# The U.P. State Electricity Board v. The Special Officer Electricity & Anr

- **Citation:** (2025) 8 ILRA 241
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2025-08-11
- **Case number:** Writ C No. 11731 of 1982
- **Bench:** Mahesh Chandra Tripathi, Ashutosh Srivastava
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/the-u-p-state-electricity-board-v-the-special-officer-electricity-anr-53660
- **Pages:** 16

## Headnote

Abhishek Mishra, Amrit Lal Yadav, Ratnakar
Bharti, S.C.

Issue for Consideration
The Petitioner, The U.P. State Electricity Board
(UPSEB) filed petition challenging specific items
within the Special Officer's Award-The Special
Officer
determined
that
a
sum
of
Rs.
63,41,886/- was payable by the UPSEB to the
Ex-Licensee
(M/s
Agra
Electricity
Supply
Company Ltd.), along with future interest.
Headnotes
Civil law-Constitution of India, 1950Article 226-Indian Electricity Act,1910
(Amendment 1975)-Section 7-A-Special
Officer's reasoning to be in line with the
Supreme court's ratio in Pilibhit Electric
Supply Co.(P) Ltd-The Special Officer had
rightly excluded works constructed at the
cost of local bodies for street lighting and
work
paid
for
by
consumers
while
determining
the
book
value
of
all
completed
works-The
deduction
of
depreciation on these works by the
Special
Officer
was
upheld-Petition
dismissed.
Held
The court found that the Special Officers
conclusion-that the cost of spare parts was
properly accounted for-was not in violation of
section 7-A(2)-Revenue collected by the board
on behalf of the Ex-Licensee, not an advance
from the Board and was outside the ambit of
section 7-A(5)(a)-The court upheld the Special
Officer's finding that the amount of Rs.
8,75,393.59 had already been credited to the
consumer contribution account, and since the
entire
consumer
contribution
was
already
excluded from the book value of assets, no
separate deduction was due-No amount of
gratuity was due or paid on the date of take
over, and there is no provision for proportionate
deduction of gratuity under the Payment of
Gratuity Act, thus the claim was not covered
under section 7-A(5(C)-The court upheld the
Special Officer's rejection of the deduction, as
the Special Officer had found that the Ex
Licensee had been utilizing the Development
Reserve in the creation of Capital Assets of their
242 INDIAN LAW REPORTS ALLAHABAD SERIES
undertaking, and no amount remained in
balance on the date of takeover, which is in
consonance with Apex Court rulings-The court
directed the petitioner(UPSEB) to pay the
amount of interest due on the principal amount
as provided under the Act,1910, within a period
of 6 months.(Para 10 to 35) (E-6)

Case law Cited
Pilibhit Electric Supply Co. (P). Ltd. & Anr. Vs
Special Officer Electricity & Anr. 1996 (ii) SCC
288,Saharanpur Electric Supply Co. Ltd. & Anr.
Vs St. of U.P. & Ors (2006) 6 ADJ 670,M/s
Farrukhabad Electric Supply Co. Ltd. Power
House Fatehgarh & Ors Vs U.P. St. Electricity
Board Shakti Bhawan, Lko. & Ors (CMWP) No.
146 1978 decided on 23.05.2008,Saduruddin Vs
UOI AIR (1981) SC 1257, Anand Behari Vs
RSRTC 1991 (1) SCC 731, Tinsukhia Electric
Supply Co. Ltd.Vs. St. of Assam AIR (1990) SC
123:1989(3) SCC 709,U.P. St. Electricity Board
Vs Upper Jamuna Valley Electric Supply Co. Ltd.
AIR 2000 SC 2736-referred to.

List of Acts
Indian Electricity Act, 1910

List of Keywords
Indian Electricity Act,1910, Award, Special
Officer, Ex-Licensee, Purchase Price, Book
Value, Depreciation, Sixth Schedule, UPSEB, M/s
Agra Electricity Supply Company Ltd, Stores and
Spare Parts, Development Reserves, Employees
claim, Gratuity, Assets, Take over.

Case Arising From
CIVIL JURISDICTION: WRIT-C No. - 11731 of
1982
From the Judgment and Order dated 11.08.2025
of the High Court of Judicature at Allahabad.
The U.P. State Electricity Board Shakti
Bhawan Lucknow Vs. The Special Officer
Electricity & Anr

Appearances for Parties
Advs. for Petitioner:
B.P. Singh, Baleshwar Chaturvedi, H.P. Dubey,
L.K. Singh, Naresh Chandra Rajvanshi (Senior
Advocate) Sudhir Chandra, V.K. Singh
Advs. for Respondent:
Abhishek Mishra, Amrit Lal Yadav, Ratnakar
Bharti, S.C.

## Text

_Characters 0–39,944 of 54,588. This is a partial read: ask again with offset=39944 for what follows._

8 All. The U.P. State Electricity Board Vs. The Special Officer Electricity & Anr.
241
for undergoing medical studies, the
disability certificate issued by the authority
and reflected in the UDID would prevail for
the benefit of grant of reservation. The
functional disability test of the petitioner has
been certified by the authority designated
under the NMC Act, thus, this Court has no
hesitation in holding that the petitioner would
be entitled to register for NEET Examination
which are opened from 08.08.2025 to
11.08.2025 and the petitioner would be
extended the benefit of reservation to which
he is entitled in accordance with law.

