- (1.) On February 5, 1929 the Governor-in-Council of the then Government of the United Provinces granted to Messrs Martin and Company a licence under Section 3 of the Indian Electricity Act, 1910 for supply of electric energy within the Districts of Bijnor and Moradabad. Messrs. Martin and Company, who were Managing Agents of the appellant Company, assigned that licence to it. By a notice dated January 31, 1957 the Government of Uttar Pradesh exercised its option to purchase the Undertaking of the appellant on the expiry of two years from the date of the notice. This period was on appellant's request, extended till May 4, 1959. The respondent - Uttar Pradesh State Electricity Board - was constituted on April 1, 1959 and under Section 71 of the Electricity (Supply) Act, 1948, the option of the Government of Uttar Pradesh to purchase electrical undertakings stood transferred to the respondent.
(2.) By a letter dated May 1, 1959 respondent informed the appellant that it had decided to purchase the Undertaking on payment of a sum of Rupees 25,38,407/-, being the fair market value of all its assets, inclusive of solatium. On May 4, 1959 respondent made a provisional payment of Rupees 15 lakhs to the appellant which, the latter accepted under protest. The Undertaking was eventually taken over by the respondent on May 4/5, 1959.
(3.) Being unable to agree on the true market value of the Undertaking, parties referred their differences to two arbitrators. Out of the several contentions raised before the arbitrators, we are concerned with one only: whether, in the computation of the market value of its Undertaking, the appellant was entitled to compensation for the "service lines" which were laid with the help of the contributions made by consumers. On this question, arbitrators were unable to agree and therefore they referred it to the decision of an umpire, Shri Randhir Singh.;