# GUJARAT ELECTRICITY BOARD v. GIRDHARLAL MOTILAL AND ANR

- **Citation:** [1969] 1 S.C.R. 589
- **Court:** Supreme Court of India
- **Decided:** 1968-08-06
- **Case number:** Civil Appeal No. 2526 of 1966
- **Bench:** R. S. Bachawat, K. S. Hegde
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/gujarat-electricity-board-v-girdharlal-motilal-and-anr-4450
- **Pages:** 6

## Headnote

Indian Electricity Act, 1910, s. 6(1)-as amended by Act 32
of
1959-notice to exercise option to purchase undertaking-requirement as
ta calling upon licensee to sell undertaking-if mandatory for exercising
power to purchase.
The respondent held a licence granted by the Government of Baroda
under the Baroda Electricity Act 1 of 1964 to supply electric energy with·
in certain defined territories.
On June 23, 1961 the appellant, which was
constituted under s. 5 of the Indian
Electricity
(Supply) Act,
1948,
served a notice on the respondent to the effect that in exercise of the
powers conferred on it by virtue of s. 71 of the Electricity (Supply) Act,
1948 read together with section 6 0f the Indian Electricity Act, 1910, as
amended by the Indian Electricity (Amendment) Act 32 of 1959, the
appellant had decided to and would exercise the option to purchase the
respondent's undertaking on 3-1-1963 i.e. the date on which
the licence
was due to expire. The respondent challenged the validity of this notice
and the High Court held the notice. was invalid.
On appeal to this Court,
HELD : The High Court was tight in holding that the impugned notice
was invalid and by virtue df that notice the appellant could not compel
the respondent to sell the undertaking. [594 A]
Before the option to purchase the undertaking can be exercised. the
~tate Electricity Board must call upon the licensee by means of a notice
in writing within the period mentioned in s. 6( I) to sell the undertaking
to it on· the expiration of the period for which the licence was given.
The impugned notice did not require the licensee to sell the undertaking.
It merely notified the respondent that the appellant Board has decided to
exercise and would exercise th·e option of purchasing the
respondent's
undertaking on the date of expiry of the licence. [592 D-E]
Nazir Ahmad v. King Emperor, L.R. 63 I.A.
372:
and Ballavdas
Agarwala v. Shri S. C. Chakravarty, [1960] 2 S.C.R. 739; referred to.
There was no force in the contention that the notice complied substantially with the requirements of the law and should therefore be given
c;:ffect to. The issuing of a notice strictly in accordance with the provisions
•f s. 6(1), which prescribes that the notice must specifica!iy cal! upon
the licensee to sell the undertaking, is a condition precedent to the exercise
of the power conferred on the State Electricity Board to purchase the
undertaking. Furthermore, on reading the impugned notice, the licensee
could not have been definite whether th.c appellant Board purported to
exe'rcise the power under the law as it was on the date of the notice i.e .
. the Indian Electricity Act. 1910 as amended by Act 32 of 1959, or as it
was under the unamended act. The rights and liabilities of the Electricity
Board .and the licensee before Act 32 of 1959 came
into force
were
~ubstantially different from those after the amendment. [593 C-G]