28.
Learned
counsel
for
the
DGME/respondent no.4 is directed to
ensure that the petitioner is able to upload
his candidature for claiming the benefit in
terms of the directions issued by this Court.

29. Present petition stands allowed
in above terms.
----------
(2025) 8 ILRA 241
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 11.08.2025

BEFORE

THE HON'BLE MAHESH CHANDRA
TRIPATHI, J.
THE HON'BLE ASHUTOSH SRIVASTAVA, J.

Writ C No. 11731 of 1982

The U.P. State Electricity Board
 ...Petitioner
Versus
The Special Officer Electricity & Anr.
 ...Respondents

Counsel for the Petitioner:
B.P. Singh, Baleshwar Chaturvedi, H.P.
Dubey,
L.K.
Singh,
Naresh
Chandra
Rajvanshi (Sr. Advocate), Sudhir Chandra,
V.K. Singh

Counsel for the Respondents:
Abhishek Mishra, Amrit Lal Yadav, Ratnakar
Bharti, S.C.

Issue for Consideration
The Petitioner, The U.P. State Electricity Board
(UPSEB) filed petition challenging specific items
within the Special Officer's Award-The Special
Officer
determined
that
a
sum
of
Rs.
63,41,886/- was payable by the UPSEB to the
Ex-Licensee
(M/s
Agra
Electricity
Supply
Company Ltd.), along with future interest.
Headnotes
Civil law-Constitution of India, 1950Article 226-Indian Electricity Act,1910
(Amendment 1975)-Section 7-A-Special
Officer's reasoning to be in line with the
Supreme court's ratio in Pilibhit Electric
Supply Co.(P) Ltd-The Special Officer had
rightly excluded works constructed at the
cost of local bodies for street lighting and
work
paid
for
by
consumers
while
determining
the
book
value
of
all
completed
works-The
deduction
of
depreciation on these works by the
Special
Officer
was
upheld-Petition
dismissed.
Held
The court found that the Special Officers
conclusion-that the cost of spare parts was
properly accounted for-was not in violation of
section 7-A(2)-Revenue collected by the board
on behalf of the Ex-Licensee, not an advance
from the Board and was outside the ambit of
section 7-A(5)(a)-The court upheld the Special
Officer's finding that the amount of Rs.
8,75,393.59 had already been credited to the
consumer contribution account, and since the
entire
consumer
contribution
was
already
excluded from the book value of assets, no
separate deduction was due-No amount of
gratuity was due or paid on the date of take
over, and there is no provision for proportionate
deduction of gratuity under the Payment of
Gratuity Act, thus the claim was not covered
under section 7-A(5(C)-The court upheld the
Special Officer's rejection of the deduction, as
the Special Officer had found that the Ex
Licensee had been utilizing the Development
Reserve in the creation of Capital Assets of their
242 INDIAN LAW REPORTS ALLAHABAD SERIES
undertaking, and no amount remained in
balance on the date of takeover, which is in
consonance with Apex Court rulings-The court
directed the petitioner(UPSEB) to pay the
amount of interest due on the principal amount
as provided under the Act,1910, within a period
of 6 months.(Para 10 to 35) (E-6)

Case law Cited
Pilibhit Electric Supply Co. (P). Ltd. & Anr. Vs
Special Officer Electricity & Anr. 1996 (ii) SCC
288,Saharanpur Electric Supply Co. Ltd. & Anr.
Vs St. of U.P. & Ors (2006) 6 ADJ 670,M/s
Farrukhabad Electric Supply Co. Ltd. Power
House Fatehgarh & Ors Vs U.P. St. Electricity
Board Shakti Bhawan, Lko. & Ors (CMWP) No.
146 1978 decided on 23.05.2008,Saduruddin Vs
UOI AIR (1981) SC 1257, Anand Behari Vs
RSRTC 1991 (1) SCC 731, Tinsukhia Electric
Supply Co. Ltd.Vs. St. of Assam AIR (1990) SC
123:1989(3) SCC 709,U.P. St. Electricity Board
Vs Upper Jamuna Valley Electric Supply Co. Ltd.
AIR 2000 SC 2736-referred to.

List of Acts
Indian Electricity Act, 1910

List of Keywords
Indian Electricity Act,1910, Award, Special
Officer, Ex-Licensee, Purchase Price, Book
Value, Depreciation, Sixth Schedule, UPSEB, M/s
Agra Electricity Supply Company Ltd, Stores and
Spare Parts, Development Reserves, Employees
claim, Gratuity, Assets, Take over.

Case Arising From
CIVIL JURISDICTION: WRIT-C No. - 11731 of
1982
From the Judgment and Order dated 11.08.2025
of the High Court of Judicature at Allahabad.
The U.P. State Electricity Board Shakti
Bhawan Lucknow Vs. The Special Officer
Electricity & Anr

Appearances for Parties
Advs. for Petitioner:
B.P. Singh, Baleshwar Chaturvedi, H.P. Dubey,
L.K. Singh, Naresh Chandra Rajvanshi (Senior
Advocate) Sudhir Chandra, V.K. Singh
Advs. for Respondent:
Abhishek Mishra, Amrit Lal Yadav, Ratnakar
Bharti, S.C.
(Delivered by Hon'ble Ashutosh
Srivastava, J.)

