TaxTMI 
TaxTMI 
1989 (4) TMI 322
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....on in the legislation under Art. 31C of the 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 ....
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.... their powers and inserted a declaration in a law 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 ....
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.... Justice Bhagwati, as the learned Chief Justice then was, 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....
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....liah. VENKATACHALIAH, J. 1. In these two writ petitions invok- 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 e....
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....r, after the coming into force of the two legis- lative enactments, with retrospective 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 ha....
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....dertaking of the company. So far as the Dibrugarh company is concerned, 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 substitut....
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....works, materi- als and plant 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 ....
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.... Section 6 provides for the gross amount pay- 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....
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....relating to the borrowing or leading of money, or to the employment of staff. (2) 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, ....
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.... ers, and all sums which have been or ought to be set aside to the credit of the consumers' fund, in so far as 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 determ....
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....is urged, would be illusory even on the judicially accepted tests applied to Article 31(2) as it then stood. The 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....
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....acquired irrespective of their 'market-value' renders the 'amount' unreal 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 obli....
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.... illusory. By then the Constitution had 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. Ar....
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....orabjee submitted that 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....
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....s 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 to earn the protection under....
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....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 characterised as illusory, even if the law did not come ....
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....R 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 resources of the community' means all things which are capable of producing wealth for the community. There is no warrant for interpret....
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....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?" " ..... I am unable to understand the purpose of substituting the word 'amount' for the word 'compensation' in the sub-Article unless it be to deprive the Court of any yard-sti....
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.... 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 .....". Indeed, in the United States of America after the hey-days of the substantive due process, the Supreme Court in 1963 in Ferguson v. Skrupa, 372 US 726 said: "We refuse to sit as a 'superlegis- lature to wei....
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....e 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 Kalyan Singh v. State of U. P ........ " This Court held that the exercise of the option would have no such effect on the licen- see's right to carry on his business until the undertaking was actually taken over and paid- for. It was held: "A licensee cannot be told tha....
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....es 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 introduced by the Courts have some times occasioned a similar difficulty. Some of these difficulties might be perhaps mitigated by a codifying Act, for which there is plenty of material. But, it is probable that a branch of the law which comes at the meeting place of the law of property and the law of obligation can never be any- thing but difficult to formulate and apply." (Emphasis Supplied) (See: "The Hi....
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....le 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 the "amount" unreal and merely illusory. This contention would not, in law, be available to the petitioners inasmuch as the law providing for the acqui- sition has the protection of Article 31-C of the Constitu- tion. The arguments of Shri Soli J. Sorabjee in regard to the alleged "illusory" nature of the "amount" presupposes and proceeds on the premise that the impugned law does not have the protection of Article 31-C. Now that we have held....
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....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) and article 31A. ............. The true nature and char- acter of article 31-C is that it identifies a class of legislation and exempts it from the operation of articles 14, 19 and 31 ........ " (1973 supp. SCR 1 at 995) Khanna J. observed in that case: Both articles 31A and 31C deal with right to property. Article 31-A deals with certain kinds of property and its effect is, broadly speaking, to take those kinds of property from the persons who have rights in the said property. The objective of ar....
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....cedent 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 policy of the State in order to secure or comply with the directive princi- ples specified in clauses (b) and (c) of Art. 39 would not be deemed to be void even if it is inconsistent with or violates Articles 14, 19 or 31 ..... " (P. 332) In the same case Fazal Ali J. further said: " .... If, once the conditions mentioned in Article 31C are fulfilled by the law, no question of compensation arises because the said Article expressly excludes not only Arti- cles 14, and 19 but also 31 which, by virtue of the 25th amendment, had replaced the word 'amount....
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....served 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 'amount' has reasonable relationship with the value of the property acquired or requestioned and one or more of the relevant principles have been applied and further that the 'amount' is neither illusory nor it has been fixed arbitrarily, nor at such a figure that it means virtual deprivation of the right under Article 31(2). The question of adequacy or inadequacy, however, cannot be gone into." Justice Chandrachud observed: "The specific obligation to pay an 'amount' and in the alternative the use of the word 'principles' for determination of th....
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....ax. 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 report: "It is true that in view of Sec. 7(A)(2) of the Electricity Act, in computing the market value of the undertaking sold under sub-section (1) of section 5 of that Act the value of service lines which had been con- structed at the expense of the consumers will not be taken into con- sideration. The reason for this provision is obvious. It will be the duty of the new licen- see to not only maintain and repair those lines but also to replace them when they become unserviceable." Under the law when a requisition is made by an intend-ingconsumer for electrical-energy, the licensee has an obligation tO lay down Service-lines. But, according to t....
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....unts. 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 construction, the expressions 'amounts remaining' and 'in so far as such amounts have not been paid overl' necessarily exclude any such duplication of the ac- countability of the licensee for these 'Reserves'. If any part of the reserves is invested in "fixed assets" and the reserves in the form of such "fixed assets" are takenover by the Government pursuant to the acquisition, what remains to be accounted for by the licensee is only the 'amounts re- maining' in the pertinent accounts. The liability of the licensee for deduction of the 'Reserves' from the 'amount' would arise only if the balance remaining in those accounts are not paid. Indeed, Dr. Shank....
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.... 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, substantially that of the licensee. There is no merit in this contention (f) either. 34. Re: Contention (g): The grievance of the petitioners on this aspect, we are afraid, proceeds on a total misconception of the effect of the statutory provisions. The contention, in substance, is that while certain liabilities of the licensee arising out of its Quondam business-operations are not expressly taken-over by the Government and are-declared to be the subsisting and continuing liabilities of the licensee, however, Section 9(7) authorises the deduction of some of those very liabilities from the 'amount' without a corre- sponding statutory obligation on the part of the GOvernment, in turn, to pay the same to the creditors o....
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....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 Courts strongly lean against any construction which tends to reduce a Statute to a futility. The provision of a Statute must be so construed as to make it effective and operative, on the principle "ut res majis valeat quam periat". It is, no doubt, true that if a Statute is abso- lutely vague and its language wholly intractable and abso- lutely meaningless, the Statute could be declared void for vagueness. This is not in judicial-review by testing the law for arbitrariness or unreasonableness under Article 14; but what a Court of construction, dealing with the language of a Statute, does in order to ascertain from, and accord to, the Statute the meaning and purpose which the legislature in- tended for it. In....
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.... 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 amount, such determination would not be final. The assessment of the net amount payable to the licensee will have to be made by the "Special Officer". It is reasonable to construe that the decision of the Govern- ment both under Sections 8 and 9 arrived at, even after giving an opportunity to the licensee of being heard, would not be final, but the final determination will have to be made by the "Special-Officer" appointed under Section 10 of the Act. Section 10(1) and (2) of the Act must be so con- strued as to enable the "Special-Officer" to take into account the determinations respecting the deduction under Section 9 and 10 of the Act made by the Government and take a decision of his own in the matter. The power to "assess" the net amount by necessary implic....