for the petitioners mainly contends that the State Govt. or for that matter, the Board can only take possession of the undertaking which is required for electric supply, under the Rajasthan Private Electric Supply Undertakings (Acquisition) Ordinance, 1975, now the same title, hereinafter referred to the 'Acquisition Act'. It is further contended that the buildings and lands which are not required for electricity supply cannot be acquired under this Act. There is no justification for freezing Rs. 50,000/- and of seizing other goods which did not form part of the undertaking. 16. The learned counsel for the State and the Board submitted that though a civil Suit is barred finder section 17 of the said Act, yet an alternate remedy is available by way of arbitration under section 20 the Acquisition Act which is in following terms. 20. Arbitration : (1) Where any dispute arises in respect of the matters specified below, it shall be determined by an arbitrator appointed by the Government, who shall be a sitting or retired District or High Court Judge. (a) Whether any property belonging , or any right, liability of obligation attaching to the undertaking vests in the Government; (b) Whether any fixed asset form part of the undertaking; (c) Whether any contract including any contract referred to in clause (ii) or (iii) of sub-section (1) of section 7 has been entered into bona fide or not.
(a) Whether any property belonging , or any right, liability of obligation attaching to the undertaking vests in the Government; (b) Whether any fixed asset form part of the undertaking; (c) Whether any contract including any contract referred to in clause (ii) or (iii) of sub-section (1) of section 7 has been entered into bona fide or not. (2) Subject to the provision of this section, the provision, of Arbitration Act, 1940 (Central Act X of 1940), shall apply to all arbitrations under this Act. 17. It is urged on the basis of this provision that since an alternate remedy is provided under the law, the petition must abate under section 58 of the Constitution (42nd Amendment), Act. 18. The learned counsel for the petitioners submits in, reply that section 20 of the Act is applied only when there is a bona fide dispute and it does not apply when the dispute is only illusory and not a real dispute. For this sub- mission, he relies upon State of Rajasthan v. Col. H.M. Sawai Tej Singhji Maharaj of Alwar, 1968 RLW 527 & contends that the State Govt and the Board are raising an unreal dispute in the matter of what so obviously is or is not covered by an undertaking. I do not think that this contention is correct as it is the petitioners who are raising a dispute as to what comprises in an undertaking. Moreover, the dispute is a serious one and cannot be characterised as no dispute at all, or, no dispute bona fide, and is a dispute which falls within the mischief of Section 20 of the Acquisition Act. 19. The learned counsel, for the petitioners further contends that this objection cannot be raised at this stage. He referred me to L. Hirday Narain v. Income Tax Officer Bareilly, AIR 1971 SC 33 , wherein an alternate remedy by way of revision was available but the petitioner without availing of that remedy moved a petition in the High Court and High Court entertained the petition. It was pointed that if the High Court had not entertained the petition, the petitioner could have moved the Commissioner in the revision, because at the date on which the petition was entertained, the period prescribed under the Act had not expired.
It was pointed that if the High Court had not entertained the petition, the petitioner could have moved the Commissioner in the revision, because at the date on which the petition was entertained, the period prescribed under the Act had not expired. The High Court was further held not to be justified in dismissing as maintainable the petition which was entertained and was Board on the merits. It was pointed out that this case was also heard by this Court three times on merits and the objection of the respondents cannot be upheld. Upon a closer scrutiny of the aforesaid ruling, it appears to me that the objection was disallowed because the time for revision had expired. No such time limit is prescribed in case of arbitration under section 20 of the Acquisition, Act. But, under the amended Art, 226 and section 58 of the Constitution (42rd Amendment) Act, the time which is lost in the writ proceedings will be excluded from computation of the period if any prescribed for the alternative remedy. Moreover, in the face of Section 58 aforesaid, this case appears to have ceased to have any relevance. 20. No question of breach of any fundamental right including Art 31 was raised at any stage in this writ petition. This is a case for redress of an injury of substantial nature by reason of the contravention of the notifications issued by the State Govt. under section 4 and 5 of the Ordinance No. 7 of 1975 and is thus squarely covered by the amended Art. 226 (1) (b) and (3) of the Constitution Now a writ in the nature of Mandamus such as the one prayed for in this petition lies to secure the performance of a public duty, in the performance of which the petitioner has a sufficient legal interest. It is not granted as of right nor it is issued as a matter of course. It is pre-eminently a discretionary remedy and the court declines to award it if another legal remedy equally beneficial, convenient and effective is there available. This self imposed limitation has been forged into a constitutional fetter and this court has no jurisdiction if alternative remedy for such redress is provided for or under any law other than Art. 226. 21.