## Text

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589
GUJARAT ELECTRICITY BOARD
v.
GIRDHARLAL MOTILAL AND ANR.
August 6, 1968
[R. S. BACHAWAT AND K. S. HEGDE, JJ.J
Indian Electricity Act, 1910, s. 6(1)-as amended by Act 32
of
1959-notice to exercise option to purchase undertaking-requirement as
ta calling upon licensee to sell undertaking-if mandatory for exercising
power to purchase.
The respondent held a licence granted by the Government of Baroda
under the Baroda Electricity Act 1 of 1964 to supply electric energy with·
in certain defined territories.
On June 23, 1961 the appellant, which was
constituted under s. 5 of the Indian
Electricity
(Supply) Act,
1948,
served a notice on the respondent to the effect that in exercise of the
powers conferred on it by virtue of s. 71 of the Electricity (Supply) Act,
1948 read together with section 6 0f the Indian Electricity Act, 1910, as
amended by the Indian Electricity (Amendment) Act 32 of 1959, the
appellant had decided to and would exercise the option to purchase the
respondent's undertaking on 3-1-1963 i.e. the date on which
the licence
was due to expire. The respondent challenged the validity of this notice
and the High Court held the notice. was invalid.
On appeal to this Court,
HELD : The High Court was tight in holding that the impugned notice
was invalid and by virtue df that notice the appellant could not compel
the respondent to sell the undertaking. [594 A]
Before the option to purchase the undertaking can be exercised. the
~tate Electricity Board must call upon the licensee by means of a notice
in writing within the period mentioned in s. 6( I) to sell the undertaking
to it on· the expiration of the period for which the licence was given.
The impugned notice did not require the licensee to sell the undertaking.
It merely notified the respondent that the appellant Board has decided to
exercise and would exercise th·e option of purchasing the
respondent's
undertaking on the date of expiry of the licence. [592 D-E]
Nazir Ahmad v. King Emperor, L.R. 63 I.A.
372:
and Ballavdas
Agarwala v. Shri S. C. Chakravarty, [1960] 2 S.C.R. 739; referred to.
There was no force in the contention that the notice complied substantially with the requirements of the law and should therefore be given
c;:ffect to. The issuing of a notice strictly in accordance with the provisions
•f s. 6(1), which prescribes that the notice must specifica!iy cal! upon
the licensee to sell the undertaking, is a condition precedent to the exercise
of the power conferred on the State Electricity Board to purchase the
undertaking. Furthermore, on reading the impugned notice, the licensee
could not have been definite whether th.c appellant Board purported to
exe'rcise the power under the law as it was on the date of the notice i.e .
. the Indian Electricity Act. 1910 as amended by Act 32 of 1959, or as it
was under the unamended act. The rights and liabilities of the Electricity
Board .and the licensee before Act 32 of 1959 came
into force
were
~ubstantially different from those after the amendment. [593 C-G]
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2526 of
1966.
590
SUPREME COlJRT REPORTS
(1969] I S.CR.
Appeal from the judgment and order dated October 30, 31,
A
l 963 of the Gujarat High Court in Special Civil Application No.
1098 of 1962.
C. K. Daphtarl', A11omey-Genera/ and /. N. Shroff, for the
appellant.
·
M. C. Chagla, R. M. Vin and R. Gopalakrishnan, for responll
dent No. 1.
R. If. Dhebar and S. K. Dholnkia, for respondent No. 2.
The Judgment of the Court was delivered by
Hegde, J. The only question for decision in this appeal is
whether the notice issued by the appellant on June 23, 1961 under
s. 6 of the Indian Electricity Act, 1910 as amended by Act 32 of
1959 (lo be hereinafter referred to as the Act) is valid.
The
High Court has come to the conclusion that it is
not a valid
notice.
On 4th January 1923, the father of respondent No. 1 was
granted a licence lo supply electric energy within the area consisting of municipal limits. of .Dabhoi and the territories comprised
within half mile radius from the municipal boundary lines by the
Government of Baroda under the Baroda Electricity Act Samvat
1964 (Act I of 1964). The said Company was
known as
Dabhoi Electricity Company. Respondent No.
I
was
at
all
material tim~s the holder of this licence.
The said licence conferred an option on the Government t<>
purchase the undertaking in accordance with the terms of the
licence.
Clause 26(a) of that licence is material for our present
purpose.
That clause reads :
"The option of purchase given by s. 8 of the Act
shall be exercisable on the expiration of 40 years computed from the commencement of this licence and thereafter on the expiration of every subsequent period of 8
years during the subsistence of this licence ...... "
On the merger of Baroda Stale with the then
P~ovince ~
Bombay, the Indian Electricity Act, 1910 and the Indian E;Iect;ncity (Supply) Act, 1948 were made applicable t? the terntones
of the former State of Baroda and the corresponding Baroda Act
was repealed with the saving clause that t~e Ikences issued .under
the repealed Act shall continue to remam m force un!Il tho
expiration of the penod of licence as if they were issued under the
Act of 1910.
In exercise of the powers conferred by s. 5 of the
T~diaa
Electricity (Supply) Act. 1948. the State Government constttuted
the appellant Corporation.
1l1e appellant served upon responc
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ELECTY. BOARD v. GIRDHARLAL (Hegde, J.)
591
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dent No. 1 a notice on June 23, 1961.
That notice is important
for our present purpose.
Hence we shall quote the same in full.
It is as· follows :-
"THE GUJARAT ELECTRICITY BOARD
Kothi Building,
B
Raopura Road, Baroda
Dated 23 June, 196L
..,
Regd. A.D.
-
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Ref. No. PLE.BRD.7(A)19648.
To
C
The Dabhoi Electric Power Supply Co.
C/o Shri Girdharlal Motilal Contractor
(Sheth), Ajit Bungalow, Pratapnagar Society, Baroda.
SUB: (i) Notice under section 6 of the Indian Electricity Act,
1910 and exercise of option vested in the Gujarat
D
Electricity Board to purchase your undertaking.
(ii) The Dabhoi Electric Licence 1923 granted by the
Government of Baroda under the State Electricity
Act, Samvat 1964.
Dear Sir,
E
In exercise of the powers conferred on the Gujarat Electricity
