Full Judgment Text
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PETITIONER:
WESTERN U.P. ELECTRIC POWER & SUPPLYCOMPANY LTD.
Vs.
RESPONDENT:
STATE OF U.P. & ANR.
DATE OF JUDGMENT:
07/03/1969
BENCH:
SHAH, J.C.
BENCH:
SHAH, J.C.
RAMASWAMI, V.
CITATION:
1970 AIR 21 1969 SCR (3) 865
1969 SCC (1) 817
CITATOR INFO :
R 1978 SC 597 (222)
R 1981 SC1829 (33)
R 1983 SC1155 (16)
ACT:
Indian Electricity Act 9 of 1910 as amended by the Indian
Electricity (Uttar Pradesh Sanshodhan) Adhiniyam 1961, ss. 3
(1) and 3 (2) (e) (ii) Constitution of India Arts. 14 and
31(1) and (2A) Licencee under s. 3(1) of Electricity Act
supplying electricity in certain area--State Government
ordering under s. 3(2)(e)(ii) that energy be supplied to a
factory in the said area directly by Electricity Board-
Whether discrimination results--’Public interest’, in s.
3(2)(e)(ii)-Satisfaction under section whether
subjective--Order of direct supply by Board whether com-
pulsory acquisition of licencee’s property without
compensation-Natural justice, whether satisfied.
HEADNOTE:
The appellant hold a licence under s. 3(1) of the Indian
Electricity Act, 1910 to supply electricity in certain areas
in the State of U.P. The 3rd respondent was a factory
manufacturing electrical equipment in the appellant’s area
of supply, and was receiving energy from the appellant. The
3rd respondent made complaints to the State Government that
the supply of electrical energy by the appellant was
inadequate and fluctuating. There was no improvement in the
supply even after discussions between the parties.
Thereafter at the request of the 3rd respondent, the State
Government by order dated December 26, 1961 under ’s.
3(2)(e)(ii) of the Indian Electricity Act, 1910 as amended
by the Indian Electricity (Uttar Pradesh Sanshodhan)
Adhiniyam 1961 directed the State Electricity Board to
supply electrical energy directly to the 3rd respondent.
The appellant made representations to the Government against
the order but these were rejected. The appellant then filed
a writ petition in the High Court which was dismissed by a
Single Judge.- A Letters Patent Appeal against the decision
was also dismissed although the High Court allowed the
appellant to raise an additional plea based on Art. 14 of
the Constitution without allowing further evidence to be
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given for that purpose. In this Court, in appeal against
the High Court’s (order it was contended : (i) That owing to
the different rates at which electricity was supplied by the
State Government, there was discrimination, (a) between the
3rd respondent and other consumers, and (b) between the 3rd
respondent and the appellant; (ii) That the impugned order
of the State Government was not made in the public interest
within the meaning of s. 3(2)(e)(ii) of the Act; (iii) That
the impugned order amounted to compulsory acquisition of the
property of the appellant without compensation-, and (iv)
That the impugned order was passed in violation of the
principles of natural justice.
HELD : (i) Article 14 of the Constitution ensures equality
among equals : its aim is to protect persons similarly
placed against discriminatory treatment. It does not
operate against rational classification. A person setting
up a grievance of denial of equal treatment by law must
establish that between persons similarly circumstanced, some
were treated to their prejudice and the differential
treatment had no relation to the object sought to be
achieved by the law. [870 D]
866
in the present case, as to the alleged discrimination
between the 3rd respondent and the other consumers in the
area there was no evidence on record showing the operative
rates on the date of the impugned order, and no grievance by
any consumer of any prejudicial treatment accorded to, him.
