- (1.) The principal question which arises in these two appeals is related to the validity of S. 24 of the Madras Electricity Supply Undertakings (Acquisition) Act, 1954 (XXIX of 1954) (hereinafter called the Act). That question arises in this way. The appellant, the West Ramnad Electric Distribution Co. Ltd., Rajapalayam, was incorporated in 1935 to carry on, within the State of Madras and elsewhere, the business of an electric light and power company, to construct, lay down and establish and carry on all necessary installations, to generate, accumulate, distribute and supply electricity under a licence granted under the Indian Electricity Act of 1910. On the 24th January, 1950, the Madras Legislature passed an Act (XLIII of 1949) for the acquisition of undertakings supplying electricity in the Province of Madras. Under the said Act, the Government was empowered to acquire any electrical undertaking on payment of compensation according to the relevant provisions of the said Act. In pursuance of the provisions of section 4(1) of the said Act. the respondent, State of Madras passed an Order G. O. M/s. No. 2059 no the 17th May, 1951, declaring that the appellant undertaking shall vest in the respondent from the 21st September, 1951. Thereafter, the respondent appointed the Chief Electrical Inspector as the Acquisition Officer, and on the appointed day, the said Officer took over possession of the appellant and all its assets, records and account-books. The appellant then appointed the liquidator as its Accredited Representative for the purposes of the Act in order to claim compensation under the Act. The respondent then paid over to the appellant Rs. 6 lakhs on the 24th October, 1952 and Rs. 2,34,387-1-0 on the 5th July, 1953, as compensation. According to the appellant, Rs. 98,876-15-0 still remained to be paid to it by way of compensation under the Act, whereas the respondent suggested that only Rs. 6,000 was the balance due to the appellant. That is how the appellant undertaking went into possession of the respondent and the appellant was paid partial compensation.
(2.) It appears that owners of some of the electrical undertakings in Madras which had been taken over by the respondent in accordance with the provisions of S. 4(1) of the 1949 Act, filed writ petitions in the High Court of Madras impugning the validity of the said Act. These writ petitions however, failed and by its judgment in Narasaraopeta Electric Corporation Ltd. v. State of Madras, 1951-2 Mad LJ 277 : (AIR 1951 Mad 979), the Madras High Court upheld the validity of the impugned Act in so far as it related to the licensees other than municipalities. The said licensees then moved this Court and their appeal succeeded. By its decision in the Rajahmundry Electric Supply Corporation Ltd. v. State of Andhra,1954 SCR 779: (AIR 1954 SC 251), this Court held that the impugned Act of 1949 was ultra vires. This decision was based on the ground that the Act was beyond the legislative competence of the Madras Legislature inasmuch as there was no entry in any of the three Lists of the Seventh Schedule of the Government of India Act, 1935 relating to compulsory acquisition of any commercial or industrial undertaking. This Court observed that although S. 292(2) of the said Constitution Act contemplated a law authorising compulsory acquisition for public purposes of a commercial or industrial undertaking a corresponding entry had not been included in any of the three Lists and so, the Madras Legislature was not competent to pass the impugned Act. This decision was pronounced on the 10th February, 1954.
(3.) Meanwhile, the Constitution came into force on the 26th January, 1950 and the position of the legislative competence of the Madras Legislature in respect of the compulsory acquisition of commercial or industrial undertakings for public purposes has been materially altered. Entry 36 in List II of the Seventh Schedule to the Constitution refers to acquisition or requisitioning of property, except for the proposes of the Union, subject to the provisions of Entry 42 of List III whereas Entry 42 of List III deals with he principles on which compensation for property acquired or requisitioned for the purposes of the Union or of a State for any other public purpose is to be determined, and the form and the manner in which such compensation is to be given. That is how the two entries read at the relevant time.;