- (1.) THE question involved in this application under article 226 of the Constitution, is whether the petitioner no. 1 is entitled to compensation in accordance with the provisions of the Indian Electricity Act, 1910 for the right of option exercised by the respondents. Originally, in the petition the petitioners had also challenged the exercise of that option but during the hearing of this application on behalf of. the petitioners that challenge was not pressed.
(2.) THIS application is by two petitioners, one, being Patna Electric Supply, Co. Ltd. and another being a director and shareholder of the said company. In order to appreciate the challenge, it may be necessary to refer to certain facts. It appears that on the 6th february, 1924, a licence was granted by the Government of Bihar to Ms. Octavias Steel and Co. Ltd. for the supply of Electrical energy. There was a notification on the 13th February, 1924 in respect of grant of the said licence and the said licence was thereafter transferred in favour of the petitioner no. 1. A notice was published by the Government of Bihar relating to certain proposed amendments to be made to the said licence dated 6th February, 1924 It is not necessary for the purpose of this application to set out the said amendments. The petitioner no. 1, however, on the 27th November, 1972 objected to the amendments proposed in the notice. On the 5th January, 1973 a notice was given by the respondent no. 1 purporting to exercise option to purchase the undertaking of the petitioner no. 1 on the expiration of 50 years from the date of commencement of the said licence and the petitioner no. 1 was required to deliver possession of the said undertaking at 12 O'clock in between the 5th and 6th February, 1974 pending determination and payment of purchase price. It is; therefore, necessary to refer to the relevant section which authorised exercise of such option. Sec, 6 of the Indian Electricity Act, 1910 permits purchase of the undertaking and for my present purpose it would be sufficient if I set out sec. 6 (1) of the Act which reads as follows : "sec. 6 (1) where a licence has been granted to any person, not being a local authority, the State Electricity board shall, (a) in the case of a licence granted before the commencement of the Indian Electricity (Amendment) Act, 1959, on the expiration of each such period as is specified in the licence: and (b) In the case of a license granted on or after the commencement of the said Act, oh the expiration of such period not exceeding twenty years and of every such subsequent period; not exceeding ten-years, as shall be specified in this behalf in the license ; have the option of purchasing the undertaking and such option shall be exercised by the State Electricity Board serving upon the licensee a notice in writing of not less than one year requiring the licensee to sell the undertaking. to it at the: expiry of the relevant period referred to in this sub-section. " Sub-section (6) of Section 6 provides as follows: "section 6 (6) where a notice exercising the option of purchasing the undertaking has been served upon the licensee under this section, the licensee shall deliver the under taking to the State Electricity Board, the State Government or the local authority, as the case may be, on the expiration of the relevant period referred to in sub-section (l) pending the determination and payment of the purchase price. "
(3.) IF an option is exercised, in the manner indicated under Sec. 6 then the determination of the purchase price has to be made under Sec. 7a of the said. Act. The said section reads as follows : "sec. 7a. (1) Where an undertaking, of a licensee not being a local authority, is sold under subsection (1) of section 5, the purchase price of the undertaking shall be the market value of the under taking at the time of purchase or where the, undertaking has been delivered before the purchase under sub-section (3) of that section, at the time of the delivery of. the undertaking and if there is any difference or dispute regarding such purchase price, the same shall be determined by arbitration. (2)The market value of an undertaking for the purpose of subsection (1) shall be deemed to be the value of all lands, buildings, works, materials and plant of the licensee suitable to, and used by him, for the purpose of the undertaking, other than (i) a generating station declared by the license not to form part of the undertaking for the purpose of purchase, and (ii) , service lines or other capital works or any part thereof which have been constructed at the expense of consumers, due regard being had to the nature and condition for the time being of such lands, buildings, works, materials and plant and the state of repair thereof and to the circumstance that they are in such position as to be ready for immediate working and to the suitability of the same for the purpose of the undertaking, but without any addition in respect of compulsory purchase or of goodwill or of any profits which may be or might have been made from the undertaking or of any similar consideration. (3)Where an undertaking of a licensee, being a local authority, is sold under subsection (1) of section 5, the purchase price of the under taking shall be such as the State government, having regard to the market value of the undertaking at the date of delivery of the undertaking, may determine. (4)Where an undertaking of a licensee is purchased under section 6, the purchase price shall be the value thereof, as determined in accordance with the provisions of sub-section (1) and (2) : provided that there shall be added to such value such percentage, if any, not exceeding twenty per centum of that value as may be specified in the license on account of compulsory purchase. ";