Further the 3rd respondent and other consumers did not
belong to the same class because in the one case energy was
being supplied by the appellant and in the other by the
Electricity Board. [870 E-G]
Similarly in respect of the alleged discrimination between
the 3rd respondent and the appellant there was no evidence
that the rates charged by the State Electricity Board to the
3rd respondent were lower than the rates charged to the
appellant. The appellant and the 3rd respondent again did
not belong to the same class inasmuch as the appellant was a
distributor of electric energy, whereas the 3rd respondent
was a consumer. [870 H-871 B]
The plea of violation of Art. 14 of the Constitution on
behalf of the appellant, could not therefore be accepted.
The Western U.P. Electric Power and Supply Co. Ltd. v. State
of U.P. & Ors., A.I.R. 1968 S.C. 1099, distinguished.
(ii)The question whether an order under s. 3 (2) (e). as
amended by U.P. Act 30 of 1961 is in public interest is not
one on which the opinion of the Government is final. If
challenged, the Government must show that exercise of the
power was necessary in the public interest. The court is
thereby not intended to sit in appeal over the satisfaction
of the Government. If there be prima facie evidence on
which a reasonable body of persons may hold that it is in
the public interest to supply energy directly to the
consumers, the requirements of the statute are fulfilled.
Normally a licencee of electrical energy though he has no
monopoly, is the person through whom electrical energy would
be distributed within the area of supply since the licencee
has to lay down electric supply lines for transmission of
energy and to maintain its establishment. An inroad may
be made in that right in the conditions which ate
statutorily prescribed, but the satisfaction of the
Government that the supply is necessary in the public
interest is in appropriate cases not excluded from judicial
review. [872 B-D]
In the present case there was ample evidence on record to
prove that uninterrupted supply of electrical energy to the
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3rd respondent was necessary in the public interest and
the, appellant was unable to- ensure it. a large industry
which gave scope and earned foreign exchange, if it was
necessary to give direct supply of electrical energy to the
3rd respondent the order to the electricity board to make
a direct supply to the 3rd respondent was in the public
interest within the meaning of s. 3(2) (e) (ii) of the Act
[872 G; 873 D-E] (e) D-E]
(iii) Even assuming that the right to supply electrical
energy is property (a question on which the court expressed
no opinion) there was in the present case no infringement of
the guarantee under Art. 31(2). By cl. (2A) of Art. 31
there is no compulsory acquisition or requisitioning of
property unless ownership or right to possession of the
property stands transferred to the State or a corporation
owned or controlled by the State. By the order granting
direct supply of electricalenergy ownership of property
unless ownership or to right to possession of property
was not transferred to the State or to a corporation owned
or controlled by the State and on that limited ground it
must be held that Art. 31(2) had no application to the
case. [873 G-874 D]
867
(iv) In view of the fact that the complains made by the
3rd respondent were discussed with the appellant and that
several representations were made by the appellant to the
State Government which were by the latter and rejected it
could not be said that the denied natural justice. [874 E-G]
JUDGMENT:
CIVIL APPELLATE JURISDICTION : civil appeal No 2482 of 1968.
Appeal by special leave from judgment and order dated March
18, 1968 of the Allahabad High Court in Second Appeal No.
317 of 1965.
Mohan Behari Lal, for the appellant.
O. P. Rana, for respondents Nos. 1 and 2.
C. K. Daphtary, B. R. L. Iyengar, Bishambar Lal and H. K.
Puri, for respondent No. 3.
The Judgment of the Court was delivered by
Shah J. The Western U.P. Electric Power & Supply Company
Ltd.-hereinafter called ’the Company’-holds a licence under
s. 3(1) of the Indian Electricity Act 9 of 1910 to supply
electricity in certain areas in the State of U.P. Messrs
Hind Lamps Private Ltd. set up a factory for manufacturing
electrical equipment within the area of supply of the
Company. Hind Lamps was receiving energy from the Company.
Hind Lamps made several representations to the State
Government that the supply of energy by the Company was
inadequate to meet its requirements and was ’interrupted and
fluctuating". Meetings were held between the Company, the
State officials and Hind Lamps for devising means to ensure
uninterrupted and adequate Supply of energy required by Hind
Lamps, but there was no improvement in the supply position.
