{"id":61312,"date":"1962-05-02T00:00:00","date_gmt":"1962-05-01T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/ms-west-ramnad-electric-vs-state-of-madras-on-2-may-1962"},"modified":"2019-01-05T14:47:13","modified_gmt":"2019-01-05T09:17:13","slug":"ms-west-ramnad-electric-vs-state-of-madras-on-2-may-1962","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/ms-west-ramnad-electric-vs-state-of-madras-on-2-may-1962","title":{"rendered":"M\/S. West Ramnad Electric … vs State Of Madras on 2 May, 1962"},"content":{"rendered":"
Supreme Court of India<\/div>\n
M\/S. West Ramnad Electric … vs State Of Madras on 2 May, 1962<\/div>\n
Equivalent citations: 1962 AIR 1753, \t\t 1963 SCR (2) 747<\/div>\n
Author: P Gajendragadkar<\/div>\n
Bench: Gajendragadkar, P.B., Subbarao, K., Wanchoo, K.N., Shah, J.C., Ayyangar, N. Rajagopala<\/div>\n
           PETITIONER:\nM\/S.  WEST RAMNAD ELECTRIC DISTRIBUTION CO.  LTD.\n\n\tVs.\n\nRESPONDENT:\nSTATE OF MADRAS\n\nDATE OF JUDGMENT:\n02\/05\/1962\n\nBENCH:\nGAJENDRAGADKAR, P.B.\nBENCH:\nGAJENDRAGADKAR, P.B.\nSUBBARAO, K.\nWANCHOO, K.N.\nSHAH, J.C.\nAYYANGAR, N. RAJAGOPALA\n\nCITATION:\n 1962 AIR 1753\t\t  1963 SCR  (2) 747\n CITATOR INFO :\n R\t    1964 SC 925\t (44)\n E\t    1968 SC 377\t (21)\n RF\t    1968 SC 394\t (17)\n RF\t    1968 SC1138\t (23)\n R\t    1970 SC 564\t (143,144)\n E\t    1972 SC2205\t (14,15,16,18)\n RF\t    1975 SC1389\t (24,28)\n RF\t    1991 SC1676\t (66)\n\n\nACT:\nElectricity  Undertaking Acquisition-Act Validating  action\ntaken under earlier Act declared ultra\tvires-Validity-Basis\nof computation of compensation, if valid-Madras\t Electricity\nSupply Undertakings (Acquisition) Act, (Mad, 43 of 1949), s.\n4-Madras Electricity Supply Undertakings (Acquisition) .Act,\n1954  (Mad. 29 of 1954), ss. 5, 24-Constitution India  Arts.\n20(1), 31 (1) (2).\n\n\n\nHEADNOTE:\nBy  an order dated May 17, 1951, the  appellant\t undertaking\nvested in the respondent from September 21, 1951, under\t the\nprovisions  of\ts.  4(1) of  the  Madras  Electricity  apply\nUndertakings Act 1949.\tThereafter the respondent  appointed\nthe Chief Electrical Adviser as the Acquisition Officer\t who\ntook  over possession on the appointed-date, and a  part  of\nthe compensation payable under the Act was paid.\nThe  validity of the said Act was challenged by\t some  other\nelectrical  undertakings  in  Madras and  in  Raja  Chaudhry\nElectric Supply Corporation Ltd. v. State of Andhra Pradesh,\nthe  Supreme  Court  held that the Act of 1  949  was  ultra\nvire8.\t After the said decision was pronounced, the  Aadras\nLegislature passed the impugned Act, the Madras Act ' 29  of\n1954.\tThe Act incorporated the main provisions of  earlier\nAct  of 1949 and purported the validate action\ttaken  under\nthe said earlier Act.  A new Government order was issued and\nthe  Chief Electrical Adviser was appointed the\t Acquisition\nOfficer\t of  the appellant concerned.  As a result  of\tthis\norder,\tthe appellant undertaking which had been taken\tover\nby  the respondent earlier in 1951, continued to be  in\t the\npossession of the Respondent.  The appellant filed two\twrit\npetitions  and alleged that to the extent to which  the\t Act\npurported  to  validate acts done under the earlier  Act  of\n1949 it was ultra vires, ineffectual and inoperative, It was\nfurther urged that the three basis of compensation laid down\nby the Act were inconsistent with the requirements of'\n748\nArt. 31 of the Constitution, and so; the operative provisons\nof the Act were unconstitutional.\nThe question was also raised whether or not it was competent\nto  the\t Legislature  to pass  a  law  restrospectively\t to,\nvalidate action taken under a void Act.\nHeld,  that  it\t was within the\t competence  of\t the  Madras\nLegislature  to\t enact a law and make  it  retrospective  in\noperation.\nThe  Madras Act, 29 of' 1954, in terms is intended to  apply\nto undertakings of which possession had already been  taken,\nand that obviously means that its material and opera-\ntive provisions are retrospective.\nThe  effect  of\t s. 24 is that if a  notification  had\tbeen\nissued properly under the provisions of the earlier Act\t and\nvalidity   could  not  have  been  impeached  if  the\tsaid\nprovisions were themselves valid, it would be deemed to have\nbeen  validly  issued  under  the  provisions  of  the\tAct,\nprovided,  of course it is not inconsistent with  the  other\nprovisions  of\tthe  Act.  It is  a  saving  and  validating\nprovision  and it clearly intends to validate  action  taken\nunder  the relevant provisions of the earlier Act which\t was\ninvalid from the start.\nHeld, further, that Art. 31(1), of the Constitution,  unlike\nArt;,  20(1), does not use the expression \"law in  force  at\nthe  time it merely says \"by authority of law\" and so, if  a\nsubsequent law passed by the Legislature is retrospective in\nits  operation,\t it would satisfy the  requirement  of\tArt.\n31(1)  and would validate the impugned notification  in\t the\npresent\t  case.\t   The\t Legislature   can   pass   a\t law\nretrospectively\t validating action taken under a  law  which\nwas  void because it contravened fundamental rights, If\t the\nLegislature  can  by  retrospective  legislation  cure\t the\ninvalidity  of action taken in pursuance of laws which\twere\nvoid  for  want of legislative competance and  can  validate\nsuch action by appropriate provisions, the same power can be\nequally\t  effectively  exercised  by  the  Legislature\t for\nvalidating  actions taken under laws which are void for\t the\nreason that they contravened fundamental rights.\nHeld, also, that the failure of the Legislature to refer  to\nthe  fair market value cannot, be regarded as conclusive  or\neven presumptive evidence of the fact that what is  intended\nto  be paid under s. 5 does not amount to a just  equivalent\nof  the undertaking taken over.\t After all,  in\t considering\nthe\n749\nquestion as to whether compensation payable under one or the\nother  of the bases amounts to a just equivalent, the  court\nmust  try to assess what would be payable on the said  basis\nof market value.\nIt  may\t be  that  in some basis B  may\t work  hardship\t and\nconceivably  evert basis A or basis C may not be  as  satis-\nfactory\t as it should be ; but when a party  challenges\t the\nvalidity  of  a\t statutory  provisions\tlike  s.  5,  it  is\nnecessary  that\t the  party  must  adduce  satisfactory\t and\nsufficient  material before the Court on which it wants\t the\ncourt  to  hold that the compensation- which would  be\tpaid\nunder  everyone\t of  the  three\t bases\tunder  the  impugned\nstatutory  provisions does not amount to a just\t equivalent.\nLooking\t merely at the scheme of the section itself,  it  is\nimpossible to arrive at such a conclusion.\nNarasaraopeta Electric Corporation Ltd. v. State Of Madras,\n(1951)\t 11  M.\t L.  J,\t 277,  Rajamundru  Electric   Supply\nCorporation  Ltd. v. State of Andhra, [1954] S. C.  R.\t779,\nand Deep Chand v. State of U. P.,<\/a> (1959) Supp. 2 S. C. R. 8,\nreferred to.\n\n\n\nJUDGMENT:\n<\/pre>\n
CIVIL  APPELLATE JURISDICTION: Civil Appeals Nos. 5 1 2\t and
\n513 of 1960.\n<\/p>\n
Appeal from the judgment and order dated March 27, 1956,  of
\nthe Madras High Court, in Writ Petition Nos. 326 of 1955 and
\n107 of 1956.\n<\/p>\n
M.   K. Nambiyar and P. Ram Reddy for the appellant.
\nB.   Ganapathy Iyer and P. D. Menon, for the respondents.
