TaxTMI 
TaxTMI 
1989 (4) TMI 322
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....he Consti- tution. In these writ petitions we are concerned with two legis- lations, namely, the Indian Electricity (Assam Amendment Act, 1973, (Assam Act IX of 1973), and the Tinsukhia & Dibrugarh Electric Supply Undertakings (Acquisition) Act, 1973 (Act X of 1973). The main point which is significant in these writ petitions, is the extent and scope of judicial review of legislation where there is 'declaration under Art. 31-C of the Constitution, which enjoins that no law giving effect to the policy of the State towards securing all or any of the principles laid down, inter alia, namely, Arti- cles 38, 39, 39A, 40, 41, 42, 43A, 44 to 48, 48A and 49 to 51 shall be deemed to be void on the ground that those are inconsistent or take away or abridge any of the rights conferred by Article 14 or 19, and further provides that no law containing a declaration that it is for giving effect to such a policy, shall be called in question in any court on the plea that it does not give effect to such a policy. The two legislations in question are covered by the declaration under Article 31C of the Constitution. The principal question which falls for consideration is, whether that declaratio....
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.... for not giving effect to securing the Directive Principles specified in Article 39(b) & (c), the court can and must necessarily go into that question and decide. See the observations of Justice Mathew in Kesavanan- da Bharati's case (supra) at page 855 of the report. If the court comes to the conclusion that the declaration was merely a pretence and that the real purpose of the law is the accomplishment of some object other than to give effect to the policy of the State towards securing the Directive Principles as enjoined by Article 39(b) & (c), the declara- tion would not debar the court from striking down any provi- sion therein which violates Articles 14, 19 or 31. In other words, if a law passed ostensibly to give effect to the policy of the State is, in truth and substance, one for accomplishing an unauthorised object, the Court would be entitled to tear the veil created by the declaration and decide according to the nature of the law. Also see pages 851 & 856 of the report. Justice Beg, as the learned Chief Justice then was, at pages 884-885 of the report reiterated that a colourable piece of legislation with a different object altogether but merely dressed up as a law ....
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....s, reiterated at pages 337-338 of the report that if the Court finds that the law though passed seemingly for giving effect to a Directive Principle is, in pith and substance, one for accomplishing an unauthorised purpose-unauthorised in the sense of not being covered by any Directive Principle, such law would not have the protection of the amended Article 31C, which does not give protection to a law which has merely some remote or tenuous connection with a Directive Principle. What is necessary is that there must be a real and substantial connection and the dominant object of the law must be to give effect to the Directive Principles. Also see the observations of this Court in Sanjeev Coke Mfg. Co. v. Bharat Coking Coal Ltd. & Anr., [1983] 1 SCR 1000 at 1020. Looked at from this point of view, it cannot be said that the principles of colourable legislation would not be applicable. If it was demonstrated that there was no direct and reasonable nexus between these two impugned laws and the principles as enshrined under Article 3 l(b) & (c) of the Constitution, then that would have been colourable legisla- tions and would have been bad on that score. It was contended on behalf of t....
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....k- ing Article 32 of the Constitution of India, the Tinsukia Electric Supply Company Limited and the Dibrugarh Electric Supply Company Limited, which are licensees under the Indian Electricity Act 19 10 for the supply of electricity within the areas of the municipal boards of Tinsukhia and Dibrugarh towns respectively, in the. State of Assam and the share- holder-Managing Directors of the two companies assail the constitutional validity of the Indian Electricity (Assam Amendment) Act, 1973, and of the Tinsukia and Dibrugarh Electric Supply Undertaking (Acquisition) Act, 1973. By the latter enactments, the undertakings of the two companies were sought to be acquired so as to vest them in the Govern- ment with effect from 27.9. 1972. The petitioners also urge, in the petitions, a challenge to the validity of the Twentyfourth and Twenty fifth Amend- ments to the Constitution. This part of the petition, in view of the subsequent pronouncements of this court on these amendments, does not survive. 2. The petitioner-companies are Public Limited Companies registered under the Indian Companies Act, 1913, and are existing companies under the Companies Act 1956 with their registered offices....