Hind Lamps then applied to the Government of U.P. to grant
direct supply of electrical energy from the State
Electricity Board. The State Government by order dated
December 26, 1961, issued in exercise of the powers
conferred by s. 3(2)(e)(ii) of the Indian Electricity Act,
1910 as amended by the Indian Electricity (Uttar Pradesh
Sanshodhan) Adhiniyam, 1961, directed the State Electricity
Board "to supply electrical energy directly to Hind Lamps
upon terms and conditions similar to those on which it
supplied electrical energy to other customers". In reply to
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a representation to reconsider the decision, the Government
informed the Company that the "decision was necessitated in
the public interest and there was no justification for
revising it". Another representation made by the Company
was also turned down and direct supply of electrical energy
was commenced, by the’ State’ Electricity Board to Hind
Lamps.
L11 Sup. C.I.-69
968
A petition moved by the Company in the High Court of
Allahabad for a writ of certiorari quashing the order dated
December 26, 1961 was rejected by R. S. Pathak, J. In appeal
under the Letters Patent against the order passed by the
learned Judge, counsel for the Company applied fOr leave to
plead that the order dated December 26, 1961, resulted in
discrimination between Hind Lamps and other consumers within
the area of supply of the Company, and also between Hind
Lamps and the Company and the order was on that account
invalid. The High Court permitted the Company to raise the
contention, but declined to-give opportunity to "enlarge,
the evidence on record at that stage". Sole reliance was
therefore placed by counsel for the Company on paragraph-2
of the Government Gazette Notification issued by the U.P.
Government on April, 24/28, 1962, containing the revised
tariff for the, supply of electrical energy to licensees
obtaining bulk supply from the U.P. State Electricity Board
and to other consumers. It stated :
"The revised tariff shall, except in the case
of the licensees, be applicable to consumers
in respect of consumption in the month of May
1962. In the case of licensees obtaining bulk
supply of energy from the Board, the revised
tariff shall apply to supplies made from 1st
July, 1962 and onwards."
The Schedules in the Gazette Notification set out the rates
at which electrical energy was to be supplied by the Board
to licensees as well as to diverse classes of consumers who
received supply of energy from the Board. The High Court
held that there was no evidence on the record to prove the
rates at which energy was being supplied to the Company on
December 25, 1961, and the rates at which the energy was
being supplied to Hind Lamps. The High Court observed that
before the order dated December 26, 1961 could be challenged
on the ground of discrimination between Hind Lamps and other
consumers as also between Hind Lamps and the Company, it was
necessary for the Company to establish by evidence the rates
of supply of energy to the Company, the Hind Lamps and to
the other consumers obtaining at the time of the impugned
order, i.e. December 26, 1961, and in the absence of that
evidence the plea of discrimination must fail.
The High Court also rejected the contention raised by
the Company that The impugned order was not made in public
interest, that granting direct. supply of electrical energy
to Hind Lamps amounted to compulsory acquisition of property
of the Company without payment of compensation, and that in
refusing to give an opportunity to the Company to object the
rules of natural justice were violated.
869
The Indian Electricity Act 9 of 1910 makes provision by s. 3
for the grant of a licence to supply energy in any specified
area and also to lay down or place electric supply. lines
for transmission of energy. Clause (e) of sub-s. (2) as
amended by U.P. Act 30 of 1961, and sub-s. (3) provide:
"(2)(e) grant of a licence under this Part
for any purpose shall not in any way hinder or
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restrict-
(i) the grant of licence to another person
within the same area of supply for a like
purpose; or
(ii) the supply of energy by the State
Government or the State Electricity Board
within the same area, where the State
Government deems such supply necessary in
public interest;"
"(3) Where the supply of energy in any area by
the State Electricity Board is deemed
necessary under subclause (ii) of clause (e)
of sub-section (2), the Board may, subject to
any terms and conditions that may be laid down
by the State Government, supply energy in that
area notwithstanding anything to the contrary
contained in this Act or the Electricity
Supply Act, 1948."
