1962 (5) TMI 36 - SC - Indian Laws

Supreme Court validates retrospective operation of Madras Electricity Act, upholds compensation adequacy.

WEST RAMNAD ELECTRIC DISTRIBUTION CO. LTD. Versus STATE OF MADRAS

The Supreme Court upheld the validity of Section 24 of the Madras Electricity Supply Undertakings (Acquisition) Act, 1954, confirming its retrospective ... - Issues Involved:1. Validity of Section 24 of the Madras Electricity Supply Undertakings (Acquisition) Act, 1954.2. Retrospective operation of the Act.3. Validity of the notification issued under the earlier Act.4. Contravention of Article 31(1) of the Constitution.5. Competence of the legislature to pass retrospective laws.6. Adequacy of compensation under Section 5 of the Act in light of Article 31(2) of the Constitution.Detailed Analysis:1. Validity of Section 24 of the Madras Electricity Supply Undertakings (Acquisition) Act, 1954:The principal question in these appeals is the validity of Section 24 of the Madras Electricity Supply Undertakings (Acquisition) Act, 1954. The appellant argued that the Act, which purports to validate actions taken under the earlier 1949 Act, is ultra vires, ineffectual, and inoperative. The respondent contended that Section 24 validly and effectively validated actions taken under the earlier Act. The Court held that Section 24 is retrospective in operation and intended to bring within its scope undertakings of which possession had already been taken. Therefore, Section 24 effectively validated the actions taken under the earlier Act.2. Retrospective Operation of the Act:The Act was passed to provide for the acquisition of undertakings supplying electricity to the public and to lay down principles for paying compensation. The Court noted that the Act, in terms, is intended to apply to undertakings of which possession had already been taken, making its material and operative provisions retrospective. The retrospective operation of the Act is an essential part of its scheme, and Section 24 serves to validate actions taken under the earlier Act.3. Validity of the Notification Issued Under the Earlier Act:The appellant argued that the notification issued under the earlier Act was invalid as it was issued under a void Act. The Court held that Section 24 of the Act retrospectively validated the notification, making it valid as if it had been issued under the provisions of the Act. The phrase 'hereby declared' in Section 24 means that the notifications are treated as validly issued under the Act, provided they are not inconsistent with its other provisions.4. Contravention of Article 31(1) of the Constitution:The appellant contended that the notification contravened Article 31(1) of the Constitution, which requires deprivation of property to be by authority of law. The Court held that the retrospective operation of the Act means that the relevant provisions were in existence when the notification was issued, thereby complying with Article 31(1). The Court also noted that Article 31(1) does not use the phrase 'law in force at the time,' allowing for retrospective validation by subsequent laws.5. Competence of the Legislature to Pass Retrospective Laws:The appellant argued that the legislature cannot retrospectively cure the contravention of fundamental rights. The Court rejected this argument, stating that the legislature can validate actions taken under a void law by passing a subsequent law with retrospective effect. The Court cited several decisions affirming the legislature's power to enact retrospective laws, including those validating actions taken under void legislation.6. Adequacy of Compensation Under Section 5 of the Act in Light of Article 31(2) of the Constitution:The appellant argued that Section 5 of the Act, which provides for compensation to licensees, is invalid as it does not ensure a just equivalent of the property acquired, violating Article 31(2). The Court noted that the appellant failed to provide material evidence to support this claim. The Court examined the three bases for compensation under Section 5 and found no conclusive evidence that they did not amount to a just equivalent. The Court emphasized that the appellant had the option to choose the basis for compensation, and in the absence of material evidence, the challenge to Section 5's validity could not be sustained.Conclusion:The Supreme Court dismissed the appeals, upholding the validity of Section 24 of the Madras Electricity Supply Undertakings (Acquisition) Act, 1954, and confirming the retrospective operation of the Act. The Court also validated the notification issued under the earlier Act and rejected the appellant's arguments regarding the contravention of Article 31(1) and the inadequacy of compensation under Section 5. The appeals were dismissed with costs.