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....tive effect from:the date of promulgation of the earlier ordinances, petitioners sought, and were granted by an order of this Court dated 18.12.1973, leave to amend the petitions so as to direct the challenge against the enactments. 4. An advertence, though brief, to the factual anteced- ents leading upto to the promulgation of the Ordinances and to certain earlier steps taken by the State Government to acquire the said undertakings, first by negotiations, and later by exercise of the option to purchase, is necessary in order to put the grounds of challenge in their proper per- spective. Respondent No. 4 i.e. the Assam State Electricity Board, it would appear, had been expressing its intention to take- over the undertaking of the Tinsukia Co. by private negotia- tions even from the year 1964. Pursuant to and in implemen- tation of this proposal the Board had constituted a commit- tee of 3 members for assessing the value of the assets of the Tinsukhia's undertaking. On the valuation so made and the inventories so prepared, the Board, on 27.3.1970, in- formed the Tinsukia Co. that the Board had approved the valuation of the assets of the undertaking at ₹ 30,54,246, exclud....
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....erned, similar negotiations for purchase by private negotiations had been initiated and the Chief Engineer of the Board accompanied by the Finance and Accounts Member of the Board visited Dibru- garh on 27.1.1965 for discussions as to the valuation of the undertaking. Nothing moved in the matter for some years. However, in the communication dated 3.8.1970 addressed by the Secretary to Government of Assam, Power (Electricity), Mines and Minerals Department, to the Secretary of the Board, it was reiterated that Government had decided that the undertaking of the Dibrugarh Co. should be taken-over by negotiation. While matters remained thus, the company's undertaking was taken over on 27.9.1972 pursuant to the two ordinances promulgated by the Governor. 5. We may briefly turn to the provisions of the two enactments which have since replaced the two Ordinances: The amendments made to Sections 5, 6 and 7A of the Indian Electricity Act, 1910, by the Indian Electricity (Assam Amendment) Act, 1973, are substantial and far-reach- ing. Section 2 of the Amending Act amended Section 5 of the Principal Act by substituting the expression "the purchase price of the undertaking" in ....
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....t of the licensee, suitable to and used by him for the purpose of the undertak- ing, other than (i) a generating station declared by the licensee not to form part of the undertaking for the purpose of purchase, and (ii) service lines or other capital works or any part thereof which have been construct- ed at the expense of the consumers, but with- out any addition in respect of compulsory purchase or of goodwill or any profit which may be or might have been made from the under- taking or of any similar consideration. (3) Notwithstanding anything contained in any licence or any instrument, order agreement or law for the time being in force in respect of any additional sum by whatever name may it be called, payable to a licensee for compulsory purchase, the licensee shall be entitled only to a solatium of ten per centum of the book value as determined under sub-sections (1) and (2) for compulsory purchase of his undertaking under Sec. 6. (4) No provision of any Act for the time being in force including the other provi- sions of this Act and of any rules made there- under or of any instrument including licence have effect by virtue of any of such Acts or any rule made thereunder, sha....
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.... able to the licensee. 6. Gross amount payable to Licensee. (1) The gross amount payable to a licensee shall be the aggregate value of the amounts specified below: (i) the book value of all completed works in beneficial use pertaining to the undertaking and taken over by the Government (excluding works paid for by consumers) less depreciation calculated in accordance with Schedule I; (ii) the book value of all works in progress taken over by the Government, exclud- ing works paid for by consumers or prospective consumers; (iii) the book value of all stores including spare parts taken over by the Gov- ernment and in the case of used stores and spare parts, if taken over, such sums as may be decided upon by the Government; (iv) the book value of all other fixed assets in use on the vesting date and taken over by the Government less depreciation calculated in accordance with Schedule I; (v) the book value of all plants and equipments existing on the vesting date, if taken over by the Government, but no longer in use owing to wear and tear or to obsolescence, to the extent such value has not been written off in the books of the licensee less depreci- ation calculated in accordanc....