The State Government may grant a licence to supply
electrical energy to consumers within a specified area on
terms and conditions prescribed in the licence and subject
to statutory conditions, but on that account the State
Government is not debarred from granting a licence to
another person or to supply energy directly to a consumer
within the same area if the State Government deemed it
necessary so to do in the public interest.
Section 3(2)(e) is challenged on the ground of denial of the
guarantee of the equal protection clause of the
Constitution. Strong reliance was placed by counsel for the
appellant upon a recent judgment of this Court : The Western
U.P. Electric Power and Supply Co. Ltd. v. The State of U.P.
and Ors.(1) In that case the Government of U.P. had by
Notification dated September 21, 1966, authorised the State
Electricity Board to supply energy directly to consumers in
the area of supply for which a licence was already granted.
This Court held that a licensee supplying electrical energy
in an area has no monopoly under its licence; but the
Notification issued by the U.P. Government directing the
State Electricity Board to supply energy directly to a
consumer at a rate lower than the rate at which it was
supplied to the licensee Company amounted to discrimination
between that
(2) A.I..R. 1968 S.C. 1099
870
consumer, and the other consumers and also, between the con-
sumer and the licensee and the Notification on that account
was invalid. Counsel for the Company says that the question
which falls to be determined in the present appeal is
concluded by the judgment in The Westem U.P. Electrical
Power and Supply Company’s case(1), for the Court in that
case held that the Notification of the Government of U.P.
directing the State Electricity Board to supply energy
directly to certain concerns at a rate lower than the rate
at which energy was supplied to the licensee Company amounts
to discrimination between those concerns on the one hand and
the other consumers on the other, and also between the
concerns and the Company.
Article 14 of the Constitution ensures equality among
equals: its aim is to protect persons similarly placed
against discriminatory treatment. It does not however
operate against rational classification. A person setting
up a grievance of denial of equal treatment by law must
establish that between persons similarly circumstanced some
were treated to their prejudice and the differential
treatment had no reasonable relation to the object sought to
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be achieved by the law. In the present case there is no
evidence about the rate charged for energy supplied by the
State Electricity Board to the Company on December 26, 1961,
nor is there any evidence on the record about the rates
charged for electrical energy supplied to the consumers by
the Company.
The plea of discrimination has to be considered from two
different points of view-(1) the discrimination between Hind
Lamps and the other consumers within the area of supply in
respect of which the Company held the licence; and (2)
discrimination in the rates of supply charged by the State
Electricity Board to the Company and to Hind Lamps. There
is no evidence on the record about the operative rates on
the date of the impugned order. Again Hind Lamps was a
consumer of electrical energy and so were the other
consumers within the area of supply in respect of which the
Company held the licence. But on that account it does. not
follow that they belong to the same class. In one case
energy is being supplied by the Company and in the other by
the State Electricity Board. Again, there is no grievance
made by any consumer of energy that he is by the grant of
preferential rates to Hind Lamps prejudicially treated.
Other consumers of energy and Hind Lamps therefore do not
belong to the same class, and there is no grievance by any
consumer of any prejudicial treatment accorded to him.
There is also no evidence that the rates charged by the
State Electricity Board to Hind Lamps were lower than the
rates charg-
(1) A.I.R. 1968 S.C. 1099.
871
ed to the Company. The Company and Hind Lamps again do not
belong to the same class. The Company is a distributor of
electrical energy, whereas Hind Lamps is a consumer. If the
State Government charged different rates from persons
belonging to the same class,. in the absence of any rational
basis for that treatment, the plea of discrimination founded
on differential rates may probably have some force. But the
Company and Hind Lamps did not belong to the same class,
and there is no evidence that for energy supplied different
rates were charged. In The Western U.P. Electric Power and
Supply Co. Ltd. v. The State of U.P.(1) the position was
different. That case was decided on the footing that the
consumer and the Western U.P. Electric Power and Supply Co.