It is pre-eminently a discretionary remedy and the court declines to award it if another legal remedy equally beneficial, convenient and effective is there available. This self imposed limitation has been forged into a constitutional fetter and this court has no jurisdiction if alternative remedy for such redress is provided for or under any law other than Art. 226. 21. I have already rejected the arguments of the learned counsel for the petitioners in this respect and Section 20 of the Acquisition Act provides not only any other remedy but as it seems to me an equally adequate and efficacious alternative for a relief similar to the one sought in this case. The objection of the respondents therefore must prevail. 22. The learned counsel for the Board submitted that the petition must fail for one more reason because the question whether any portion of the land has been demarcated and was being used for purposes other than these of the undertaking such as a quarry or Tin Factory, etc. is a question of fact and those facts are disputed, this court is precluded in the writ jurisdiction from entering into determination of the disputes of facts which can conveniently be gone into by an arbitration. I agree with this contention too. 23. However, since arguments at length have been addressed on merits also, I would like to discuss them as well. There is no dispute that the Abu Road Electricity Industrial Company was primarily licened for supply of electricity. It is only when the Company became apprehensive that upon nationalisation of the business of electrical supply, the undertaking is likely to be taken over by the State Govt., the company woke up in 1972 to widen its articles of association and to delimit a portion of the premises for the power house so that in the event of acquisition they may be able to save as much of the land and other properties as they by this device could. As a matter of fact, they have not been able to put up any of the proposed factories and even if they had put some wire fencing for reserving land for the proposed Tin Factory and the Marble Factory, the undertaking is for that account only not going to undergo any change in its character.
As a matter of fact, they have not been able to put up any of the proposed factories and even if they had put some wire fencing for reserving land for the proposed Tin Factory and the Marble Factory, the undertaking is for that account only not going to undergo any change in its character. It is true that the Acquisition Act only relates to the acquisition of the electricity supply undertaking, it is a moot point as to what an undertaking will include in it. The learned counsel for the petitioner referred to the "Words and Phrases Legally Defined" published by Butterworths, and urged that land is not embraced in an undertaking as was held in respect of section 75 of a railway company's Act. But it does riot seem to be correct to apply the same meaning in the case before us. According to what is stated in the aforementioned book, an undertaking is a word of variable meaning. Basically the idea which it conveys is that of a business or enterprise. The word undertaking like the word `business' will commonly embrace, when used depositively, the property or some property which is used in connection with the undertakings, and it may be too, the debts and liabilities, or some debts and liabilities, which have arisen in relation there to. With reference to the word 'undertaking' occurring in the definition of the `Industry' in the Industrial Disputes Act, 1947, the Supreme Court in The State of Bombay and others v. The Hospital Mazdoor Sabha and others, AIR 1960 SC 610 , consulted the `Webster's dictionary which said, undertaking means any thing undertaken any business works or project which one engages in or attempts, an enterprise." In Ma Kyin Hone v. Ong Book Hock, AIR 1937 Rang 47 , it was held that undertaking though not defined in Indian Electricity Act, 1910, would include all lands, buildings, machinery, lines of supply goodwill, etc. in fact everything which appertains to the supply of electricity under the licence. With that broad understanding of the word "undertaking" let us now see what it means in the context of the case under our consideration.
in fact everything which appertains to the supply of electricity under the licence. With that broad understanding of the word "undertaking" let us now see what it means in the context of the case under our consideration. I have already mentioned above that according to clause 31 of the licence, the undertaking will include lands, buildings, works, material and plant of the licensees suitable to, and used by them for the purposes of the undertaking including the gent rating station belonging to the licensees. Same ate the words used in Section 7 A of the Indian Electricity Act, 1910, which provides for determination of price of an undertaking if purchased under section 6 thereof. Moreover, according to section 4 of the Acquisition Act, all the undertaking vests in the Govt on the 23rd day of April, 1975, and the Government by force of such vesting is deemed to have entered into possession of all the properties movable and immovable fixed assets, rights, powers, authorities and privileges of the undertaking as from the date of such vesting Section 5 provides for transfer of all what has vested in the Government as aforesaid to the Board. Upon such transfer, any officer of the Board can take physical possession of all the property movable and immovable including fixed assets of the undertaking. Section 7 (1) shows that all the fixed assets of the licensee and documents relating to the undertaking and all rights and liabilities under bona fide contracts vest in the Board. 24. Section 6 provides for compensation for the following : (i) All completed works in beneficial use pertaining to the undertaking, (ii) All works in progress excluding works paid for by consumers or prospective consumers. (iii) All stores including spare parts and used stores and spare parts. (iv) All other fixed assets in use. (v) All plants and equipments existing on the vesting date but no longer in use owing to wear and tear or to obsolescence. (vi) Amount due from consumers in respect of every hire-purchase agreement. (vii) Any amount paid actually by the licensees in respect of every contract referred to in clause (iii) of sub-section (1) of section 7. 25.