1. The instant writ petition has been
filed
questioning
the
Award
dated
12.07.1982 rendered by the Special Officer
(Electricity) appointed under Section 7A(6) of the Indian Electricity Act, 1910 as
amended vide U. P. Amendment and
Validation Act, 1975 determining the net
amount payable to the Ex-Licensee, M/s
Agra Electricity Supply Company Ltd.
(Respondent No. 2) under Section 7-A of
the Indian Electricity Act, 1910 as a result
of purchase of the electrical undertaking by
the petitioner, The U. P. State Electricity
Board (UPSEB). The relief claimed in the
writ
petition
is
being
reproduced
hereunder:-

a) Quashing the Award of the
Special Officer dated 12th of July, 1982
(Annexure-1);

b) Granting such other and
further relief as this Hon'ble Court may
deem
just
and
proper
in
the
circumstances of the case;

c)
Awarding
costs
of
this
petition.

2. The facts giving rise to the
controversy involved in the instant writ
petition briefly stated are that the Indian
Electricity Act, 1910 was enacted as a
result of the experience gained by the
Government of India after enactment of the
Indian Electricity Act, 1903 and the
recommendations made by the Committee
constituted in this regard to consider the
technical and financial aspect of the matter.
Section 3 of the Act of 1910 empowered
the State Government to grant license to
any person to supply energy in any
specified area on an application made in the
prescribed form and on the payment of
8 All. The U.P. State Electricity Board Vs. The Special Officer Electricity & Anr.
243
prescribed fee and for laying down electric
supply lines for the conveyance and
transmission of energy. A license cited as
"The Agra City & Cantonment Licensee,
1923" was granted to the M/s Martin and
Company, 6 & 7, Clive Street Calcutta for
supply of electric energy in respect of the
area contained within the Municipal Cantt.
Limits of Agra. The License was published
in the Government, United Provinces,
Public Works Department, Buildings and
Roads
Branch
Notification
No.
2813W/137-1923 dated 18/12/2023. The
said license was transferred to "M/s Agra
Electric Supply Company Ltd." (ExLicensee)
in
accordance
with
the
Government
Notification
No.
2263C/
137W 23 dated 04.10.1924.

3. Clause 9 of the License conferred an
option
of
purchase
of
the
Electrical
undertaking by the UPSEB after a period of
50 years from the date of the Notification of
the License. The option of purchase as
provided under the License was exercised on
the expiry of the 50 years and, accordingly,
the Agra Electric Supply Undertaking of the
Ex-Licensee was taken over by the petitioner
UPSEB at midnight on 17/18.12.1973.

4. On 4th February, 1975 the State
Government
promulgated
the
Indian
Electricity (Uttar Pradesh Amendment
and Validation) ordinance 1975 which
subsequently became the U. P. Act No.
16 of 1975. The provisions of the U. P.
Act No. 16 of 1975 applied to all
licensees in respect of their undertakings
sold after September 5, 1959 under
Section 5 or Section 6 of the Indian
Electricity Act, 1910 and the purchase
price
in
respect
whereof
was
not
determined prior to the commencement of
the Indian Electricity (U. P.) Amendment
and Validation Act, 1975.

5. The State Government vide its
Notification
No.
7299-ELC/75-23-P-4
dated 31.08.1975 appointed one Sri R. K.
Satsangi, as the Special Officer for
determining the net amount payable under
Section 7-A of the Indian Electricity Act,
1910 (as amended for its application to the
State of U. P.). Subsequently, one Sri Sher
Singh was appointed as the Special officer
vide Notification No. 128-P-3/78-23 dated
09.01.1978 and No. 2083-P-3/79. Finally
one Sri P. N. Agarwal was appointed as the
Special
Officer
(Electricity)
vide
Notification No. 3317-P-3/80-23 dated
14.07.1980 and Notification No. 4317-P3/81-23 dated 14.07.1981. The Ex-Licensee
was requested to intimate the details of
book value of all the assets including
stores,
plants
and
equipments
as
enumerated in sub-Section (2) and (4) of
Section 7-A of the Electricity Act, 1910
taken over by the State Electricity Board
i.e. the petitioner herein. The Ex-Licensee
was also requested to intimate the details of
deductions which the State Electricity
Board was entitled to make under subsection (5) of the Section 7-A. The State
Electricity Board/Petitioner herein was also
requested to furnish the information of
assets and stores as taken over along with
the claims for deductions under Section 7A (as amended) of the Indian Electricity
Act, 1910. The UPSEB authorised the
Superintending Engineer, Agra Electric
Supply undertaking Agra to furnish various
information to the Special Officer on behalf
of the UPSEB in respect of taken over
licensee Agra Electric Supply Co. Ltd. The
Chief Electrical Inspector to Government
of U. P. was requested to intimate the
amount outstanding from the Ex-Licensee
on account of Government Loan Electricity
Duty,
and
any
other
dues
of
the
Government along with the amount of
interest due thereon. The Chief Electrical
244 INDIAN LAW REPORTS ALLAHABAD SERIES
Inspector was also requested to furnish
copy of the working sheet and the audit
reports upto the date of take over of the
undertaking.