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.... All the assets specified in sub- Section (1)(i) shall vest in the Government free from any debts, mortgages or similar obligations of the licensee or attaching to the undertaking; Provided that such debts, mortgages or obligations shall attach to the amount payable under this Act for the assets. (3) In the case of an undertaking which vests in the Government under this Act, the license granted to it under part II of the Electricity Act shall be deemed to have been terminated on the vesting date and all the rights, liabilities and obligations of the licensee under any agreement to supply elec- tricity entered into before that date shall devolve or shall be deemed to have devolved on the Government; Provided that where any such agreement is not in conformity with the rates and condi- tions of supply approved by the Government and in force on the vesting date, the agreement shall be voidable at the option of the Govern- ment. (4) In respect of any undertaking to which Sec. 4 applies, it shall be lawful for the Government or their authorised representa- tive on and. after the vesting date, after removing any obstruction that may be or might have been offered, to take possession of....
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.... such advances or sums have not been paid over by the licensee to the Government; (i) the amounts remaining in Tariffs and Dividends Control Reserve, Contingencies Reserve and Development Reserve, in so far as such amounts have not been paid over by licen- see to the Government; (j) the amount, if any, as specified in Ss. 11(2) and 11(3): (k) the amount, if any, relating to debts, mortgages or obligations as mentioned in proviso to sec. 7(2); Provided that before making any deduc- tion under this section, the licensee shall be given a notice to show cause against such deduction, within a period of fifteen days from the date of receipt of such notice. Section 10 enables the Government to appoint, by order in writing, a person having adequate knowledge and experience in matters relating to accounts as Special Officer to assess the net amount payable under this Act, after making the deductions enumerated in section 9. Section 20 provides: 20. Arbitration. (1) Where any dispute arises in respect of any of the matters speci- fied below, it shall be determined by an arbitrator appointed by the Government, who shall be a sitting or retired District or High Court Judge-- (a) whether....
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.... validity of some of the specific provi- sions of the acquisition law which excluded certain items from valuation and envisaged and authorised certain deduc- tions in the amount are also assailed. 8. These writ petitions were heard along with a batch of writ petitions, viz, WP Nos. 5, 14, and 15 of 1974, where the constitutionality of an analogous statute of the State of Tamil Nadu was assailed by the companies whose undertak- ings were similarly sought to be acquired and civil appeal No. 243 of 1985, C.A. 344 of 1985 and C.A. 4113 of 1985 arising out of the Judgment, dated 20.7.1984, of the High Court of Bombay striking down certain amendments to the Indian Electricity Act, 1910, made by the Maharashtra State Legislature in the matter of statutory purchase of some of the private electricity supply undertakings in the State of Maharashtra. The three batches of cases arising from Assam, Tamil Nadu and Maharashtra were heard together as there were certain aspects common to-them. However, in view of the distinctiveness and particularities of the facts of the cases and the situational variations even in respect of the legal context in which questions arise for decision, the three batc....
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....eal and illusory. (d) That the exclusion of "service- lines", which are part of the assets of the licensee as from valuation, renders the law unconstitutional and ultra-vires. (e) That the provision of Section 9(i) for the deduction of the 'Reserves' from the "Amount", in addition to the takingover of the same in the form of 'fixed assets' and the omission to value the unexpired period of licence are unreasonable and arbitrary. (f) That the continued liability of the petitioner-licensee under Section 11(3) for payment to employees retrenched by Government after the vesting-date and the provision for deduction of such sums from the "Amount" payable for the acquisition are arbitrary and unreasonable. (g) That while Section 7(5) makes all the liabilities of the licensee, other than those specifically referred to and expressly taken over by Government under the Act, as the continuing liabilities of the licensee, yet some of those liabilities referred to in clauses (c) (d) and (f) of Section 9, are yet made deductible from the "Amount", without the corresponding express obligation on the part of the Government to hold the sums ....
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....ad done away with the idea of a Just-equivalent or full idemnifica- tion principle and substituted therefore the idea of an "Amount" and rendered the question of the adequacy or the inadequacy of the amount non-justiciable. The Indian Constitutional experiments with the 'right to property' offer an interesting illustration of how differ- ences in the interpretation of the fundamental law sometimes conceal--or, perhaps, expose--conflicts of economic idealog- ics and philosophies. With the right to property conceived of as a fundamental fight at the inception of the Constitu- tion, it found so strong an entrenchment that in its pris- tine vigour it tended to be overly demanding and sought the sacrifice of too many social and economic goals at its alter and made the economic cost of social and economic change unaffordably prohibitive and the fulfilment of the constitutional ethos of the promise of an egalitarian social order difficult. Inevitably the constitutional process of de-escalation of this right in the constitutional scale of values commenced culminating, ultimately, in the deletion of this right from the fundamental-rights part. Articles 31-A and 31-C were s....