\nR.   Gopatakrishnan, for the Intervener No. 1.
\nK.   Bhimsankaran, B. R. G. K. Achar and
\nP.   D. Menon, for the intervener No.
\n1962.  May 2. The Judgment of the Court was delivered by
\nGAJENDRAGADKAR,\t J.-The principal question which  arises  in
\nthese two appeals is related to the validity of s.24 of\t the
\nMadras Electricity
\n750<\/span>
\nSupply\tUndertakings (Acquisition) Act, 1954 (XXIX of  1954)
\n(hereinafter called the Act).  That question arises in\tthis
\nway.   The appellant, the West Ramnad Electric\tDistribution
\nCo. Ltd., Rajapalayam, was incorporated in 1935 to carry on,
\nwithin the State of Madras and elsewhere, the business of an
\nelectric light and power company, to construct, lay down and
\nestablish  and\tcarry  on all  necessary  installations,  to
\ngenerate,  accumulate,\tdistribute  and\t supply\t electricity
\nunder a licence granted under the Indian Electricity Act  of
\n1910.\tOn  the 24th January, 1950, the\t Madras\t Legislature
\npassed\tan  Act\t (XLIII) of 1949)  for\tthe  acquisition  of
\nundertaking supplying electricity in the Province of Madras.
\nUnder the said Act, the Government was empowered to  acquire
\nany  electrical\t undertaking  on  payment  of\tcompensation
\naccording  to the relevant provisions of the s aid Act.\t  In
\npursuance  of the provisions of s.4(1) of the said Act,\t the
\nrespondent,  State  of\tMadras, passed\ton  Order  C.O.\t Ms.
\nNo.2059 on the 17th May, 1951, declaring that the  appellant
\nundertaking  shall  vest  in the respondent  from  the\t21st
\nSeptember,  1951.  Thereafter, the respondent appointed\t the
\nChief  Electrical Inspector as the Acquisition Officer,\t and
\non the appointed day, the said Officer took over  possession
\nof  the appellant and all its assets, records  and  account-
\nbooks.\t The appellant then appointed the liquidator as\t its
\nAccredited  Representative  for the purposes of the  Act  in
\norder  to claim compensation under the Act.  The  respondent
\nthen  paid  over to the appellant Rs. 6 lakhs  on  the\t24th
\nOctober, 1952 and Rs. 2,34,387-1-0 on the 5th July, 1953, as
\ncompensation.  According to the appellant-, Rs.\t 98,876-15-0
\nstill remained to be paid to it by way of compensation under
\nthe  Act,  whereas the respondent suggested  that  only\t Rs.
\n6000\/was the balance due to the appellant.  That is how\t the
\nappellant undertaking went into possession of
\n 751<\/span>
\nthe   respondent   and\tthe  appellant\twas   paid   partial
\ncompensation.\n<\/p>\n
It   appears   that  owners  of\t some  of   the\t  electrical
\nundertakings  in  Madras which had been taken  over  by\t the
\nrespondent  in accordant e with the provisions of s.4(1)  of
\nthe  1940  Act, filed writ petitions in the  High  Court  of
\nMadras\timpugning the validity of the said Act.\t These\twrit
\npetitions   however,   failed  and  by\t its   judgment\t  in
\nNarasaraopeta\tElectric  Corporation  Ltd.  v.\t  State\t  of
\nMadras(1)  the Madras High Court upheld the validity of\t the
\nimpugned Act in so far as it related to the licensees  other
\nthan  municipalities.\tThe said licenses  then\t moved\tthis
\nCourt  and their appeal succeeded.  By its decision  in\t the
\nRajamundry Electric Supply Corporation Ltd. v. The State  of
\nAndhra\t(2), this Court held that the impugned Act  of\t1949
\nwas ultra vires.  This decision was based on the ground that
\nthe Act was beyond the legislative competence of the  Madras
\nLegislature  inasmuch  as there was no entry in any  of\t the
\nthree  Lists  of the Seventh schedule of the  Government  of
\nIndia  Act, 1935 relating to compulsory acquisition  of\t any
\ncommercial  or industrial undertaking.\tThis Court  ohservel
\nthat   although\t s.299(2)  of  the  said  Constitution\t Act
\ncontemplated  a law authorising compulsory  acquisition\t for
\npublic purposes of a commercial or industrial undertaking, a
\ncorresponding  entry  had not been included in\tany  of\t the
\nthree  Lists  and  so.,\t the  Madras  Legislature  was\t not
\nCompetent to pass the impugned Act.  This decision was\tpro-
\nnounced on the 10th February, 1954.\n<\/p>\n
Meanwhile,  the\t Constitution came into force  on  the\t26th
\nJanuary,   1950,  and  the  position  of   the\t legislative
\ncompetence  of\tthe  Madras Legislature in  respect  of\t the
\ncompulsory   acquisition   of\tcommercial   or\t  industrial undertakings
\n for  public  purposes\thas  been   materially
\naltered.  Entry 36 in List 11 of
\n(1) (1931) 11 M.L.J. 277.\n<\/p>\n
(2) (1954) S.C.R. 779.\n<\/p>\n
752<\/span><\/p>\n
the   Seventh  Schedule\t to  the  Constitution\t refers\t  to
\nacquisition  or requisitioning of property, except  for\t the
\npurposes of the Union, subject to the provisions of entry 42
\nof  List  111, whereas entry 42 of List III deals  with\t the
\nprinciples  on which compensation for property\tacquired  or
\nrequisitioned for the purposes of the Union or of a State or
\nfor  any other public purpose is to be determined,  and\t the
\nform  and  the manner in which such compensation is  to\t ‘De
\ngiven.\t That  is how the two entries read at  the  relevant
\ntime.\n<\/p>\n
After the decision of this Court was pronounced in the\tcase
\nof  Rajamundry Electric Supply Corpn.  Ltd. (1), the  Madras
\nLegislature passed the Act and it received the assent of the
\nPresident on the 9th October, 1954, and was published in the
\nGovernment  Gazette  on\t the 13th October,  1954.   The\t Act
\nincorporated the main provisions of the earlier Act of\t1949
\nand  purported\tto  validate action  taken  under  the\tsaid
\nearlier\t Act.\tAfter  the Act was  passed,  the  respondent
\nissued a new Government Order No. 4388 on the 14th December,
\n1954,  appointed  the Chief Electrical Inspector to  be\t the
\nAcquisition Officer of the appellant concern for purposes of
\nthe  Act.   As\ta  result  of  this  order,  the   appellant
\nundertaking  which had been taken over by the respondent  on
\nthe 21st September, 1951, continued, to be in the possession
\nof the respondent.  It is under-these circumstances that the
\nappellant  filed  its writ petition No. 326 of 1955  on\t the
\n26th April, 1955.\n<\/p>\n
In  its\t writ petition, the appellant alleged  that  to\t the
\nextent to which the Act purports to validate acts done under
\nthe earlier Act of 1949, it is ultra vires, ineffectual\t and
\ninoperative.   It was further urged that the three bases  of
\ncompensation as laip
\n(1)  (1934) S.C.R, 779.,
\n753<\/span>
\ndown  by the Act are inconsistent with the  requirements  of
\nArt. 31 of the Constitution and so, the operative provisions
\nof  the\t Act are unconstitutional.  On\tthese  grounds,\t the
\nappellant  prayed  for\ta writ of Certiorari  or  any  other
\nappropriate  writ,  or order or direction  calling  for\t the
\nrecords relating to G.O. Ms. No. 2052 issued on the 17th May
\n1951 and quashing the same.  Later, the appellant filed\t an-
\nother  writ  petition No. 107 of 1956 on the  31st  January,