6. The Ex-Licensee vide their Letter
No. CE/AG/44(S)/360 dated 19.11.1975
submitted on statement showing details of
the amount payable to them and the
deductions which were to be made under
Section 7-A of the Indian Electricity Act,
1910 (as amended). The Ex-Licensee also
submitted revised statements of claims vide
their
letters
dated
22.07.1980
and
14.11.1980. The Ex-Licensee subsequently
furnished
all
the
information
and
participated in the meeting held for
finalising
the
amount payable
under
Section 7A of the Indian Electricity Act,
1910 (as amended).

7. The Special Officer (Electricity)
processed the information provided to him
strictly in accordance with the provisions of
the Section 7-A of the Indian Electricity
Act, 1910 (as amended for its application to
the State of U. P.) and after affording full
opportunity to both the parties and after
going through the detailed arguments
submitted by them and examining the
relevant records and the provisions of the
Act, rendered the impugned order and
award dated 12.07.1982 determined that a
sum of Rs. 63,41,886.26 was payable by
the UPSEB/Petitioner to the Ex-Licensee
together with future interest.

8. The petitioner by means of the
instant writ petition did not challenge the
validity of the entire award of the Special
Officer (Electricity) but confined its
challenge to the following items:-

A. Disallowing the claim of the
petitioner on account of depreciation on
works constructed at the cost of local
bodies for street lighting and works paid
for by the consumer amounting to Rs.
20,98,226/-.

B. Wrongly allowing the value
of stores and spare parts taken over
amounting to Rs. 83,243/-.

C.
Wrongly
disallowing
deductions of Rs. 2,50,000/- paid by the
Board to the ex-license in advance out of
collections made from consumers.

D. Claim on account of Railway
siding amounting to Rs. 31,595.69.

E. Initial payment received
from consumers amounting to Rs.
8,75,393.59.

F. Employees claims amounting
to Rs. 14,50,980.35 in respect of gratuity,
overtime,
unavailed
leave,
Supreme
Court awards etc.

G. Wrongly disallowing the
deductions of amount of Development
reserves amounting to Rs. 19,95,398/-.

9. Sri Rakesh Pande, learned Senior
Counsel assisted by Sri Abhishek Mishra,
learned counsel, who has put in appearance
on
behalf
of
Agra
Electric
Supply
Company Ltd., "Martin Burn House", 12
Mission Row, Calcutta (West Bengal)
(Respondent No. 2) in opposition to the
writ petition submits that the Special
Officer (Electricity) while determining the
amount payable (purchase price) to the ExLicensee in exercise of his powers has
extensively dealt with the provisions of
Section 7-A of the Indian Electricity Act,
1910 (amended) and applicable to the State
of U. P. The amount so arrived at is wholly
just, legal and has been arrived at in a
proper
manner.
The
Special
Officer
(Electricity) has recorded findings of fact
and given adequate reasons for recording
the said findings of fact. The award is
wholly reasoned rendered after hearing the
8 All. The U.P. State Electricity Board Vs. The Special Officer Electricity & Anr.
245
parties and on an objective determination
of the amount payable in accordance with
Section 7-A of the Act.

A.
Depreciation
on
Works
Constructed at the cost of Local Bodies
for Street Lighting and Works paid for
by the Consumer

10. Sri C. B. Yadav, learned Senior
Counsel appearing for the petitioner
submits
that
the
Special
Officer
(Electricity) while rendering the Award
dated 12.07.1982 manifestly erred in
disallowing the claim of the petitioner as
regards depreciation on works constructed
at the cost of local bodies paid for by the
consumers which worked out to Rs.
20,98,226/-
as
the
same
was
in
contravention of the the express provision
of Section 7-A (2) of the Indian Electricity
Act, 1910. Learned counsel while inviting
the attention of the Court to Section 7A(2)(i) of the Act and to the definition of
depreciation, submits that the Special
Officer (Electricity) on an erroneous
interpretation of the provisions referred to
above held that the book value of the works
constructed at the cost of local bodies for
street lighting and work paid for by the
consumers were liable to be excluded and
the depreciation was required to be
computed on works other than those paid
by the local bodies and consumers.
According to Sri C. B. Yadav, the
depreciation was liable to be computed on
the book value of the entire assets as
reflected in the audited account of the ExLicensee including those created at the cost
of local bodies and consumers. He further
submit that the depreciation is provided for
the purposes of replacement of assets when
they have outlived their utility. The
procedure of providing the depreciation has
been laid down in para IV of the Sixth
Schedule and Seventh Schedule to the
Electricity
(Supply)
Act,
1948.
The
depreciation is set aside every year from
the revenue earned from the consumers by
the sale of electrical energy and retained in
the form of reserves by the undertaking for
replacing the units as and when required.
The depreciation cannot be treated as profit
of the Ex-Licensee so as to be disallowed
as has been done in the case at hand by the
Special
Officer
(Electricity)
while
determining the amount payable under
Section 7-A of the Indian Electricity Act,
1910 (as amended).