(v) All plants and equipments existing on the vesting date but no longer in use owing to wear and tear or to obsolescence. (vi) Amount due from consumers in respect of every hire-purchase agreement. (vii) Any amount paid actually by the licensees in respect of every contract referred to in clause (iii) of sub-section (1) of section 7. 25. A look back to the definition of "works" reveals that the Works include electric supply lines and any lands, buildings, machinery or appartus required to supply energy and to carry into effect the object of a licence granted under the Electricity Act. These provisions spell out what the undertaking shall comprise and the petitioners cannot be permitted to urge that the houses meant for the residence of the Managing Director & Engineer, the rest house, office and staff quarters and the vacant lands are not required to supply energy and to cam into effect the objects of the licence. They are all comprised in the works of the undertaking. The documents and books of accounts are expressly covered by section 7 (1), (a) and carious clauses of section 12 of the Acquisition Act. 26. As regards the supply lines, it is no concern of the petitioners as to what the Board will be doing with that has vested in them under the Acquisition Act. It is not open to them to contend that instead of using the supply lines, the Board will sell them at a profit. For that reasons, it is not possible to hold that the supply lines cannot be takes over by the Board. 27. As regards used diesel oils, empty barrels, damaged engines and scraps, the learned counsel contended that they are not parts of the undertaking and are "goods". He relies upon Murli Prasad v. Parsnath Prasad and others, AIR 1967 Pat 191 according to which the word undertaking used in section 9 of the Electricity, Act, 1910, does not include goods. The Patna High Court held that every thing appertaining to a running concern dealing with the distribution and supply of electrical energy taken together constitutes the undertaking. But at the same time, it is also clear that if the concern is not a running one, then the plant, materials, buildings and other materials constituting the undertaking become ordinary goods.
The Patna High Court held that every thing appertaining to a running concern dealing with the distribution and supply of electrical energy taken together constitutes the undertaking. But at the same time, it is also clear that if the concern is not a running one, then the plant, materials, buildings and other materials constituting the undertaking become ordinary goods. This ruling has no application to the instant case because the concern was a running concern and the materials aforesaid do not cease to be part of the once undertaking and become ordinary goods. The formed part of the undertaking specially as pointed out by me above with reference to the provisions of the Acquisition Act, and those contained in the licence. 28. It appears that the amount of Rs. 50,000/- cannot be detained by the Board and shall have to by returned sooner or later to the petitioners. The learned counsel for the Board stated that the Board shall be directing the Bank to defreeze the said amount and may even have done so. 29. Though earlier I have already said that all the lands are included in the undertaking, yet a few more remarks can bear repetition. I have no doubt in my mind that before the company began its attempts not in any case earlier than Jan. 1972 to take upon itself other enterprises the entire plot of land hound on all sides by roads, was except the area covered by the ice-factory required for the actual uses and likely expansion of the Power house and its ancillary establishments, and it was all a part and property of the electrical undertaking as is indicated by the document of title and by the fact that it was not used for an other purpose. Simply because the company chose to earmark, upon what criteria we do not know, only 100' x 250' of it for the power house, and to reserve the rest for the other enterprises which the Company proposed to undertake, the area of the electrical undertaking can not be reduced. The Board was therefore entitled to take possession of all the lands and buildings within the premises of the undertaking.
The Board was therefore entitled to take possession of all the lands and buildings within the premises of the undertaking. In its supplementary affidavit, para 5, the Board has stated that it has not taken over the ice factory which is locked with its key in the keeping of the petitioners I therefore find nothing in the case of the petitioners so as to call far any direction by this Court to be given to the respondents. 30. The result of the aforesaid discussion is that the petition fails both on the preliminary points and as well as on its merits. It is hereby dismissed but without any order as to costs.Writ dismissed. *******