1989 (4) TMI 322 - SC - Indian Laws

Judicial Review: Article 31C Nexus with Article 39(b) Upheld

TINSUKHIA ELECTRIC SUPPLY CO. LTD. Versus STATE OF ASSAM AND ORS.

TINSUKHIA ELECTRIC SUPPLY CO. LTD. Versus STATE OF ASSAM AND ORS. - 1990 AIR 123, 1989 (2) SCR 544, 1989 (3) SCC 709, 1989 (2) JT 217, 1989 (1) SCALE 1006 Issues Involved:1. Scope of judicial review under Article 31C.2. Reasonable and direct nexus with Article 39(b).3. Determination of the 'amount' payable for acquisition.4. Exclusion of 'service lines' from valuation.5. Deductions from the gross amount.6. Liability for retrenchment compensation.7. Deduction of liabilities without corresponding obligations.8. Machinery for determining deductions.9. Limited scope of arbitration.Summary:Issue 1: Scope of Judicial Review under Article 31CThe principal question was whether the declaration under Article 31C is justiciable and open to judicial review. The court held that it is within the court's jurisdiction to examine if there is a direct and reasonable nexus between the legislation and the principles in Article 39(b) and (c). If the nexus is absent, the legislation will not enjoy the protection of Article 31C.Issue 2: Reasonable and Direct Nexus with Article 39(b)The court examined whether the impugned legislations, namely the Indian Electricity (Assam Amendment Act, 1973) and the Tinsukhia & Dibrugarh Electric Supply Undertakings (Acquisition) Act, 1973, had a reasonable and direct nexus to the principles in Article 39(b). It was concluded that the legislations aimed at nationalizing the undertakings to ensure better distribution of material resources (electric energy) for the common good, thus falling within the ambit of Article 39(b).Issue 3: Determination of the 'Amount' Payable for AcquisitionThe petitioners argued that the 'amount' payable under the impugned laws was illusory. However, the court held that the concept of 'Book-Value' is an accepted accountancy concept and cannot be considered illusory. The court also noted that the adequacy of the amount is not justiciable if the law has the protection of Article 31C.Issue 4: Exclusion of 'Service Lines' from ValuationThe petitioners contended that excluding 'service lines' from valuation was arbitrary. The court reasoned that since service lines are constructed at the expense of consumers, it would be inequitable to provide compensation for them to the licensee. Therefore, the exclusion was justified.Issue 5: Deductions from the Gross AmountThe petitioners argued that the deductions from the gross amount, particularly the amounts remaining in various reserves, could lead to duplication of liability. The court clarified that the liability for deduction of reserves would arise only if the amounts remain unpaid by the licensee to the government, thus avoiding any duplication.Issue 6: Liability for Retrenchment CompensationThe court addressed the petitioners' contention regarding the liability for retrenchment compensation under Section 11(3). It was held that this provision was not unreasonable as it accounted for the period during which the employment subsisted under the licensee.Issue 7: Deduction of Liabilities without Corresponding ObligationsThe petitioners contended that the deductions under Section 9(c), (d), and (e) were made without corresponding statutory obligations on the government to pay the same to creditors. The court held that the government would be under a legal obligation to pay the sums deducted to the concerned creditors, ensuring no unjust enrichment.Issue 8: Machinery for Determining DeductionsThe petitioners argued that there was no machinery for determining the amounts deductible under Sections 8 and 9. The court interpreted that the 'Special Officer' appointed under Section 10 has the authority to assess the net amount payable, including examining the validity of deductions.Issue 9: Limited Scope of ArbitrationThe petitioners contended that the arbitration clause was limited and did not cover all disputes. The court held that the arbitration provision in Section 20 was adequate for resolving disputes in specified areas, and the overall scheme of the Act was workable.Conclusion:All contentions urged by the petitioners were rejected, and the writ petitions were dismissed. The court upheld the validity of the impugned legislations, affirming their protection under Article 31C.