11. The Apex Court in the case of
Pilibhit Electric Supply Co. (P) Ltd. and
another Vs. Special Officer (Electricity)
and another reported in 1996 (ii) SCC 288
while dealing with a similar issue regarding
depreciation in Para 11 laid as under:-

In order to appreciate the rival
contentions on this claim it is necessary to
refer to the relevant provisions of the Sixth
Schedule that applied in 1975 when the
appellant's undertaking was acquired with
effect from 1st December 1975. The
relevant provisions for depreciation are
found in paragraphs VI to XII of the Sixth
Schedule as applicable at the relevant time.
 They read as under:

"VI. (i) There shall be allowed in
each year in respect of depreciation of
fixed assets employed in the business of
electricity supply such an amount as would,
if set aside annually throughout the
prescribed period and accumulated at
compound interest at 4 per centum per
annum, produce by the end of the
prescribed period an amount equal to 90
per cent of the original cast of the asset
after taking into account the sums already
written off or set aside in the books of the
undertaking.
Annual
interest
on
the
246 INDIAN LAW REPORTS ALLAHABAD SERIES
accumulated balance will be allowed as an
expense from revenue as well as the annual
incremental deposit:

Provided that, within 3 months
from the date upon which these principles
are enacted, a licensee may elect to adopt
the straight line method of depreciation
accounting in lieu of the compound interest
method above prescribed.

Straight-line
method
of
depreciation accounting means the method
whereby an allowance is made in each year
in respect of depreciation of fixed assets
employed in the business of such an amount
as is arrived at by dividing ninety percent
of the original cost of the asset by the
prescribed method in respect of such asset.'
(2) The year in which any asset becomes
available for use in the business and the
relative cost thereof shall, in the absence of
satisfactory record, be determined by the
State Government. All sums credited to
depreciation account shall be invested only
in the business of electricity supply of the
undertaking or where it is not practicable
to so invest them in investments approved
by the State Government.

(3)
Any
sums
invested
in
investments
approved
by
the
State
Government
under
sub-paragraph
(2)
shall, as soon as practicable, be utilized in
the business of electricity supply of the
undertaking and if such sums are not so
utilized they shall not form part of the
capital base under clause (d) of subparagraph (1) of paragraph XVII.

VII. (1) Where any fixed asset
ceases to be available for use through
obsolescence, inadequacy, superfluity or
for any other reason, it shall be described
in the books of the licensee as no longer in
use and no further depreciation in respect
thereof shall be allowed as a charge
against revenue.

(2) The written down cost of such
fixed asset shall be charged against the
Contingencies Reserve :

Provided
that
where
the
accumulations
in
the
Contingencies
Reserve are not sufficient to permit the
charging of the entire written down cost of
the asset, the excess amount may, be
included in the capital base for the purpose
of clause (a) of sub-paragraph (1) of
paragraph XVII.

(3) The amount for which any
such fixed asset is sold or the amount of its
scrap value when actually realised shall be
credited to the Contingencies Reserve.

VIII. When any asset has been
written
down
in
the books
of
the
undertaking to 10 percent, or less of its
original cost, no further depreciation shall
be allowed in respect of that asset.

IX. When any fixed asset is sold
for an amount exceeding its written down
cost the excess after deducting all taxes
payable thereon shall be credited to the
Contingencies Reserve.

X. Except with the previous
consent of the State Government, no sums
shall be carried forward to a reserve and
no dividends in excess of 3 percent shall be
paid on share capital and no other
distribution of profits shall be made to the
shareholders in respect of any year of
account so long as any of the following
sums remain to be written off in the books
of the undertaking, namely:-

(i) normal depreciation due for
that
year
of
account
calculated
in
accordance
with
the
provisions
of
paragraph VI;

(ii) equated instalment in respect
of arrears of depreciation, computed in
accordance
with
the
provisions
of
paragraph XI, for that year of account;

(iii) arrears, if any, in respect of
normal depreciation referred to in clause
8 All. The U.P. State Electricity Board Vs. The Special Officer Electricity & Anr.
247
(i),
accumulated
after
the
date
of
application of the provisions of the Sixth
Schedule to the licensee;

(iv) arrears, if any, in respect of
equated instalments referred to in clause
(ii).

XI.
Arrears
of
depreciation
calculated in accordance with paragraph
VI may be written off by equated payments
over the remainder of the prescribed period
and the amount so set aside in the books of
the undertaking may be taken into account
in any year as a special appropriation for
purposes of assessing the clear profit.

XII. Where contributions are
made by consumers towards the cost of
construction of service lines constructed
after the date on which this Act comes into
force only the net cost of such service lines
after deducting such contributions shall be
included in the cost of fixed assets for the
purposes of arriving at the capital base :

Provided that for the purposes of
depreciation under paragraph VI, the total
original cost of construction of the service
lines shall be taken into account."

