| The Appellant Board in exercise
of its powers under Section 6(1) of the Indian Electricity
Act, 1910 (for short, “1910 Act”) purchased the
undertaking of the Respondent Company. Certain disputes arose
regarding the mode of assessment of the purchase money to
be paid by the Board to the company. The company appointed
an arbitrator purportedly under section 52 of the 1910 Act.
The objection raised by the Board against such appointment
was based on the amendments introduced in the 1910 Act by
the Indian Electricity (U.P.Amendment and Validation) Act,
1975 (for short, “Amendment and Validation Act”).
It was the contention of the Board that in view of specific
provisions made in Section 7-A(6) of the 1910 Act the Special
Officer appointed by the Government of Uttar Pradesh alone
has the jurisdiction to assess the net amount payable to the
company as purchase money. The Special Officer was to make
the assessment in accordance with provisions in Section 7-AA
of the Amendment and Validation Act. It was the further contention
of the Board that in view of such specific statutory provisions
in the Amendment and Validation Act, it was not open for the
company to appoint the arbitrator under section 52 of the
1910 Act. The core controversy between the parties was whether
purchase price was to be assessed on the basis of market value
of the undertaking on the date of takeover as contended by
the company or according to its book value as contended by
the Board.
A Division Bench of the Calcutta High Court had declared
the Amendment and Validation Act as unconstitutional and the
purchase price had to be paid as per market value prevailing
on the date of takeover of the undertaking.
The question regarding validity of the provisions of the
Amendment and Validation Act has been set at rest by a Bench
of three learned Judges of the Supreme Court in the cases
of State of U.P. vs. Agra Electric Supply Co.Ltd. and State
of U.P. vs. Banaras Electricity Light and Power Co.Ltd. in
which this court, placing reliance on the judgement of the
Constitution bench in Tinsukhia Electric Supply Co.Ltd vs.
State of Assam upheld the validity of the Act/Ordinance and
the judgement of the Calcutta High Court was set aside.
The Supreme Court held that in view of the aforesaid decisions,
the judgement of the aforesaid Division Bench of the Calcutta
High Court was not good in law and the resultant position
is that the Special Officer appointed by the State Government
of Uttar Pradesh is the only competent authority to assess
the amount of purchase money to be paid by the Board to the
Company and such assessment is to be made on the book value
of the undertaking. The Arbitrator appointed by the company
has no authority to undertake such exercise. The award, if
any, passed by such Arbitrator is non est.
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