\n1956,  and it added a prayer that a writ of Mandamus or\t any
\nother  writ,  or  order,  or  direction\t should\t be   issued
\ndirecting  the\trespondent  to\trestore\t possession  of\t the
\nappellant  undertaking with all its assets along with  masne
\nprofits from 21st September, 1951 or pay the market value of
\nthe said undertaking as on 21st September 1951 and  interest
\nthereon\t @ 6 per cent. per annum, and to direct\t payment  of
\ncosts  and pass such other orders as may be appropriate\t and
\njust in the circumstances of the case.\n<\/p>\n
The  claim  thus  made by the appellant was  denied  by\t the
\nrespondent.  The respondent’s case was that the Act is valid
\nand  s.24  which operates retrospectively  has\tvalidly\t and
\neffectively  validated actions taken under the earlier\tAct,
\nwith  the  result  that\t the  possession  of  the  appellant
\nundertaking  which  was taken on the 21st  September,  1951,
\nmust  be deemed to have been taken under the  provisions  of
\nthe Act and so the claim made by the appellant either for  a
\nwrit  of certiorari or mandamus could not be granted It\t was
\nalso  urged  that it would not be open to the  appellant  to
\nclaim  possession  of the undertaking or to  ask  for  mesne
\nprofits in writ proceedings.\n<\/p>\n
Mr.  Justice Rajagopalan who beard the two  writ  petitions,
\nrejected  the  contentions  raised  by\tthe  appellant\t and
\ndismissed the said petitions. He held that having regard  to
\nthe fact that the
\n754<\/span>
\nappellant  had accepted compensation under the earlier\tAct,
\nno real relief could be granted to it even if its contention
\nthat  s.  34  of the Act was invalid in\t uphold.   In  other
\nwords,\tthe  learned Judge took the view that  even  if\t the
\nchallenge made by the appellant to the validity of s. 24 was
\nfound  to be justified, in the present writ  proceedings  he
\nwould  not  be\tprepared to grant it the  relief  either  of
\npossession or of mesne profits.\t Even so, the learned  Judge
\nproceeded  to  examine\tthe  several  points  urged  by\t the
\nappellant  in  support\tof its contention  that\t s.  24\t was
\ninvalid,  and  rejected them.  In his opinion, the  Act\t was
\nvalid and s. 24 being retrospective in operation,  validated
\nthe  actions taken by the respondent under the earlier\tAct.
\nThe  argument that the Compensation awardable under the\t Act
\nwas inconsistent with Art. 31(1) and 31(2) was not accepted,
\ninter  alia, on the ground that so material had been  placed
\nbefore the Court on which the appellant’s plea could be sus-
\ntained.\t The learned Judge has also recorded his conclusions
\non some other points urged before him, but it is unnecessary
\ny to refer to them.  After this decision was pronounced, the
\nappellant  moved the learned Judge for a  certificate  under
\nArt.  132(1)  of  the  Constitution  and  it  is  with\t the
\ncertificate  thus granted to it under the said Article\tthat
\nthe present appeals have been brought to this Court.
\nThe  first point which Mr. Nambiar has raised before  us  on
\nbehalf\tof  the appellant is that s. 34\t which\tpurports  to
\nvalidate  action  taken under the earlier Act  is,  in\tlaw,
\nineffective to sustain the order issued by the respondent on
\nthe  17th  May,\t 1951.\tIt would be recalled  that  by\tthis
\norder,\tthe respondent obtained possession of the  appellant
\nundertaking for the first time under the relevant provisions
\nof  the\t earlier  Act.\tThe argument is\t that  there  is  no
\nspecific or express provision in the Act which makes the Act
\nretrospective and no, s 24
\n755<\/span>
\neven  if  it  is valid, is ineffective for  the\t purpose  of
\nsustaining  the\t impugned order by which possession  of\t the
\nappellant  concern  was\t obtained by  the  respondent.\t The
\nimpugned order had recited that the appellant concern  shall
\nwest  in the Government on the 21st September, 1951, and  it
\ndirected  that\tunder s. 4(2) of the earlier  Act  the\tsaid
\norder  shall  be published in the Gazette.  Under  the\tsaid
\norder  a  further direction had been issued  appointing\t the
\nChief  Electrical  Inspector  to the respondent\t to  be\t the
\nAcquisition Officer, and the appellant was requested to take
\naction for the appointment of an accredited  respresentative
\nin accordance with s. 8 of the earlier Act and to submit the
\ninventories and all particulars required under ‘S. 17 of the
\nsaid Act.  Mr. Nambiar contends that this order amounts to a
\nnotification which must be held to be a law under Art. 13 of
\nthe  Constitution.  For the purpose of the present  appeals,
\nwe  will assume that the said order is notification  amounts
\nto  a law under Art. 13.  Mr. Nambiar further contends\tthat
\nthis  notification  was\t invalid for  two  reasons;  it\t was
\ninvalid\t because it had been issued under the Provisions  of
\nan  Act\t which\twas void as  being  beyond  the\t legislative
\ncompetence  of the Madras Legislature, and it was  void\t for
\nthe  additional\t reason\t that  before  it  was\tissued,\t the
\nConstitution  of India had come into force and\tit  offended
\nagainst\t the provisions of Art. 31 of the Constitution,\t and
\nso,  Art. 13(2) applied.  Section 24 of the Act,  no  doubt,
\npurported  or attempted to validate this  notification,\t but
\nthe   said  attempt  has  failed  because  the\t Act   being
\nprospective,  s.  24 cannot  have  retrospective  operation.
\nThat,  in substance, is the first contention  raised  before
\nus.\n<\/p>\n
Before dealing with this argument, it would be necessary  to
\nexamine\t the  broad features of the Act and  understand\t its
\ngeneral\t scheme.   The\tAct was passed\tbecause\t the  Madras
\nLegislature thought
\n756<\/span>
\nit expedient to provide for the acquisition of under takings
\nother  than those belonging to and under the control of\t the
\nState  Electricity Board constituted under section 5 of\t the
\nElectricity  (Supply)  Act,  1948 in  the  State  of  Madras
\nengaged\t in  the business of supplying\telectricity  to\t the
\npublic.\t It is with that object that appropriate  provisions
\nhave been made by the Act to provide for the acquisition  of
\nundertakings  and  to  lay down the  principles\t for  paying
\ncompensation for them.\tIt is quite clear that the scheme of
\nthe  Act  was to bring within the purview  of  its  material
\nprovisions under-‘ takings in respect of which no action bad
\nbeen  taken  under the earlier act and those in\t respect  of
\nwhich  action  had  been  so taken.  In\t fact,\tas  we\twill
\npresently  point  out, several provisions made\tby  the\t Act
\nclearly referred to both types of undertakings and leave  Do
\nroom for doubt that both types of undertakings are  intended
\nto  be\tgoverned by it.\t The definition\t of  an\t ‘accredited
\nrepresentative’\t prescribed  by\t s.  2(b)  shows  that\t the
\naccredited representative means the representative appointed
\nor  deemed to have been appointed under s. 7. Similarly,  s.
