Direct electricity supply within a licensed area upheld where public interest was shown and discrimination, acquisition, and fairness challenges failed.

Government authorisation of direct electricity supply within a licensed area was upheld where public interest was supported by material showing the need for uninterrupted supply to a major industry, and the Court would not reappraise the sufficiency of that material. The discrimination challenge under Article 14 failed because no comparable class or operative rate evidence was shown. The order did not amount to compulsory acquisition under Article 31(2) since it transferred no ownership or possession to the State. Natural justice was not violated because the licensee had notice of the complaints and a fair opportunity to make representations.

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Issues: (i) Whether direct supply of electricity by the State Electricity Board to a consumer within a licensed area was invalid as discriminatory under Article 14. (ii) Whether the Government's satisfaction that such supply was necessary in public interest under Section 3(2)(e)(ii) of the Indian Electricity Act, 1910 was open to judicial review and supported by the record. (iii) Whether the impugned order amounted to compulsory acquisition of the licensee's property without compensation under Article 31(2). (iv) Whether the licensee was denied a reasonable opportunity of making its representation before the order was made.

Issue (i): Whether direct supply of electricity by the State Electricity Board to a consumer within a licensed area was invalid as discriminatory under Article 14.

Analysis: Equality under Article 14 protects persons similarly situated against hostile discrimination, but it does not bar rational differentiation. The challenge failed because there was no evidence establishing the operative rates of supply on the relevant date, and no material showing that the licensee, the consumer receiving direct supply, and the other consumers formed the same class for comparison. The mere fact that one entity supplied energy and another consumed it did not by itself establish equality of status or discriminatory treatment.

Conclusion: The plea of discrimination failed and was rightly rejected.

Issue (ii): Whether the Government's satisfaction that such supply was necessary in public interest under Section 3(2)(e)(ii) of the Indian Electricity Act, 1910 was open to judicial review and supported by the record.

Analysis: The statutory condition that the Government must deem the supply necessary in public interest was not treated as wholly immune from scrutiny. The Court held that the Government must be able to show that the power was exercised for public interest, though the Court would not sit in appeal over the sufficiency of the material. On the facts, the record showed that uninterrupted supply was needed for a major industry, that the licensee had failed to ensure stable supply, and that the industry served employment and foreign exchange interests. Those materials furnished a sufficient basis for the governmental decision.

Conclusion: The requirement of public interest was satisfied and the order was valid on that ground.

Issue (iii): Whether the impugned order amounted to compulsory acquisition of the licensee's property without compensation under Article 31(2).

Analysis: The licence did not create a monopoly, and the statute expressly permitted the State to authorise direct supply within the same area. The order did not transfer ownership or the right to possession of any property to the State or to a State-controlled corporation. Since the constitutional concept of compulsory acquisition under Article 31(2) depended on such transfer, the deprivation complained of did not fall within that provision, even if loss was caused to the licensee as a consequence of direct supply to another consumer.

Conclusion: No compulsory acquisition within Article 31(2) was made out.

Issue (iv): Whether the licensee was denied a reasonable opportunity of making its representation before the order was made.

Analysis: The material showed that complaints regarding inadequate supply had been brought to the Government's notice, meetings were held with the company, the company was aware of the issue, and its later representations were also considered and rejected. The circumstances showed that the company had adequate opportunity to place its case before the Government.

Conclusion: There was no violation of natural justice.

Final Conclusion: The statutory power to authorise direct supply within the licensed area was upheld on the facts, and none of the constitutional or procedural challenges succeeded.

Ratio Decidendi: A Governmental decision to authorise direct supply of electricity within a licensed area is valid where the statutory condition of public interest is supported by material, the alleged discrimination is not established between persons similarly situated, no transfer of ownership or possession occurs so as to attract compulsory acquisition, and adequate opportunity of representation has been afforded.

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