Ltd. belonged to the same class, and the Board charged
higher rates from the distributing Company than the rate
charged from the third respondent in that case. The Court
observed in that case
"........ the notification and the
Government’s direction to the Board therein
results in clear discrimination. If the Board
were to supply energy directly to the 3rd
respondent it has to do so at rates lower than
the rates at which electricity is supplied by
it to the petitioner company. The petitioner
company being thus charged at higher rates
from its other consumers with the result that
the 3rd respondent would get energy at
substantially lower rates than other consumers
including other industrial establishments in
the area. The notification thus results in
discrimination between the 3rd respondent on
the one hand and the other consumer on the
other as also between the 3rd respondent and
the petitioner company. "
The first contention was, therefore, rightly negatived by
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the High Court.
By the amendment made by U.P. Act 30 of 1961 electrical
energy may be supplied by the State Government or the State
Electricity Board within the same- area in respect of which
a licence is granted only if the State Government deems such
supply "necessary in public interest". The High Court
observed that "the State Government was the sole Judge of
the question whether direct- supply of energy to Hind Lamps
was or was not in the public, interest. The test is of a
subjective nature, no objective test being contemplated.
Thus it is not open to this Court to examine whether it was
necessary in the public interest. The subjective opinion of
the Government is final in the matter, and the same is not
justiciable or subject to judicial scrutiny as to the
sufficiency of the grounds on which the State Government has
formed its opinion. In other words the Legislature has left
’(1) A.I.R. 1968 S.C. 1099.
872
it to the sole discretion of the State Government to decide
whether a direct supply of energy was in the public
interest".
We are unable to agree with that view. By s. 3 (2) (e) as
amended by the U.P. Act 30 of 1961, the Government is au-
thorised to supply energy to consumers within the area of
the license in certain conditions : exercise of the power is
conditioned by the Government deeming it necessary in public
interest to make such supply. If challenged, the Government
must show that exercise of the power was necessary in public
interest. The Court is thereby not intended to sit in
appeal over the satisfaction of the Government. If there be
prima facie evidence on which a reasonable body of persons
may hold that it-is in the public interest to supply energy
directly to the consumers, the requirements of the statute
are fulfilled. Normally a licensee of electrical energy,
though he has no monopoly, is the person through whom
electrical energy would be distributed within the area of
supply, since the licensee has to lay down electric supply
lines for transmission of energy and to maintain its
establishment. An inroad may be made in that right in the
conditions which are statutorily prescribed. In our
judgment, the satisfaction of the Government that the supply
is necessary in the public interest is in appropriate cases
not excluded from judicial review.
But the decision of the High Court must still be maintained.
The order issued by the Government recited:
"The Governor is satisfied that it is
necessary in the public interest for the State
Electricity Board to make the supply of
electricity direct to the industry (Hind Lamps
Private Ltd.) and is, therefore, pleased to
order in exercise of the powers vested in him
under section 3(2)(e)(ii) of the Indian
Electricity Act, 1910 (Act No. IV of 1910) as
amended by the Indian Electricity (Uttar
Pradesh Sanshodhan) Adhiniyam, 1961 (U.P. Act
No. XXX of 196 1) that the U.P. State
Electricity Board make the supply of
electricity direct to the Hind Lamps Ltd.,
Shikohabad."