\n2(j)  which defines a licensee provides that in relation  to
\nan undertaking taken over or an undertaking which has vested
\nin the Government under s. 4, it shall be the person who was
\nthe licensee at the time when the undertaking was taken over
\nor  vested  is\tthe Government as the case may\tbe,  or\t his
\nsuccessor-in-interest.\tSection 2 (e) defines an undertaking
\ntaken  over  as\t meaning an undertaking taken  over  by\t the
\nGovernment  after  the\t1st January,  1951  and\t before\t the
\ncommencement of this Act.  The ,vesting date’ under s. 2 (m)
\nmeans in relation to an undertaking, the date fixed under s.
\n4 (1) as the date on which the undertaking shall vest in the
\nGovernment or in the case of an undertaking taken over,\t the
\ndate on which it was taken over.  These
\n757<\/span>
\ndefinitions thus clearly point out that the Act was intended
\nto apply to undertakings of which possession would be  taken
\nafter  the Act was passed as well as undertakings  of  which
\npossession  had\t already  been\ttaken  under  the   relevant
\nprovisions of the earlier Act.\n<\/p>\n
Section\t 3  which  deals with the application  of  the\tAct,
\nprovides  that\tit  shall  apply  to  all  undertakings\t  of
\nlicensees  including : (a) undertakings in respect of  which
\nnotice for compulsory purchase has been served under s. 7 of
\nthe Electricity Act, such undertakings not having been taken
\nover   before  the  commencement  of  this  Act;   and\t (b)
\nundertakings  taken over.  Similarly, section 4 which  gives
\npowers\tto  the\t respondent to\ttake  over  any\t undertaking
\nclearly”  says that that ‘power can be exercised in  respect
\nof  any ‘undertaking which had already not been taken  over.
\nIn  dealing with the appointment of sole representative,  s.
\n7,  sub-ss.  (3)  and (5) bring\t out  the  same\t distinction
\nbetween undertakings already taken over and those which\t had
\nyet  to\t be  taken over.  The same  distinction\t is  equally
\nclearly\t brought out in s. 10 (3), 11 sub-s,(2), (5) and  (1\n<\/p>\n
1), and s. 14 (3).  It is thus clear that the Act, in terms,
\nis intended to apply to undertakings of which possession had
\nalready\t been  taken,  and that\t obviously  means  that\t its
\nmaterial   and\toperative  provisions\tare   retrospective.
\nActions\t taken under the provisions of the earlier  Act\t are
\ndeemed\tto have been taken under the provisions of  the\t Act
\nand  possession taken under the said earlier  provisions  is
\ndeemed\tto have been taken under the relevant provisions  of
\nthe  Act.   This  retrospective operation  of  the  material
\nprovisions of the Act is thus writ large in all the relevant
\nprovisions  and\t is an essential part of the scheme  of\t the
\nAct.   Therefore, Mr. Nambiar is not right when\t he  assumes
\nthat  the rest of the Act is intended to be prospective\t and
\nso, section 24 should be construed
\n758<\/span>
\nin  the light of the said prospective character of the\tAct.
\nOn  the\t contrary, in construing s. 24, we have to  bear  in
\nmind the fact that the Act is retrospective in operation and
\nis  intended  to  bring within the  scope  of  its  material
\nprovisions undertakings of which possession had already been
\ntaken.\n<\/p>\n
Let  us then construe s.24 and decide whether it  serves  to
\nvalidate the impugned notification issued by the  respondent
\non the 21st September, 1951.\n<\/p>\n
Section 24 reads thus: –\n<\/p>\n
\t      “Orders  made, decisions or directions  given,
\n\t      notifications  issued, proceedings  taken\t and
\n\t      acts of things done, in relation to any under-
\n\t      taking  taken  ever, if they would  have\tbeen
\n\t      validly  made, given, issued, taken  or  done,
\n\t      had the Madras Electricity Supply Undertakings
\n\t      (Acquisition) Act,, 1949 (Madras Act XLIII  of
\n\t      1949),  and the rules made thereunder been  in
\n\t      force  on the date on which the  said  orders,
\n\t      decisions\t  or   directions,    notifications,
\n\t      proceeding,  acts or things were\tmade  given,
\n\t      issued,  taken or done are hereby declared  to
\n\t      have  been validly made, given, issued,  taken
\n\t      or  done,\t as the case may be, except  to\t the
\n\t      extent  to which the said\t orders,  decisions,
\n\t      directions,  notifications, proceedings,\tacts
\n\t      or  things are repugnant to the provisions  of
\n\t      this Acts.”\n<\/p><\/blockquote>\n
The  first  part  of the section deals,\t inter\talia”,\twith
\nnotifications  which  have  been validly  issued  under\t the
\nrelevant provisions of the earlier Act. and it means that if
\nthe  earliar  Act had been valid at the\t relevant  time;  it
\nought  to  appear that the notifications in  question  could
\nhave been and had. in fact been made properly under the said
\nAct.  In other words, before any notification can claim\t the
\nbenefit\t of  s.\t 24, it must be shown  that  it\t was  issued
\nproperly under the relevant provisions of the earlier Act,
\n759<\/span>
\nassuming that the said provisions were themselves valid\t and
\nin  force  at  that time.  The second part  of\tthe  section
\nprovides  that the notifications covered by the\t first\tpart
\nare  declared by this Act to have been validly\tissued;\t the
\nexpression “hereby declared” clearly means “declared by this
\nAct”  and that shows that the notifications covered  by\t the
\nfirst  part  would be treated as issued under  the  relevant
\nprovisions of the Act and would be treated as validly issued
\nunder  the said provisions.  The third part of\tthe  section
\nprovides that the statutory declaration about the validly of
\nthe  issue  of\tthe notification would be  subject  to\tthis
\nexception   that  the  said  notification  should   not\t  be
\ninconsistent with or repugnant to the provisions of the Act.
\nIn  other  words, the effect of this section is\t that  if  a
\nnotification had, been issued properly under the  provisions
\nof  the\t earlier Act and its validity could  not  have\tbeen
\nimpeached  if the said provisions were themselves valid,  it
\nwould  be  deemed  to have been\t validly  issued  under\t the
\nprovisions  of\tthe  Act, provided, of\tcourse,\t it  is\t not
\ninconsistent  with  the other provisions of  the  Act.\t The
\nsection\t is  not very happily worded, but on  its  fair\t and
\nreasonable  construction,  there can be no doubt  about\t its
\nmeaning or effect.  It is a saving and validating  provision
\nand  it clearly intends to validate actions taken under\t the
\nrelevant  provisions  of the earlier Act which\twas  invalid
\nfrom the start.’ The fact that s. 24 does not use the  usual
\nphraseology that the notifications issued under the  earlier
\nAct shall be deemed to have been issued under the Act,\tdoes
\nnot  alter the position that the second part of the  section
\nhas and is intended to have the same effect.
\nNo doubt, Mr. Nambiar suggested that s. 24 does not seem  to
\nvalidate  actions taken under the earlier Act on  the  basis
\nthat the ‘earlier Act was void and honest and in support  of
\nthis argument, he ralies on the
\n760<\/span>
\nfact that the notification following under the first part of
\ns.  24 are referred to as validly made and the\tearlier\t Act
\nand  the rules made thereunder are assumed to have  been  in
\nforce on the date on which the said notification was issued.
