Chinnappa Reddy, J. - (1.) The old question "what is compensation" is back again. Fortunately, Constitutional Amendments and Judicial precedents have narrowed the scope for controversy. The question has arisen this way:
(2.) The appellant (sic) (Petitioner) the Oriental Gas Company Ltd. was originally constituted in England by a deed of settlement in April 1853, as the Oriental Gas Company for the purpose of manufacture, supply, distribution and sale of fuel gas in Calcutta. It was later incorporated in accordance with the provisions of the English Joint Stock Companies Act, 1862. By a subsequent arrangement the control and management of the Company passed from British into Indian hands. Over the course of the years the Company acquired extensive properties and became the owner of large plants, machinery, buildings, lands, pipelines, stores etc. The total market value of the appellant's (sic) (Petitioner ) industrial undertaking was estimated by the appellant (sic) (Petitioner ) as on 22nd March, 1962, at Rs. 7,00,00,000. In 1958, the Government of West Bengal, being of the view that the Company which enjoyed a monopoly in the supply of Gas in Calcutta was negligent in looking after the interest of the consumers, appointed a Committee to inquire into the unsatisfactory condition of supply of gas in Calcutta and to suggest remedial measures including valuation of the undertaking for the purpose of taking over the gas supply undertaking. The Members of the Committee were:the Chief Secretary, the Sheriff of Calcutta, the Secretary, Commerce and Industries Department, the Administrator, Durgapur Project and the Director, Central Fuel Research Institute. The Committee was assisted by several experts. The Committee reported that the present Gas Works in Calcutta including the distributing system was in a bad state of disrepair and a very poor state of maintenance. The Committee recommended that the Gas Works and the distribution system should be taken over immediately under the management of the State Government in order to ensure and maintain the supply of gas to the consumers in Calcutta. After the report of the Committee was received by the Government of West Bengal, the West Bengal Legislature enacted the Oriental Gas Company Act (West Bengal Act XV of 1960) providing for the taking over for a limited period, of the management and control and the subsequent acquisition of the undertaking of the Oriental Gas Co. Ltd. The 'undertaking of the Company' was defined to mean "the properties of the company, movable or immovable other than cash balances and reserve funds but including works, workshops, plants, machineries, furniture, equipments and stores, and lands appertaining thereto, actually in use immediately before the commencement of this Act, or intended to be used, in connection with the production of gas or supply thereof in Calcutta and its environs;". Section 3 of the Act provided for the taking over of the management and control of the undertaking of the Company for a period of five years from the date specified in a notification to be issued. Section 7 provided for the acquisition of the undertaking of the Company at any time within the period of the said five years. Section 8 (1) (a) provided for the payment of annual compensation during the period of the takeover of the management and control of the undertaking of the Company. Section 8 (1) (b) provided for the compensation payable for the acquisition of the undertaking of the Company. In the present appeal (sic) (Petition ) we are concerned with the compensation payable for the acquisition of the undertaking of the Company, that is, we are concerned with S. 8 (1) (b) only. Section 8 (1) (b) as originally enacted was as follows: "8 (1) (b) in the case of acquisition of the undertaking of the company, the total compensation payable shall be,- a sum representing the purchase price of the undertaking of the company reduced by such depreciation as may be allowed by the Tribunal referred to in sub-sec. (2) after considering the period and the nature of the use and the present condition of the properties concerned on the date of vesting in the State Government under S. 7, or a sum representing eight times the average net income of the undertaking of the company over a period of five complete years preceding the year in which the undertaking of the company has been transferred to the State Government under cl. (a) of S. 4 for the purpose of management and control, whichever is less. Explanation - In this sub-section- (i) "Purchase price of the undertaking of the company" means the aggregate of the prices of the different parts of the undertaking of the company at the respective dates on which parts were purchased, acquired or constructed by the Company; (ii) "net income of the undertaking of the Company" means the difference between the amount of gross revenue receipts and other general receipts, accountable in the assessment of Indian Income-tax arising from, and ancillary or incidental to, the business of the company and the amount of expenditure incurred on the following- (a) rents, rates and taxes, (b) interest on loans and security deposits, (c) maintenance and repair, (d) collection charges, (e) cost of management, including the remuneration of managing agents, if any, (f) other expenses admissible under the law for the time being in force in the assessment of Indian income-tax and arising from, and ancillary or incidental to, the business of the Company, and (g) such other expenses as may be prescribed by rules made under this Act."
(3.) Section 8 (2) provided that the compensation was to be determined by a Tribunal to be appointed by the State Government. The decision of the Tribunal was subject to an appeal to the High Court. Section 9 (2) provided that the amount of compensation was to be paid by the State Government in bonds carrying interest at the rate of 3% per annum from the date of issue and payable in 20 equal annual instalments.;