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....t in the present case, notwithstanding the legislative declaration in Sec. 23 of Assam Act X of 1973, the question whether there is any real nexus between the legislation and the principles envisaged in Article 39(b) is justiciable and indeed the existence of such nexus or connection is a condition-precedent for the attraction and applicability of Article 31-C. Learned Coun- sel submitted that in order to decide whether a Statute is within Article 31-C or not, the Court has to examine the nature and character of the legislation and if upon such scrutiny it appears that there is no nexus between the legislation and the principles in Article 39(b) the legisla- tion must be held to fall outside the protection of Article 31-C. Shri Sorabjee said, stripped of its veils and vest- ments, the law, would show its real nature as one whose avowed nexus to Article 39(b) is merely a pretence and that its purpose is other than the objects envisaged in Article 39(b). The validity of the legislation, learned counsel says, would have to be examined independently of the immuni- ty under Article 31C. The proposition that the legislative declaration of the nexus between the law and the principles in ....
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....sonable nexus between the impugned law and the provisions of Article 39(b) and (c)" (P. 261) (Emphasis Supplied) In the same case, Bhagwati, J. observed: " ..... The point that I wish to emphasis is that the amended Article 31-C does not give protection to a law which has merely some remote or tenuous connection with a directive principle." " ..... Even where the dominant object of a law is to give effect to a direc- tive principle it is not every provision of the law which is entitled to claim protec- tion ......" (P. 338) " ..... it is not every provision of a statute which has been enacted with the dominant object of giving effect to a direc- tive principle, that it entitled to protec- tion, but only those provisions of the statute which are basically and essentially necessary for giving effect to the directive principles are protected under the amended Article 31-C " (P.339) (Emphasis Supplied) 13. The proposition of Sri Sorabjee, in principle, is, therefore, unexceptionable; but the question remains whether, upon the application of the appropriate tests, the impugned statute fails to measure-up to the requirements of the Constitution t....
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....so goes the argument, is entitled to pierce the apparent veil under which the acquiring legislation masquer- ades as one for securing the object of Article 39(b). Dr. Shankar Ghosh and Sri G.L. Sanghi for the State of Assam and the Assam State Electricity Board,. the contest- ing-Respondents, however, say that the Assam Act X, 1973, is entitled to the protection of Article 31-C as, indisputably, Electrical energy is a material resource of the community and any legislative measure to nationalise the undertaking falls squarely within the ambit of Article 39(b). Any appeal by the petitioner to the doctrine of colourable legislation, they say, is wholly inapposite as, indeed, where, as here, legislative competence is undisputed, any speculation as to the motives of the legislative is impermissible. No mala- fides could be attributed to the Legislature. Respondents further submit that on the question of even the possible 'illusory' nature, let alone the adequacy, of the "Amount" could not be agitated if the law has the protection of Article 31-C. They, however, assert that 'Book-value' is a well accepted accountancy concept of value and could never be character....
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....aning of Article 39(b). In Sanjeev Coke Manufacturing Company v. Bharat Coking Coal Ltd., [1983] 1 SCR 1000 this Court, referring to what constitute "material resources of the community" and whether resources produced by, or at the command of, private, as distinguished from the State agencies, constitute such resources as the resources of the community, noticed the contention urged in that case thus: " ..... The submission of Shri A.K. Sen was that neither a coal mine nor a coke oven plant owned by private parties was a 'material resources of the community'. Accord- ing to the learned counsel they would become material resources of the community only after they were acquired by the State and not until then. In order to qualify as material re- sources of the community the ownership of the resources must vest in the community i.e. the State ..... A law providing for acquisition was not a law for distribution ...... " (P. 1022) Repelling this argument which suggested a limited concept of "Material resources of the Community" the Court observed: " ..... We are unable to appreciate the submission of Shri Sen: The expression 'material resou....