\nHe also relies on the provisions of s. 25 which purports  to
\nrepeal\tthe said Act and that, no doubt, gives room for\t the
\nargument  that\tthe Legislature did not recognise  that\t the
\nsaid Act was nonest and dead right up from the start.  It is
\nnot easy to understand the genesis of s. 25 and the  purpose
\nwhich it is intended to achieve.  The only explanation given
\nby  Mr. Ganpati Aiyer on behalf of respondent is that  since
\nthe  earlier  Act  was\tin fact on  the\t statute  book,\t the
\nlegislature  may have thought that for the sake of form,  it
\nmay have to be repealed formally and so, s. 25 was  enacted.
\nBut even if the enactment of the said section be held to  be
\nsuperfluous or unnecessary, that cannot assist the appellant
\nin  the construction of s. 24.\tWe have no doubt that s.  24
\nwas intended to validate actions taken under the earlier Act
\nand on its fair and reasonable construction, it must be held
\nthat  the intention has been carried out by the\t legislature
\nby enacting the said section.  Therefore, the argument\tthat
\ns.  24,\t even  if valid,  cannot  effectively  validate\t the
\nimpugned notification, cannot succeed.\n<\/p>\n
Mr. Nambiar then contends that the impugned notification  is
\ninvalid\t and inoperative because it contravenes Art. 31\t (1)
\nof the Constitution.  Article 31 (1) provides that no person
\nshall be deprived of his property save by authority of\tlaw.
\nIt is urged that this provision postulates the existence  of
\nan  antecedent\tlaw,  before a citizen is  deprived  of\t his
\nproperty.   The\t notification was issued on  the  assumption
\nthat  there was an antecedent law, viz., the earlier Act  of
\n1949  ; but since the said Act was nonest, the\tnotification
\nis not supported by the authority of any pre-existing law
\n761<\/span>
\nand  so, it must be held to be invalid and ineffective.\t  In
\nour  opinion, this argument is not wellfounded.\t If the\t Act
\nis retrospective in operation and s. 24 has been enacted for
\nthe  purpose  of retrospectively  validating  actions  taken
\nunder  the provisions of the earlier Act, it must follow  by
\nthe very retrospective operation of the relevant  provisions
\nthat at the time when the impugned notification was  issued,
\nthese  provisions were in existence.  That is the plain\t and
\nobvious\t effect\t of  the  retrospective\t operation  of\t the
\nstatute.   Therefore in considering whether Art.  31(1)\t has
\nbeen  complied with or Dot, we must assume that\t before\t the
\nnotification was issued, the relevant provisions of the\t Act
\nwere  in existence and so, Art. 31(1) must be held  to\thave
\nbeen complied with in that sense.\n<\/p>\n
In  this  connection, it would be relevant to refer  to\t the
\nprovisions  of\tArt.  20 (1). because  the  said  provisions
\nillustrate the point that where the’ Constitution desired to
\nprevent\t the  retrospective operations of any  law,  it\t has
\nadopted suitable Phraseology to carry out that object.\tArt.
\n30  (1)\t provides that no person shall be convicted  of\t any
\noffence\t except for violation of a law in force at the\ttime
\nof  the commission of the act charged as an offence, nor  be
\nsubjected  to a penalty greater than that which\t might\thave
\nbeen  inflicted under the law in force at the ,-lime of\t the
\ncommission of the offence.  By using the expression “,law in
\nforce”\tin both the parts of Art. 20 (1),  the\tConstitution
\nhas  clearly  indicated\t that even if  a  criminal  law\t was
\nenacted\t   by\tany   legislature    retrospectively,\t its
\nretrospective operations would be controlled by Art.  30(1).
\nA  law in force at the time postulates actual factual  exis-
\ntence of the law at the relevant time and that excludes\t the
\nretrospective  application  of\tany  subsequent\t law.\tArt.
\n31(1), on the other hand, does not use the expression  ‘,law
\nin force at the time”.\tIt
\n762<\/span>
\nmerely says “by authority of law”, and so if subsequent\t law
\npassed by the legislature is retrospective in its  operation
\nwould  satisfy\tthe  requirement of Art\t 31  (1)  and  would
\nvalidate  the  impugned notification in\t the  present  case.
\nTherefore, we are not satisfied that Mr. Nambiar is right in
\ncontending that the impugned notification is invalid for the
\nreason that at the time when it was issued there was no\t law
\nby whose authority it could be sustained.\n<\/p>\n
That  takes us to the larger issue raised by Mr. Nambiar  in
\nthe  present  appeals.\tHe contends that the  power  of\t the
\nlegislature  to\t make laws retrospective cannot\t validly  be
\nexercised  so  as to care the contravention  of\t fundamental
\nrights retrospectively.\t His contention is that the  earlier
\nAct  of\t 1949  being dead  and\tnon-existent,  the  impugned
\nnotification  contravened Art. 31(1) and this  contravention
\nof a fundamental right cannot be cured by the legislature by
\npassing\t a subsequent law and making it\t retrospective.\t  In
\nsupport\t of this argument, he has relied on the decision  of
\nthis Court in Deep Chand v. The State of Uttar Pradesh<\/a>\t(1).
\nIn that case, one of the questions which arose for  decision
\nwas  whether the doctrine of eclipse applied to a law  which
\nwas  found to be invalid for the reason that it\t contravened
\nthe fundamental rights, and the majority decision held\tthat
\nit did not apply to such a law.\t In feeling with a  question
\nas  to\tthe  applicability of the  doctrine  of\t eclipse,  a
\ndistinction  was drawn between a law which was\tvoid  either
\nfor  want  of  legislative power at the\t time  when  it\t was
\npassed, or because it contravened fundamental rights on\t the
\none hand, and the law which was valid when it was passed but
\nsubsequently   became\tinvalid\t  because   of\t supervening
\ncircumstances on the other.  In the latter case, the law was
\nvalid when it was passed and became invalid because a  cloud
\nwas cast on its validity by supervening
\n(1)  (1959) Supp. 2 S.C.R. 8.\n<\/p>\n
763<\/span><\/p>\n
circumstances.\t  That\tbeing  so,  if\tthe   constitutional
\namendment subsequently made removes the cloud, the  validity
\nof the law is revived.\tThat is the effect of application of
\nthe  doctrine of eclipse; but there can be no scope for\t the
\napplication of the said doctrine to a law which is void\t and
\nnonest either for want of legislative competence or  because
\nit  contravenes fundamental rights.  That, in substance,  is
\nthe  effect of the majority decision in Deep  Chand’s  case.