It is, of course, true that as
mentioned in paragraph XII of the Sixth
Schedules while considering the question of
total capital base which includes the assets
consisting of service lines for installation of
which contributions are made by consumer
towards the construction of such service
lines, the net cost of such service lines after
deducting such contributions has to be
included in the costs of such fixed assets. It
i also true that, however, for computing the
depreciation as per paragraph VI on such
assets,
wherein
consumers
have
contributed towards their acquisition, the
total original cost of construction of the
service lines had to be taken into account.
The Special Officer has applied paragraph
XII whole had while deducting the
depreciation from the book value of all
completed works which are acquired from
the licensee as per Section 7-A(2) (i). In
our view the said approach of the Special
Officer is ex facie unjustified. The reasons
are obvious. Paragraph XII of the Sixth
Schedule to the Supply Act deals with a
special type of asset, namely, service lines
which are installed by the licensee wherein
the consumers have contributed towards
the cost of construction of such service
lines. For this type of assets, in computing
the capital base of the licensee, the
contribution by the consumers has to be
excluded but for computing depreciation
under paragraph VI for such assets,
namely, the service lines, the total original
cost of construction of service lines has to
be taken into account which may include
the cost of construction of service lines
incurred by the licensee as well as the
other part of the component of the cost of
construction of service lines which has
come from the pockets of the consumers.
But entire paragraph XII deals with only
one type of assets, namely, service lines
construction cost of which is wholly or
partially
borne
by
the
consumers.
Paragraph VI of Schedule VI, however, is
general in nature and covers all types of
fixed assets and the method of computation
of depreciation on these fixed assets. It is
axiomatic that fixed assets employed in the
business of electricity supply may consist of
those assets which are wholly acquired at
the cost of the licensee and may also
include assets like service lines which may
partly be acquired and installed at the cost
of
the
licensee
and
partly
out
of
contribution of the consumers who would
be interested in getting electrical supply at
their own premises and for that purpose
they may be willing and may be made to
pay contribution towards extension of
service lines to their premises. Therefore,
reference to service lines in paragraph XII
248 INDIAN LAW REPORTS ALLAHABAD SERIES
of Schedule VI is with a view to finding out
as to how depreciation has to be computed
for such a special type of asset, namely
service lines wherein consumers have also
contributed towards their installation.
Consequently on a conjoint reading of
paragraph VI and paragraph XII of Sixth
Schedule the depreciation on such service
lines installed by drawing upon the
contributions
from
the
consumers
is
required to include the total original cost of
construction of such service lines and that
would necessarily include the component of
the amount of cost contributed by the
consumers. However that has nothing to do
with the computation of depreciation on the
assets which are acquired by the acquiring
authority under Section 6-A read with
Section 7-A(2)(i). It is now well settled that
service lines whose installation had been
paid for by the consumers are not to be
compensated for and they vest in the
acquiring authority under Section 6-A read
with Section 7-A free of cost of payment of
compensation to the licensee. The logic
underlying this settled legal position is that
as the licensee had not spent from his
pocket for installing such an asset, he was
not required to be compensated for that
part of the asset which was paid for by
consumers. A mere look at Section 7A(2)(i) shows that the gross amount
payable to such licensee for acquiring his
assets amongst others has to consist of an
amount of the book value of all completed
works in the beneficial use pertaining to the
undertaking. While computing such book
value of acquired assets the works paid for
by the consumers have to be ignored and
omitted from consideration. Therefore, the
amount of book value computed as per
Section 7-A(2)(i) will consist of only those
works which are for beneficial use of the
undertaking which was installed and
acquired by the licensee at its own cost.
Having computed this amount the next
question survives about deducting the
depreciation on such acquired assets. That
would
naturally
imply
deduction
of
depreciation on such assets from the
amount so computed being the book value
of the completed works installed and
acquired at the cost of the licensee. If these
are the assets whose book value has to be
computed as per Section 7-A(2)(i) the
question of deduction from that amount
would necessarily imply deduction of
depreciation on these very assets. In other
words the field is clearly earmarked both
for computation of the book value of the
concerned assets as also fro deduction of
depreciation on such assets as enjoined by
the second part of Section 7-A(2)(i) itself. It
is axiomatic that before any depreciation is
deducted from the computed book value of
an asset it should be for the same asset
whose book value has been ascertained and
from that value depreciation is to be
deducted. It cannot be that for computing
the book value of licensee's assets only self-
financed assets are to be taken into
consideration and not the works paid for by
the consumers but while deducting from
this very amount of book value the
depreciation is to be deducted qua not only
the assets whose book value is computed
but also qua the assets belonging to
somebody else like the consumers who have
paid for the works. This would on the face
of it be very anomalous and unfair. It is
also pertinent to note that from the book
value of the assets which were financed by
the licensee as computed as per Section 7A(2)(i) when a question arises about
deducting
the
depreciation, only
the
calculation of such depreciation on the
concerned
asset
is
to
be
done
in
accordance with Sixth Schedule because
the words advisedly used by the Legislature
in Section 7-A(2)(i) in this connection are
8 All. The U.P. State Electricity Board Vs. The Special Officer Electricity & Anr.
249
less depreciation calculated in accordance
with the Sixth Schedule read with the
Seventh Schedule. Therefore, only the
method of calculation of depreciation has
to be applied by way of reference to the
Sixth Schedule. But the type of asset for
which depreciation has to be computed is
not to be gathered from the Sixth Schedule.
It has to be gathered from the very first
part of Section 7-A(2)(i), namely, only self-
financed fixed assets whose book value is to
be computed by the Special Officer for
payment to the licensee and from that
amount depreciation is to be deducted
which would necessarily mean depreciation
on the very same asset which has
undergone the book valuation as per
Section 7-A(2)(i). If for calculating the
book value of such assets the works paid
for by the consumers are to be excluded
they necessarily cannot be included for the
purpose
of
ascertaining
deductible
depreciation on such assets. Consequently
reference to paragraph XII Schedule VI
would be totally out of picture and
redundant so far as the scheme of Section
7-A sub-section (2)(i) is concerned. It may
be that the licensee might have obtained
benefit of such depreciation on consumer
paid assets under Income Tax Act or any
other statutory provision but that is totally
irrelevant
for
deciding
the
question
whether the deduction of depreciation on
the concerned assets whose book value is to
be computed as per Section 7-A(2)(i),
paragraph XII of Sixth Schedule could at
all be pressed in service. It is, therefore,
not possible to agree with the submission of
learned senior counsel for the respondents
and also the learned counsel who appeared
for the State of U.P. that for the purpose of
deducting the depreciation the assets which
are not included in computing the book
value as per Section 7-A(2)(i), namely, the
consumer-financed assets also could be
taken into consideration. In our view the
Special Officer was patently in error when
he computed the depreciation on the assets
under Section 7-A(2)(i) by adding the
amount of depreciation on the service lines
which were paid for by the consumers.
Reference to paragraph XII of Sixth
Schedule in this connection was wrongly
made and the said paragraph was wrongly
pressed in service by the Special Officer. In
this connection it has also to be kept in
view that the amount of Rs.2,48,718/- being
the depreciation amount on the works
constructed at the cost of consumers was
not disputed by the Board and the only
contention of the Board before Special
Officer was that as per paragraph XII of
Sixth
Schedule
the
said
amount
of
depreciation was also to be deducted from
the book value of the assets acquired by the
Board under Section 6-A read with Section
7-A. As the reliance placed on paragraph
XII of Sixth Schedule by the Special Officer
is found by us to be unjustified and as the
amount of depreciation deducted from the
book value on this score is undisputedly
Rs.2,48,718,81 this amount of depreciation
deducted from the book value on this score
is undisputedly Rs.2,48,718.81 this amount
must be treated to have been wrongly
deducted from the book value by way of
depreciation on consumer-financed assets,
namely, service lines.