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....;, which were meant to achieve an oblique motive of interdicting and extinguishing the vested rights of the petitioner-company to receive payment in accordance with the provisions of the 1910 Act, as they then stood, should not have the protection of Article 31-C. We are afraid this contention proceeds on an impermissible dichotomy of the components integral to the idea of nationalisation. The economic cost of social and economic reform is, perhaps, amongst the most vexed problems of social and economic change and constitute the core ele- ment in Nationalisation. The need for constitutional immuni- ties for such legislative efforts at social and economic change recognise the otherwise unaffordable economic burden of reforms. The observations of Mathew J. in Keshavananda case on the point are worth recalling: "If full compensation has to be paid, concentration of wealth in the form of immova- ble or movable property will be transformed into concentration of wealth in the form of money and how is the objective underlined in Article 39(b) and (c) achieved by the trans- formation? And will there be enough money in the coffers of the State to pay full compensa- tion?" "....
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....y the actual effectuation of the avowed objectives of such nationalisation--the choice between the pragmatic and the doctrinaire approaches--is concluded and no longer avail- able. In Akadasi Padhan v. State of Orissa and Ors., AIR 1963 SC 1047 this debate on the philosophy of nationalisa- tion is concluded. was held: " ..... Broadly speaking, this discussion discloses a difference in approach. To the socialist, nationalisation or State ownership is a matter of principle and its justification is the general notion of social welfare. To the rationalist, nationalisation or. State ownership is a matter of expediency dominated by considerations of economic efficiency and increased output of production ". " ...... The amendment made by the Legislature in Art. 19(6) shows that according to the Legislature, a law relating to the creation of State monopoly should be presumed to be in the interests of the general public ...... " " ..... In other words, the theory underlying the amendment in so far as it relates to the concept of State monopoly, does not appear to be based on the pragmatic ap- proach, but on the doctrinaire approach which socialism accepts .....&q....
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....] 1 SCR 580 referring to the legal conse- quences that ensue by a mere exercise of the option, it was held: " .... that the right to purchase the undertaking accrues only at the expiration of the period of licence but for exercising that right, the authority must make its elec- tion within the period prescribed in sec. 7(4) and issue a notice as required by that sub- section ..... " (Emphasis Supplied) That the right, title and interest of the licensee in the undertaking does not get transferred to the Board or the State, as the case may be, immediately upon the mere exer- cise of the option to purchase is further clear from what is implicit in the observa- tions of this Court in Godra Electricity Company Limited and another v. The State of Gujarat and another, [1975] 2 SCR 42 at page 54. The proposition contended for by the Learned Additional Solicitor General in that case was noticed thus: "In support of the contention that when once the notice exercising the option to purchase the undertaking has been served, the licensee has no further right to carry on the business, the learned Additional Solicitor General placed reliance on the decision of this Court in Kal....
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.... which, if wrongfully withheld, an action must have been brought; things, in respect of which a man had no actual posses- sion or enjoyment, but a mere right enforce- able by action. The most important personal things recoverable by action only were money due from another, the benefit of a contract and compensation for a wrong; and .these have always been the most prominent choses in action, though not the only things to which the term has been applied ..... "(see page 29 and 30) Indeed, in English law the difficulties in the precise definition of chose-in-action arise out of the fact that the meaning attributed to the expression has been expanded from time to time by judicial decisions and the principles pertaining to the concept did not develop on any logical or scientific basis. W.S. Holdsworth also refers to this diffi- culty in apprehending the precise incidents of the concept of a "chose-in-action": "It is sometimes difficult to ascer- tain the sense in which the legislature has used the term 'chose-in-action 'we have seen that Bankruptcy Act affords one illustration, and, as we can see from the case of Edwards v. Dicard the modifications introduce....