\nIn  the present appeals it is not disputed that the  earlier
\nAct  of 1949 was dead and void from the start, and  that  no
\ndoubt,\tis  consistent with the majority  decision  in\tDeep
\nChand’s\t  case.\t  But  the  question  as  to   whether\t the
\nlegislature can retrospectively validate actions taken under
\na  void law did not arise for consideration in Deep  Chand’s
\ncase.  The only point which was decided was that the removal
\nof  the cloud by a subsequent constitutional amendment\twill
\nnot  automatically  revive  a law which was  void  from\t the
\nstart,\tbut that obviously is not case before us.   What  we
\nare called upon to decide is the present appeals is  whether
\nor  not\t it is competent to the legislature to\tpass  a\t law
\nretrospectively to validate actions taken under a void\tAct,
\nand  in deciding this question, Deep Chand’s case would\t not
\nafford ue any assistance.\n<\/p>\n
Mr.  Nambiar did not dispute the position that\tin  enacting
\nlaws in respect of topics covered by appropriate entries  in
\nthe relevant Lists of the 7th Schedule to the  Constitution,
\nthe  legislatures would be competent to make the  provisions
\nof  the\t laws passed by them  retrospective.   He,  however,
\nseeks to import a limitation on this legislative power where
\nthe  contravention  of fundamental rights is  involved.\t  No
\nauthority  has\tbeen cited in support of the plea  that\t the
\nlegislative power of the legislature is subject to any\tsuch
\nlimitation  even  where\t the  contravention  of\t fundamental
\nrights\tis  involved.\tOn principle,  it  is  difficult  to
\nappreciate how such
\n764<\/span>
\na  limitation  on the legislative power can  be\t effectively
\npleaded.   If  a law is invalid for the reason that  it\t has
\nbeen passed by a legislature without legislative competence,
\nand  action is taken under its provisions, the\tsaid  action
\ncan  be\t validated by a subsequent law passed  by  the\tsame
\nlegislature   after  it\t is  clothed  with   the   necessary
\nlegislative  power.  This position is not disputed.  If\t the
\nlegislature  can  by  retrospective  legislation  cure\t the
\ninvalidity in actions taken in pursuance of laws which\twere
\nvoid  for  want of legislative competence and  can  validate
\nsuch  action by appropriate provisions, it is  difficult  to
\nsee  why  the  same  power  cannot  be\tequally\t effectively
\nexercised  by  the legislature in validating  actions  taken
\nunder\tlaw  which  are\t void  for  the\t reason\t that\tthey
\ncontravened fundamental rights.\t As has been pointed out  by
\nthe  majority decision in Deep Chand’s case,  the  infirmity
\nproceeding  from lack of legislative competence as  well  as
\nthe   infirmity\t  proceeding  from  the\t  contravention\t  of
\nfundamental rights lead to the same result and that is\tthat
\nthe  offending legislation is void and honest.\t That  being
\nso, if the legislature can validate actions taken under\t one
\nclass of void legislation, there is no reason why it  cannot
\nexercise  its  legislative power to validate  actions  taken
\nunder  the  other  class  of  void  legislation.   We\tare,
\ntherefore, not prepared to accept ‘Jr.\tNambiar’s contention
\nthat  where  the  contravention\t of  fundamental  rights  is
\nconcerned, the legislature cannot pass a law retrospectively
\nvalidate actions taken under a law which was void because it
\ncontravened fundamental rights.\n<\/p>\n
In  this  connection,  it may be useful\t to  refer  to\tsome
\ndecisions  which deal with the legislature’s power  to\tpass
\nretrospective\tlaws.  in  the\tUnited\tProvinces  v.\tMst.
\nAtiqabegum  (1) Gwyer C.J. observed that “the validation  of
\ndoubtful executive acts is
\n(1)  (1940) F.C.R. 110. 136.\n<\/p>\n
765<\/span><\/p>\n
not so unusual or extraordinary a thing that little surprise
\nwould be felt if Parliament had overlooked it, and it  would
\ntake a great deal to persuade me that the legislative  power
\nfor  the  purpose  has been  denied  to\t every\tLegislature,
\nincluding the Central or Federal Legislature, in India.”  It
\nis true, “,he added,” that validation of executive orders or
\nany entry even remotedly analogous to it is not to be  found
\nin any of the three lists; but I am clear that\tlegislation
\nfor that purpose must necessarily be regarded as  subsidiary
\nor  ancillary to the power of legislating on the  particular
\nsubjects  in respect of which the executive orders may\thave
\nbeen issued.” The same principle was stated by Speans C.  J.
\nin Piare Dusadh v. The King Emperor.(1)
\nThis  question has been considered by this Court in  several
\ndecisions  to some of which we will now briefly\t refer.\t  In
\nthe  Union  of\tIndia v. Madan Gopal Kabra<\/a>  this  Court\t had
\noccasion to consider the validity of certain amendments made
\nin  the Income Tax Act by section 3 of the Finance Act\t(XXV
\nof  1950).   These  amendments had the\teffect\tof  applying
\nretrospectively the charging sections of the Taxing Act\t and
\ntheir  validity\t was impeached.\t In rejecting  the  argument
\nthat the levy authorised to be imposed by the amendments was
\nultra  vires, Patanjali Sastri, C. J., observed that  “while
\nit  is\ttrue-  that the Constitution  has  no  retrospective
\noperation,  except  where  a  different\t intention   clearly
\nappears,  it  is not correct to say that  in  bringing\tinto
\nexistence  new Legislatures and conferring on  them  certain
\npowers\t  of   legislation,   the   Constitution    operated
\nretrospectively.   The\tlegislative  powers  conferred\tupon
\nParliament  under Articles 245 and 246 read with List  I  of
\nthe,  Seventh  Schedule could obviously\t be  exercised\tonly
\nafter
\n(1) (1944) F.C.R. 61, 105.\n<\/p>\n
(2) (1954) S.C.R. 541, 554.\n<\/p>\n
766<\/span><\/p>\n
the  Constitution  came\t into  force  and  no  retrospective
\noperation of the Constitution is involved in the  conferment
\nof  these powers.  But it is a different thing to  say\tthat
\nParliament  in\texercising,  the  powers  thus\tacquired  is
\nprecluded  from\t making a retrospective law,”  and  so,\t the
\nconclusion  was\t that Parliament was content to make  a\t law
\nimposing  a  tax  on the income of any\tyear  prior  to\t the
\ncommencement of the Constitution.\n<\/p>\n
In  M.\tP.  V. Sundararamier & Co. v. The  State  of  Andhra
\nPradesh\t (1), the validity of the Sales Tax laws  Validation
\nAct, 1956 (7 of 1956) was questioned and the majority of the
\nCourt  held that the said Act was in substance\tone  lifting
\nthe  ban  on taxation of inter-State sales  and\t within\t the
\nauthority conferred on the Parliament under Art. 286(2)\t and
\nfurther\t that under that provision, it was competent to\t the
\nParliament  to\tenact a law  with  retrospective  operation.
\nThis  conclusion also proceeded on the basis that the  Power
\nof  a legislature to pass a law included a power to pass  it
\nretrospectively, and so, the argument that the impugned\t Act
\nwas ban on the ground that it was retrospective in operation
\nwas rejected.  The same principle has been again  enunciated
\nby this Court in M\/s.  J. K. Jute Mills Co. Ltd. v. State of
\nUttar  Pradesh<\/a> (2). it has been held in this case  that\t the
\npower  of  the legislature to enact a reference to  a  topic
\nentrusted  to  it  is  unqualified,  subject  only  to\t any
\nlimitation  imposed by the Constitution in the\texercise  of
\nsuch  a\t power,\t and that I it would be\t competent  for\t the
\nLegislature  to enact a law which is either  prospective  or
\nretrospective, vide also Mt.  Jadao Bahuji v. The Municipal
\nCommittee, Khandwa,\t   Jadab Singh<\/a> v.    The   Himanchal
\nPradesh Administration and    Raghubar Dayal Jai Prakash  v.
\nThe Union of India<\/a>(5).\tTherefore, there is no doubt about
\n(1958) S.C.R. 1022.   (2) (1962) 2 S C.R. I.\n<\/p>\n
(3) (1962) 1 S.C.R. 633.  (4) (1960) 3 S.C.R. 755.