12. The above view expressed by
their Lordships of the Apex Court in
Pilibhit Electric Supply Co. (P) Ltd.
(supra) was followed by this Court in
Saharanpur Electric Supply Company
Ltd. and another vs. State of U. P. &
others reported in 2006 (6) ADJ 670 and
also in the case of M/s Farrukhabad
Electric Supply Co. Ltd. Power House
Fatehgarh and others vs. U. P. State
Electricity
Board
Shakti
Bhawan,
250 INDIAN LAW REPORTS ALLAHABAD SERIES
Lucknow and others (Civil Misc. Writ
Petition No. l46 of 1978 decided on
23.05.2008.

13. In the instant case, the Special
Officer (Electricity) has duly considered
the rival submissions of the petitioner (U.
P. State Electricity Board) and the ExLicensee,
M/s
Agra
Electric
Supply
Undertakings and has held that the
provisions of Section 7-A(2) (i) requires
the exclusion of all works constructed at
the cost of local bodies for street lighting
and the work paid for by the consumers
while determining the book value of all
completed
works
in
beneficial
use
pertaining to the undertaking taken over by
the Board, irrespective of the period when
they were constructed. The Special Officer
after going through the details of the
arguments submitted by the Ex-Licensee
and the Petitioner/Board and considering
the provisions of the Act has held that the
book value of all the completed works in
beneficial use pertaining to the undertaking
taken over by the SEB (excluding works
constructed at the cost of local bodies for
street lighting and works paid for by
consumers less the amount of depreciation
calculated in accordance with the 6th
Schedule read with the 7th Schedule to the
Electricity (Supply) Act, 1948 is to be
taken. The Special Officer (Electricity) has
determined the amount of depreciation on
works constructed at the cost of local
bodies for street lighting and works paid for
by the consumers as Rs. 20,98,226/- and
has accordingly deducted the same from
the total depreciation on all completed
works pertaining to the undertaking and
taken
over
by
the
Board
i.e.
Rs.
1,59,88,944/-.

14. Having gone through the
reasoning
of
the
Special
Officer
(Electricity) while dealing with the issue of
depreciation and disallowing the claim of
the
Petitioner/Board
on
account
of
depreciation on works constructed at the
cost of Local Bodies for street lighting and
works
paid
for
by
the
consumers
amounting to Rs. 20,98,226/- we find that
the same is in consonance with the ratio of
the law laid down by the Apex Court in
Pilibhit Electric Supply Co. (Pvt.) Ltd.,
and another (supra) followed by this
Court in Saharanpur Electric Supply
Company Ltd., (supra) and in the case of
M/s Farrukhabad Electric Supply Co.
Ltd., (supra) and calls for no interference
by this Court.

B. Stores and Spare Parts

15. Sri C. B. Yadav, learned Senior
Counsel
assisted
by
Sri
Baleshwar
Chaturvedi, learned counsel next contended
that the Special Officer (Electricity) while
rendering the Award dated 12.07.1982
committed manifest error in allowing the
value of Stores and Spare Parts taken over
amounting to Rs. 83,243/-. Sri C. B. Yadav,
learned Senior Counsel submits that once
the calculation has been made on the basis
of Book Value which excludes stores and
spare
parts
along
with
Plant
and
Machinery, the finding that spare parts
have
to
be
paid
for
separately
is
misconceived and the award of the Special
Officer (Electricity) is vitiated on this
score.