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....ore, not necessary to consider the submissions of the learned counsel for the respondent that it does not lay down the law correctly in as much as the arguments based on Article 31-C were neither advanced nor considered in that case. It requires, therefore, to be held that the impugned legislation viz., Assam Act X, 1973, was broughtforth for securing the principles contained in Article 39(b) of the Constitution and is protected under Article 31-C. The amend- ment made to the provisions of the Indian Electricity Act, 1910, by Assam Act IX of 1973, amending the basis for quan- tification of the amount payable in the case of a statutory purchase pursuant to the exercise of the option in terms of the licence would apply to and govern cases of statutory- sales and would not assume any immateriality in this case as the Assam Act X of 1973 is itself--as we have held--a valid piece of legislation. 22. We find, therefore, no substance in the contentions (a) and (b) urged by the petitioner. 23. Re. contention (C): This pertains to the question whether the principles laid down in the Act for determination of the "amount" payable for the acquisition are so arbitrary as to render....
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....usions broadly emerge: (1) that in view of the express provisions of Article 31-C which excludes Art. 31(2) also where a property is acquired in public interest for the avowed purpose of giving effect to the principles enshrined in Art. 39(b) and (c), no compensation is neces- sary and Art. 31(2) is out of the harm's way, and (2) that even if the law provides for compensation, the courts cannot go into the details or adequacy of the compensation and it is sufficient for the State to prove that the compensation was reasonable and not monstrous or illusory so as to shock the conscience of the court." (Emphasis of counsel) Sri Rangarajan would say that the observations emphasised would show that even if Article 31-C was attracted yet the State should show that compensation was reasonable and not illusory. We are afraid, these passages are quoted out of context and, if properly understood, were not intended to support the proposition now propounded by Shri Rangarajan. Indeed in the Keshavananda case itself Chandrachud J. referring to the effect of Article 31-C observed: "... In fact article 31-C is a logi- cal extension of the principles underlying article 31(4) and (6....
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....ion is not entitled to the protection of Article 31-C, as such a law can never be said to be to further the Directive Principle affirmed in Art. 39(b), would indeed, be, to use a hack- neyed phrase, to put the cart before the horse. If the law made to further the Direc- tive Principle iS necessarily non-discrimina- tory or is based on a reasonable classification, then such law does not need any protection such as that afforded by Art. 31-C. Such law would be valid on its own strength, with no aid from Art. 31-C. To make it a condition precedent that a law seeking the haven of Art. 31-C must be non-discriminatory or based on reasonable classification is to make Art. 31-C meaning- less ...... " (p.1019) "We are firmly of the opinion that where Art. 31-C comes in Art. 14 goes out .... " (p. 1021) What applies to Article 14 would equally apply to Article 31 (as it then stood before its deletion by the Constitution Fortysecond (Amendment) Act, 1978). In State of Tamil Nadu v. L. Abu Kavur Bai, AIR 1984 SC 326 on which Shri Rangarajan relied, Fazal Ali J. categorily said: "It is manifest from a bare reading of the newly added Art. 31-C that any law effectuating the p....
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....amount' conveys no idea of any norm. It supplies no yard-stick. It furnishes no measuring rod. The neutral word 'amount' was deliberately chosen for the purpose. I am unable to understand the purpose in substituting the word 'amount' for the word 'compensation' in the sub-article unless it be to deprive the Court of any yard stick or norm for determining the adequacy of the amount and the relevancy of the principles fixed by law (para 1765) Referring to what might, yet, be open to judicial scrutiny, under Article 31(b), Shelat and Grower, JJ observed in the Keshavananda case: "But still on the learned Solicitor General's argument, the right to receive the amount continues to be a fundamen- tal right. That cannot be denuded of its iden- tity. The obligation to act on some principle while fixing the amount arises both from Article 31(2) and from the nature of the legislative power for, there can be no power which permits in a democratic system an arbi- trary use of power." "But the norm or the principle of fixing or determining the 'amount' will have to be disclosed to the Court. It will have to be satisfied that the 'amo....
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....ave much to commend it. Learned-counsel for the petitioner placed reliance on the definition of 'works' in Section 2(n) of the 1910 Act and on the pronouncement of this Court in Calcutta Electric Supply Corporation v. Commissioner of Wealth-tax, [1972] 1 SCR 159. The question in that case was whether in the computation of net wealth of the licensee, the "Service-lines" should be included. That was a converse case where the licensee rely- ing upon the statutory provisions of the Electricity Act contended that "Service-lines" were not a part of his wealth. This Court negatived that contention for purposes of assessment to wealth tax. Learned counsel placed some store by this pronouncement to contend that the exclusion of this 'wealth' from valuation is arbitrary. But, in our opinion, the pronouncement relied upon does not advance petitioners' case on the point. While it is true that the expression 'works' in Section 2(n) of the 1910 Act includes 'Service-lines', the reason why 'Service-lines' could justifiably be excluded from valuation for purposes of determination of the 'amount' is indicated in page 166 the r....