\n(5)  (1962) 3 S.C.R. 547.\n<\/p>\n
767<\/span><\/p>\n
the  competence of the Legislature to enact a law and  ‘make
\nit  retrospective in operation in regard to topics  included
\nwithin\tthe  relevant Schedules of  the\t Constitution.\t Our
\nconclusion,  therefore, is that the  appellant’s  contention
\nthat it was beyond the competence of the Madras\t Legislature
\nto make the Act retrospective so as to validate the impugned
\nnotification, cannot be accepted.\n<\/p>\n
That  takes  us to the last argument raised by\tMr.  Nambiar
\nbefore\tus.   He contends that section 5 of  the  Act  which
\nprovides  for the payment of compensation to  the  licensees
\nwhose undertakings are taken over, is invalid because it  is
\ninconsistent with Art. 31(2).  It is common ground that\t the
\nprovisions of Art. 31(2) with which we are concerned in\t the
\npresent\t appeals  are  those as they stood  before  the\t 4th
\nConstitutional\tAmendment came into force.  Art. 31(2)\tthen
\nprovided, enter alia, that no property shall be compulsorily
\nacquired  save for the public purpose and save by  authority
\nof  law which provides for compensation for the property  so
\nacquired and either fixes the amount of the compensation  or
\nspecifies the principles on which, and the manner in  which,
\nthe compensation is to be determined and given.\t In  support
\nof  his argument, Mr. Nambiar has relied on the decision  of
\nthis  Court  in\t the  State of\tWest  Bengal  v.  Mrs.\tBala
\nBanerjee-<\/a>(1).  In dealing with the question about the  scope
\nand effect of the provisions of Art. 31(2) in so far as they
\nreferred to the payment of compensation, this Court observed
\nthat   though  entry  42  of  List  III\t conferred  on\t the
\nLegislature  the  discretionary\t power of  laying  down\t the
\nprinciples  which  should govern the  determination  of\t the
\namount\tto be given to the owner of the\t property  acquired,
\nArt.  31 (2) required that such principles must ensure\tthat
\nwhat is determined as
\n(1)  (1954) S. C. R. 558.\n<\/p>\n
768<\/span><\/p>\n
payable\t must be “compensation’, that is, a just  equivalent
\nof  what  the owner has been deprived of.  That\t is  why  in
\nconsidering the validity of any statute is the light of Art.
\n31(2)  it would be open to the Court to enquire whether\t all
\nthe  elements which make up the true value of  the  property
\nacquired  have\tbeen taken into account in  lying  down\t the
\nprinciples  for determining compensation.  It  appears\tthat
\nsection\t 8 of the West Bengal Land Development and  Planning
\nAct,  1948  (XXI of 1948) which was impugned  in  that\tcase
\nlimited\t the amount of compensation so as to not  to  exceed
\nthe  market  value  of the land on December,  31,  1946,  no
\nmatter\twhen the land was acquired.  This part of s.  8\t was
\nstruck\tdown as invalid because it was hold that  in  fixing
\nthe  market  value on December 31, 1946, as the\t ceiling  on
\nCompensation, the legislature had patently ignored the\tfact
\nthat  prices of lands had considerably risen after the\tsaid
\ndate and that tended to show that the compensation awardable
\nunder  the  said  provision could not be  said\tto  be\tjust
\nequivalent  of\twhat the owner would be\t deprived  of.\t Mr.
\nNambiar,  therefore, contends that since section 5 does\t not
\nauthorise  the payment of compensation which can be  treated
\nas just equivalent of the property which would be taken over
\nunder its provisions, it must be struck down as inconsistent
\nwith  Art.  31\t(2).   It  may\tbe  conceded  that  the\t 4th
\nConstitution  amendment\t which\tsubstantially  changed\t the
\nprovisions  of\tArt.  31 (2) would be  inapplicable  in\t the
\npresent case, and that the High Court was in error in making
\na contrary assumption.\n<\/p>\n
In  support of this argument, Mr. Nambiar has also  referred
\nus  to section 7A of the Indian Electricity Act 1910 (No.  9
\nof  1910) as it then stood.  Section 7A (2) of the said\t Act
\nlays down
\n 769<\/span>
\nthat  in purchasing undertakings under s. 7A (1), the  value
\nof such lands, buildings, works, materials, and plant  shall
\nbe  deemed  to\tbe  their market E  value  at  the  time  of
\npurchase,  due regard being had to the nature and  condition
\nfor  the time being of such lands, buildings, materials\t and
\nplant  and the state of repair thereof and to  the  circums-
\ntance  that  they are in such position as to  be  ready\t for
\nimmediate working and to the suitability of the same for the
\npurpose of the undertaking.  The- proviso to a. 7A lays down
\nthat to the value determined under sub-s. (2) shall be added
\nsuch percentage, if any, not exceeding twenty per centum  of
\nthat value as may be specified in the license on account  of
\ncompulsory   purchase.\t Mr.  Nambiar  suggests\t  that\t the
\nprovisions  made  in s. 7A (2) and the proviso to a.  7A  of
\nthis Act give a fair picture of what could be regarded as  a
\nreasonable   compensation  that\t should\t be  paid   to\t the
\nundertakings before they are acquired.\n<\/p>\n
Before\tdealing\t with  this argument,  it  is  necessary  to
\nexamine\t  the\tscheme\tof  s.5\t which\tprovides   for\t the
\ncompensation  to  be  paid  to\tthe  licensees.\t  Section  5
\nprovides that the compensation payable to a licensee on whom
\nan order has been served under s.4 or whose undertaking\t has
\nbeen taken over before the commencement of the act, shall be
\ndetermined  under any one of the Bases A, B and C  specified
\nby  the\t section as may be chosen under a.  8.\tThen  follow
\ndetailed provisions about the three Bases A, B and C.  Under
\nBasis  A, the compensation payable shall be an amount  equal
\nto  twenty  times  the\taverage not  annual  profit  of\t the
\nundertaking  during  a period of  five\tconsecutive  account
\nyears\timmediately   preceding\t the  vesting\tdate.\t The
\nexplanation makes it clear that the net annual profit  shall
\nbe  determined in the manner laid down in Part A or Part  B,
\nas  the case may be, of Sch. 1. It is also clear  that\tthis
\nbasis shall
\n770<\/span>
\nnot  apply  to an undertaking which has not  been  supplying
\nelectricity  for five consecutive account years\t immediately
\npreceding the vesting date.\n<\/p>\n
Under  Basis  B,  the  compensation  payable  shall  be\t the
\naggregate  value  of all the shares constituting  the  share
\ncapital\t of the undertaking, reckoned as indicated  in\t(a),\n<\/p>\n
(b),  (c), and (d) ‘thereof.  These respective clauses\thave
\nreference to the dates on or before which the shares of\t the
\nundertaking have been issued, for instance, cl. (a) provides
\nthat  in  the case of shares issued on or  before  the\t31st
\nMarch,\t1946, the value of each share shall be\treckoned  at
\nits average value as arrived at from the quotations for\t the
\nshares\tas  given in the official list of the  Madras  share
\nMarket\ton the 15th day of each month and where such  market
\nwas  closed on that day, the quotations on the next  working
\nday  during the period of there years commencing on the\t 1st
\nApril,\t1946,  and ending on the 31st  March,  1949.   Under
\nclause (b) it is provided that in the case of shares issued
\non  or before the 31st March, 1946, if clause (a)  does\t not
\napply but there have been bonafide transfers in each of\t the
\ndifferent classes of shares in every one of the three  years
\naforesaid,  and such transfers have been duly registered  in
\nthe  appropriate  books of the licensee, the value  of\teach
\nshare  of each such class shall be reckoned at one-third  of
\nthe  aggregate\tof its three annual average values  for\t the
\nthree\tyears,\tthe  average  value  for  each\tyear   being
\ndetermined’  from the transactions in that year.  It is\t not
\nnecessary  to set out clauses (c) and (d).  The\t explanation
\nto this Basis provides that it shall not apply unless clause\n<\/p>\n
(a) or clause (b) is applicable.\n<\/p>\n
Under  Basis  C,  the  compensation  payable  shall  be\t the
\naggregate  value  of the amounts specified in  cls.  (i)  to\n<\/p>\n
(viii).\t These clauses refer respectively to the book  Value
\nof all completed works in- beneficial
\n771<\/span>
\nuse  pertaining\t to the undertaking and handed over  to\t the
\nGovernment less depreciation as specified; the book value of
\nall  works  in progress: the book value of all\tother  fixed
\nassets;\t the book value of all other fixed assets; the\tbook
\nvalue  of  all plant and equipment; the book  value  of\t all
\nintangible  assets  to the extent such value  has  not\tbeen
\nwritten\t off  in the books of the licensee; the\t amount\t due
\nfrom  consumers\t as specified in cl. (vii); and\t any  amount
\npaid  actually by the licensee in respect of every  contract
\nreferred  to  in  s.  6 (2) (a) (iii).\t Where\tbasis  C  is
\napplied,  an additional sum by way of solatium. is  required
\nto  be\tpaid as specified in cls. (a) and (b) to  cl.  (ix).