16. The parties are at common
ground that the book value of all stores,
including spare parts taken over and in the
case of used stores and spare parts if taken
over, such sums is to be decided by the
Special Officer (Electricity) as per Section
7-A (2) (iii) of the India Electricity Act,
1910 (as amended). The Special Officer
8 All. The U.P. State Electricity Board Vs. The Special Officer Electricity & Anr.
251
(Electricity) in his Award has elaborately
dealt with the issue and arrived at a
conclusion that the cost of spare part as
appearing in List (C) was prepared by the
Board after physical verification of stores.
Some of the items appearing in the Bills
produced by the Ex-licensee have been
duly accounted for in the Stores Account.
There is no such record produced by the
Board by which it can be established that
remaining items of the Bills produced by
the Ex-Licensee have not been debited to
the Stores Account or to prove that cost of
these items have been debited to Capital
Account. Sri Yadav has been unable to
impress upon us that the conclusion drawn
by the Special Officer (Electricity) is
factually incorrect or in violation of the
Section 7-A (2) (iii) of the Indian
Electricity Act, 1910. The findings returned
by the Special Officer (Electricity), in this
regard calls for no interference.

C. Amount, if any, already paid
in advance

Sri C. B. Yadav, learned Senior
Counsel in furtherance of the challenge to
the Award dated 12.07.1982 submits that
the Special Officer (Electricity) grossly
erred in disallowing deductions of Rs.
2,50,000/-paid by the Board to the ExLicensee in advance out of collections
made from consumers. It is not in dispute
that the amount of Rs. 2,50,000/- is
reflective of the revenue realised by the
Board on behalf of the Ex-Licensee. Sri
Yadav has argued that the said sum was
included
in
the
total
sum
of
Rs.
34,10,54,072/- as per the calculation at
Page 63 of the Award. Admittedly, the
amount is not an advance received from the
Board by the Ex-Licensee and the Special
Officer (Electricity) has rightly arrived at
the conclusion that it was not advance from
the Board but the amount collected by the
Board on behalf of the Ex-Licensee and,
therefore, outside the ambit of Section 7-A
(5) (a) of the Act. The submissions of Sri
C. B. Yadav, do not merit considerations
and is hereby rejected.

D. Claim on Account of Railway
Siding Charges

17. Sri C. B. Yadav, learned Senior
Counsel appearing for the petitioner has
fairly submitted that he does not wish to
press this issue. Since, the issue is not
being pressed on behalf of the petitioner,
we
refrain
from
conveying
our
observations.
As
a
result,
the
findings/conclusion of the Special Officer
(Electricity) on the issue is upheld.

E. Initial Payment received from
Bulk Supply Consumers

19. Sri C. B. Yadav, learned Senior
Counsel for the petitioner submits that an
amount of Rs. 13,22,996.80 as advance
from 38 Bulk Supply Consumers with the
agreement that the same would be refunded
by adjustment in 240 instalments upto the
date of the take over had been taken but
only a sum of Rs. 4,47,603.21 was adjusted
by the Ex-Licensee, thus leaving a balance
of Rs. 8,75,393.59 to be refunded to the
consumers. This claim was disallowed by
the Special Officer by returning a finding
that the Ex-Licensee had credited this
amount towards the consumers contribution
towards service line. The consumers
contribution towards service lines formed a
separate head of deduction already allowed,
this amount of 8,75,393.59 could not be
allowed again and the award of the Special
Officer (Electricity) suffers from patent
illegality in this regard as this amount was
252 INDIAN LAW REPORTS ALLAHABAD SERIES
liable to be deducted from the amount
payable to the Ex-Licensee.

20. Prima-facie,
we
find
the
submissions of Sri C. B. Yadav, learned
Senior Counsel to be attractive but,
however, on the perusal of the record we
find that the amount of Rs. 8,75,393.50 is
referable to 38 consumers to whom the
Board has been refunding in monthly
instalments. It is verified from the records
of the Ex-Licensee that the amount
received as advance from Bulk Consumers
have
been
credited
to
consumer
contribution account and adjustment for
amount refunded in instalments has also
been made in the accounts. The entire
amount of consumer contribution has
already been excluded from the book value
of assets. The Special Officer (Electricity)
has returned a finding that no amount is to
be deducted separately on this account. The
Special Officer has recorded findings of
fact in this regard which calls for no
interference.

F. Employees Claims amounting
to Rs. 14,50,980.35 in respect of
Gratuity, Overtime, Unavailed
Leave, Supreme Court Award
etc.

21. Sri C. B. Yadav, learned Senior
Counsel for the petitioner submits that the
Special
Officer
(Electricity)
while
rendering the Award dated 12.07.1982
disallowed a sum of Rs. 10,95,431.50
towards gratuity in respect of workers, a
sum of Rs. 2,29,538/- towards gratuity in
respect of Agreemental Staff, a sum of Rs.
48,622.67
towards
Agreemental
Staff
refused/unavailed leave, a sum of Rs.
38,000/- towards Railway fare activities, a
sum of Rs. 36,173.68 towards Supreme
Court Awards and a sum of Rs.