Purchase valuation of electricity undertakings includes consumer-paid service lines under the unamended statutory scheme; severable award errors may be corrected.

Under the unamended Indian Electricity Act, 1910, service lines formed part of the licensee's undertaking for purchase valuation even when consumers had paid the laying cost, because the statutory scheme and licence conditions treated ownership and maintenance as remaining with the licensee. The later insertion of section 7A did not apply retrospectively to an earlier acquisition, so the excluded value had to be restored in compensation. Where the arbitral award wrongly omitted that component, the error was severable and did not taint the entire award; the award could be amended to include the service lines rather than set aside in full.

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Issues: (i) Whether the licensee was entitled, on purchase of the undertaking under the Indian Electricity Act, 1910, to compensation for service lines laid at the cost of consumers; (ii) whether the invalid exclusion of that component from the award rendered the award liable to be set aside in whole or could be corrected to that extent alone.

Issue (i): Whether the licensee was entitled, on purchase of the undertaking under the Indian Electricity Act, 1910, to compensation for service lines laid at the cost of consumers.

Analysis: The Act defined "works" broadly enough to include electric supply lines, and the licence schedule treated service lines laid for supply as part of the licensed undertaking even where the consumer paid for the laying cost. The purchase provisions required payment of the value of all lands, buildings, works, materials and plant used for the undertaking, assessed at fair market value. The Court also relied on the licence conditions and the statutory scheme showing that ownership and maintenance of the service lines remained with the licensee. The later amendment inserting section 7A, which excluded consumer-paid service lines, was held inapplicable because the acquisition had taken place earlier.

Conclusion: The appellant was entitled to compensation for the service lines laid at the cost of consumers.

Issue (ii): Whether the invalid exclusion of that component from the award rendered the award liable to be set aside in whole or could be corrected to that extent alone.

Analysis: The arbitral award proceeded on an erroneous legal basis in excluding the consumer-paid service lines from valuation, and the error was apparent on the face of the speaking award. The Court held that the defect related to a distinct and severable part of the award and did not infect the entire award. Instead of remitting the matter, the Court found it proper to amend the award itself to avoid further delay and expense.

Conclusion: The award was not wholly set aside; it was amended only to include the value of the service lines.

Final Conclusion: The appellant succeeded on the core valuation dispute, and the purchase price of the undertaking was increased by restoring the excluded value of the consumer-paid service lines.

Ratio Decidendi: Under the unamended Indian Electricity Act, 1910, service lines remained part of the licensee's undertaking for purchase valuation, even if consumers contributed to laying costs, and a severable legal error in an arbitral award may be corrected without upsetting the valid remainder of the award.

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