There is ample evidence on the record to prove that
uninterrupted supply of electrical energy to Hind Lamps was
necessary in public interest, and the Company was unable to
ensure it. The only averment made in the petition filed by
the Company before the High Court was that "the giving of
the. supply to Hind Lamps (Private) Ltd. could not be said
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to be in public interest as required by section 3(2)(e)(ii)
of the Indian Electricity Act, 1910 as amended by Indian
Electricity (U.P. Amendment) Act XXX of 1961". No
particulars were furnished in the petition. In the
affidavit filed on behalf of the State Electricity Board it
was affirm-
873
ed that Hind Lamps was engaged in the manufacture of
electric bulbs, fluorescent tubes etc. and the process
required uninterupted supply; that it was one of the major
industries of the State and was the only industry of its
kind in the State; that as a result of the defective supply
by the Company, the Hind Lamps felt dissatisfied and
informed the Government that if the supply position was not
improved: it would be forced to shift its factory from the
State to some other State; that the industry gave employment
to a number of people in the State and saved a large amount
of foreign exchange and on that account the State Government
was keen to give it fair and due protection that it deserv-
ed; that the total supply of electricity to the Company was
1700 K.W. and even if the entire supply under the agreement
was made available by the Company to Hind Lamps it would
fall short of its requirements. It was, therefore, in
public interest that direct supply of energy should be made
available to Hind Lamps. An affidavit containing similar
averments was also filed on behalf of the State of Uttar
Pradesh.
There is no evidence on behalf of the Company to the con-
trary. For maintaining effective working of a large
industry which gave scope for employment to the local
population and earned foreign exchange, if it was necessary
to give direct supply of electrical energy to Hind Lamps,
the order to the Electricity Board to make direct supply of
electrical energy to Hind Lamps was unquestionably in public
interest within the meaning of s. 3 (2) (e) (ii) of the
Act.
There is no substance in the contention that by the issue of
the order dated December 26, 1961, there was ’compulsory ac-
quisition of the property of the Company without providing
for compensation. By the grant of a licence under Act 9 of
1910 no monopoly was created in favour of the Company. The
statute expressly reserves the right of the State to
authorise supply of electrical energy through another
licensee in the same area or to a consumer directly through
the State Electricity Board. Assuming that the right to
supply electrical energy is property (on that question we
express no opinion), we are of the view- that there is no
infringement of the guarantee under Art. 31(2)’of the Con-
stitution. Clause (2) of Art. 31 as amended by the
Constitution (Fourth Amendment) Act, 1955, insofar as it is
material, provides
"No property shall be compulsorily acquired
save for a public purpose and save by
authority of a law which provides for
compensation for the property so acquired and
either fixes the amount of the compensation or
specifies the principles on which, and
874
the manner in which, the compensation is to be
determined and given................"
Clause (2A) in substance defines compulsory acquisition or
requisitioning of property within the meaning of cl. (2).
It provides
Where a law does not provide for the transfer
of the ownership or right to possession of any
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property to the State or to a corporation
owned or controlled by the State, it shall not
be deemed to provide for the compulsory
acquisition or requisitioning of property,
notwithstanding that it deprives any person of
his property."
By cl. (2A) there is no compulsory acquisition or
requisitioning of property, unless ownership or right to
possession of the property stands transferred to the State
or a corporation owned or controlled by the State. By the
order granting direct supply of electrical energy ownership
of property or right to possession of property was not
transferred to the State or to a corporation owned or
controlled by the State, and on that limited ground it must
be held that Art. 31(2) has no application. The Company
may, it may be assumed, as a result of direct supply of
electrical energy to Hind Lamps, suffer loss; but Art. 31(2)
does not guarantee protection against that loss.
The Company was afforded sufficient opportunity to make its
representation before and after the impugned order was
passed. Hind Lamps had submitted several, representations
to the Government of U.P. regarding inadequate and irregular
supply of electrical energy. The Company was informed about
the complaints made by Hind Lamps. Meetings were held in
which certain steps to be taken by the Company to make the
supply regular were agreed upon, but they were not carried
out, presumably because the Company had not the requisite
equipment for that purpose. The Company was asked to supply
electrical energy as released in favour of Hind Lamps; it
failed to do so. Representations made by the Company, after
the order was passed, requesting that the order dated
December 26, 1961, be withdrawn, were also considered by the
Government and rejected. Adequate opportunity of making a
representation was afforded to the Company to satisfy the
State Government that it was not in the public interest to
supply electrical energy directly to Hind Lamps.
The appeal fails and, is dismissed with costs.
G.C. Appeal dismissed.
875