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....fs and Devidend Control Reserve"; "Contingency-Reserve" and the "Development Reserve", in so far as such amounts have not been paid over by the licensees to the Government, the provision, however, does not take into account and provide for cases where such reserves are invested in 'fixed assets' and as such "fixed assets" vest in the Government under the Acquisition. There would, there- fore, it is urged be, a duplication of the liability of the licensee on this score, in the sense that while the "Re- serves" in the form of fixed-assets vest in the Government, the licensee is still exposed to the liability for the deduction of the amount shown in the accounts. Section 9(1)(i) provides: "Deductions from the Gross amount: The Government shall be entitled to deduct the following sums from the gross amount payable under this Act to the licensee. (a) (to) (h) Omitted as unnecessary (i) The amounts remaining in tariffs and dividends control reserve, contingencies reserve and development reserve, in so far as such amounts have not been paid over by licen- see to the Government; (j) (k) Omitted as unnecessary On a reasonable c....
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.... the case may be, within one year from the vest- ing-date after the take-over. Section 11(3) provides that if the Board or the Government, as the case may be, retrenches any employee within a period of one year from the vesting- date, the liability for the amounts payable to the re- trenched employee shall be deducted from the 'amount'. This provision, it is contended, imposes a liability which is arbitrary. Dr. Shankar Ghosh submitted that this point is purely academic inasmuch as there has been no such case of retrenchment. Dr. Ghosh further submitted that the provision is not unreasonable because in the case of employees so retrenched, the amounts payable would substantially relate to the period during which the employment subsisted under the licensee and that it is not unreasonable to take this circumstances into account in continuing the licensee's liability which would, even otherwise, be substantially be that of the-licensee. 'On a consideration of the matter, we are inclined to the view--even if this question is justicia- ble--that the provision is not unreasonable or arbitrary as it envisages the continuance of a liability which was, otherwise, substantiall....
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.... follow. There is really no justifiable grievance on this score. Contention (g) is, accordingly, held and answered against the petitioners. 35. Re: Contentions (h) and (i): These two contentions pertain to the machinery envisaged by and set up under the impugned law for resolution of disputes on questions essential for the determination of the amount in accordance with the provisions of the Act. The contention of the petitioners, in substance, is that there is no machinery set up under the Act to determine the amounts under Section 9(c), (d) and (e) and to assess the loss referred to in Section 8. The Other contention on the point is that the arbitra- tion clause is a limited one and is confined only to dis- putes in four areas specifically enumerated in clauses (a) to (d) of sub-section (1) of Section 20 of the Act. These lacunae in the Statute, it is contended, render- the scheme of the Act for the determination of the 'Amount' unreasonable and the scheme of the 'Act' in relation to the determination of the 'Gross Amount', the deductions to be made therefrom and the assessment of the 'amount' payable for the acquisition, unworkable. 36. The Cou....
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....to assess the net amount payable under this Act by the Government to the licensee after making the deductions mentioned in Section 9". Sub-Section (2) of Section 10 provides that the Special Officer may call for the assistance of such Officer and staff of the Government or the Board or the undertaking as he may deem fit "in assessing the net amountpayable". These provisions, contemplate the determination by the Special Officer, who is constituted as a statutory authority under the Act, of the net amount payable. The functions of the Special Officer include an examination of the correctness of all the determinations made by the Government in the matter of the deductions, except where Government is statutorily specially constituted as an appellate authority in respect of certain matters under the Act. The Proviso to Sections 8 and 9 envisages prior notice to be issued to the licensee by the Government to show cause against any deduction proposed to be made under Section 8 or 9, as the case may be, within the period specified in the Provisos. Even after the Government so makes such determina- tion of the amounts which, according to it, are deductible from the gross amo....