\nThe  explanation to Basis C explains how the book  value  of
\nany  fixed  assets has to be ascertained.   That,  in  broad
\noutlines,  is  the nature of the three Bases  prescribed  by
\nsection\t 5  for assessing the compensation to be paid  to  a
\nlicensee.\n<\/p>\n
It  is\ttrue  that  in none of\tthe  three  bases  does\t the
\nLegislature  refer to the market value of  the\tundertaking,
\nbut  that  itself cannot justify the argument that  what  is
\nintended to be paid by way of compensation must\t necessarily
\nmean  much less than the market value.\tThe failure  of\t the
\nlegislature to refer to the fair market value cannot, in our
\nopinion,  be  regarded\tas conclusive  or  even\t presumptive
\nevidence of the fact that what is intended to be paid  under
\nsection\t 5  does  not amount to a  just\t equivalent  of\t the
\nundertaking  taken  over.   After all,\tin  considering\t the
\nquestion as to whether compensation payable under one or the
\nother of the Bases amounts to just equivalent.\tWe must\t try
\nto assess what would be payable under the said basis.
\nOn  this  point,  the real difficulty,, in the\tway  of\t the
\nappellant  is  that it has produced no material\t before\t the
\nCourt on which its plea can be sustained.  As the High Court
\nhas pointed out, in the absence of any satisfactory material
\nit would be difficult
\n772<\/span>
\nfor  the  Court to come to any definite\t conclusion  on\t the
\nquestion as to whether just equivalent is provided for by s.
\n5 or not.  Mr. Nambiar, no doubt, attempted to suggest\tthat
\nin the Madras High Court oral evidence is not allowed to’ be
\nadduced on questions of fact in writ proceedings.  That\t may
\nbe so; but it is quite clear that the affidavit made by\t the
\nappellant  in support of its petition could have easily\t set
\nforth  all  relevant  facts showing  that  the\tcompensation
\npayable\t under s. 5 was so inadequate that it could  not  be
\nregarded as a just equivalent of the property acquired.\t  In
\nthe absence of any material, we do not see how we can assess
\nthe  validity  of Mr. Nambiar’s contention  that  section  5
\ncontravenes  Art.  31 (2) of the Constitution.\tIt  is\ttrue
\nthat   in  its\tpetition,  the\tappellant  made\t a   general
\nallegation  that  the  market value of\tits  assets  at\t the
\nrelevant time would be Rs. 16,49,350\/-, but no\tsatisfactory
\nmaterial was placed in the form of proper affidavits made by
\ncompetent  persons to show how this market value was  deter-
\nmined.\tIn fact, the appellant did not state before the High
\nCourt  and was unable to state even before this\t Court\twhat
\nprinciples should have been laid down by the legislature  in
\ndetermining a just equivalent for the undertaking taken over
\nby  the respondent.  The general argument that s.5 does\t not
\nprovide\t for  the  payment of market value  cannot,  in\t the
\nabsence\t  of  material,\t help  the  appellant  at   all\t  in
\nchallenging the validity of section 5.\n<\/p>\n
In  this connection, it must be borne in mind that 8 of\t the
\nAct leaves it to the opinion of the licensee to intimate  to
\nthe  Government\t in writing which basis of  compensation  it
\nwants  to be adopted, and so, it is not as if the choice  of
\nthe  basis is left to the Government in every  case.   Take,
\nfor  instance, Basis A; the compensation payable under\tthis
\nBasis is: an amount equal to twenty times the aver ag
\n773<\/span>
\nnet annual profit of the undertaking during a period of five
\nconsecutive account years preceding the vesting date.\tNow,
\nin   determining  the  fairness\t A  or\totherwise   of\t the
\ncompensation  awardable under basis A, it cannot be  ignored
\nthat  what is acquired is an undertaking which is  a  going
\ncommercial  concern  and  so,  it  would,  prima  facie,  be
\ninappropriate  to attempt to determine its value  safely  or
\nmainly by reference to the buildings it owns or the  machin-
\nery  it works.\tIt would also be relevant to  remember\tthat
\nundertakings  of this kind cannot claim a general market  in
\nthe  sense in which lands can claim it.\t That being  so,  if
\nthe  legislature thought that giving the undertaking  twenty
\ntimes  the average not annual profit would amount to a\tjust
\nequivalent,  prima facie it would be difficult to hold\tthat
\nthe  basis  adopted by the legislature is such as  could  be
\nheld  to be inconsistent with Art. 31 (2).  The Basis B\t may
\nor  may not be satisfactory, but Basis C may prima facie  be
\nsatisfactory in respect of new undertaking and in any  case,
\nthe  option  in\t most cases would be  with  the\t undertaking
\nitself.\t  Therefore, in the absence of any material, we\t are
\nunable to hold that on looking at the scheme adopted by s. 5
\nby itself, the appellant’s argument that what is offered  by
\nway  of\t compensation  is  not a  just\tequivalent,  can  be
\naccepted.   It\tmay be that in some oases basis B  may\twork
\nhardship and conceivably even basis A or basis C may not  be
\nas  satisfactory  as  it  should  be;  but,  when  a   party
\nchallenges the validity of a statutory provision like s.  5,
\nit is necessary that the party must adduce satisfactory\t and
\nsufficient  material before the Court on which it wants\t the
\nCourt  to  hold that the compensation which  would  be\tpaid
\nunder  everyone\t of  the  three\t Bases\tunder  the  inpugned
\nstatutory  provision does not amount to a  just\t equivalent.
\nLooking\t merely at the scheme of the section itself,  it  is
\nimpossible to arrive at such a conclusion.  That is the view
\n774<\/span>
\ntaken  by  the\tMadras High Court and we see  no  reason  to
\ndiffer from it.\t Therefore, the challenge to the validity of
\nthe  Act  on  the  ground  that\t its  important\t  provisions
\ncontained  in section 5 offend against Art. 31 (2)  must  be
\nrejected.   That being our view, we must held that the\tHigh
\nCourt  was right in rejecting both the writ petitions  filed
\nby  the\t appellant.   On that view, it\tis,  unnecessary  to
\nconsider  whether appellant would have been entitled to\t get
\nthe relief of possession or mesne profits which it purported
\nto claim by its two petitions.\n<\/p>\n
The  appeals accordingly fail and are dismissed with  costs.
\nOne set of hearing fees.\n<\/p>\n
Appeals dismissed.<\/p>\n","protected":false},"excerpt":{"rendered":"
Supreme Court of India M\/S. West Ramnad Electric … vs State Of Madras on 2 May, 1962 Equivalent citations: 1962 AIR 1753, 1963 SCR (2) 747 Author: P Gajendragadkar Bench: Gajendragadkar, P.B., Subbarao, K., Wanchoo, K.N., Shah, J.C., Ayyangar, N. Rajagopala PETITIONER: M\/S. WEST RAMNAD ELECTRIC DISTRIBUTION CO. LTD. Vs. RESPONDENT: STATE OF MADRAS DATE […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-61312","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"\nM\/S. 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