Board by virtue of s. 71 of the Electricity (Supply) Act, 1948,
read together with section 6 of the Indian Electricity Act, 1910,
as amended by the Indian Electricity (Amendment) Act, 1959
(32 of 1959) this is to give you notice that the Gujarat Electricity
Board has decided to exercise and shall exercise the option of purF
chasing your undertaking on 3-1-1963, the date on which the
· .license granted to you by the Government of Baroda expires.
· The receipt of this notice may please be acknowledged.
Yours faithfully,
Sd/- Secretary,
The Gujarat Electricity Board."
G
As this notice was issued after the Indian Electricity Act, 1910
was amended by Act 32 of 1959, we have to see whether that
notice complies with the requirements of s. 6 ( 1 )(a) of the Act
which says:
H'
"Where a license has been granted to any person
not being a local authority, the State Electricity Board
shall.-
( a) in the case of a: license granted before the commencement of the Indian Electricity (Amend-
592
SUPREME COURT REPORTS
[1969\ I S.C.R.
ment) Act, 1959 on the expiration of each
A
such period as is specified in the license ..... .
have the option of purcha,ing the undertaking and such
option shall be exercised by the State Electricity Board
servmg upon the licensee a notice in writing of not Jess
than one year requiring the licensee to sell the underB
taking to it at the expiry of the relevant period referred
to in this sub-section."
These provisions confer a power on the State Electricity Board
to purchase the property of the licensee hut that right can be
exercised only in the manner provided in the Act and not in any
other way.
h must he remembered that the provisions in question empower the State Electricity Board to interfere with the
property rights of the licensee.
Therefore such a power will
have to be strictly construed.
The legislature has prescribed a
mode fof the exercising of that power and hence that power can
be exercised only in that manner and in no other manner.
See
Nazir Ahmad v. King Emperor(') and Bal/avdas Agarwala v.
Shri S. C. Chakravarty{°).
Before the option to purchase the
undertaking can be exercised, the State Electricity Board must call
upon the licensee by means of a notice in writing within the
period mentioned in s. 6 ( 1) to sell the undertaking to it on the
expiration of the period for which licence was given.
The impugned notice does not require the licensee to sell the undertaking.
It merely notifies the respondent that the appellant Board has
decided to exercise and shall exercise the option of purchasing
the respondent's undertaking on 3-1-1963, the date on which the
lieence granted to him by the Government of Baroda expired.
It was contended by the learned Attorney-General on behalf
of the appellant that in matters like these rigid compliance with
the provisions of law should not be insisted upon.
According to
1 him if the legal requirements are substantially satisfied the validity
of the notice given, should be upheld.
Proceeding further he
urged that so long as tbe notice given by the Electricity Board is
sufficient to intimate the licensee the intention of the Board, the
mandate of the law is complied with; in a notice under s. 6( 1)
what is of the essence is the substance of the matter mentioned
therein and not the manner in which the notice is worded.
He
urged that the licensee must have imported some commonsense
into the notice received by him and he could not be allowed to
riggle out of his obligation by having recourse to technicalities.
Tn advancin" these arguments. the learned Attorney-General overlooked the fact that notice required by s. 6 (I) is not a notice of
an action to be taken or merely a procedural step.
It is a mode
(I) LR. 63
I.A. 372.
(2)
11960] 2 S.C.R. 739.
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ELECTY. BOARD v. GJRDHARLAL (Hegde, l.)
593
of exercising the power conferred on the State Electricity Board
by the exercise of which the property rights of the licensees can
be affected.
Section 6 ( 1) confers power on the State Electricity Board to take away the property of the licensee.
Such a
power must be exercised strictly in accordance with law.
The
legislature has prescribed the manner of its exercise. It must
exercise in that manner and in no other way.
It must also be
seen that the Parliament deliqerately changed the form of the
nonce to be given from what it was before Act 32 of 1959 was
enacted.
It presc:ribe4_, that the notice must specifically call upon
the licensee to sell the undertaking.
The mandate of the law is
clear and it must be obeyed.
We agree with Mr. M. C. Chagla
learned Counsel for the licensee that the issuing of a notice
strictly in accordance with the provisions of s. 6 ( 1) is a condition
precedent to the exercise of the power conferred on the State
Electricity Board to purchase the undertaking.
That being so, we
must hold that s. 6 ( 1) is mandatory and it must be strictly complied with.
In this case we are not satisfied that the requirements of law
have at least been substantially complied with.
Obviously the
person who issued the notice was not familiar with the legal position.
He appears to be under the misapprehension that s. 71 of
the Electricity (Supply) Act, 1948 was still in operation when he
gave the notice.
He appears to have been in two minds.
He
was not sure whether he should issue the notice under the provisions of the Act as they stoo~ on the date of the notice or in
accordance with the provisions as they were prior to the coming
into force of Act 32 of 1959. At the top of the notice it is
mentioned that it is given under s. 6 of the Act but in the body of
tile notice it is purported to be given in exercise of the power
available under s. 71 of tile Indian Electricity (Supply) Act.
Again the contents of notice indicate that it is a notice under
s. 7(1) read witll s. 7(4) of the Indian Electricity Act, 1910 as
they stood prior to 1959.
Quite clearly the notice speaks in two
voices.
It is the product of a confused mind. We fail to see how
any commonsense can be read into it.
On reading that notice
the licensee could not have been definite whether the State Electricity Board purported to exercise the power under the law as it
was on the date of the notice or as it was under the unamended V
Act.
Rights and liabilities of the Electricity Board and the
licensee before Act 32 of 1959 can1e into force are substantially
different from their rights and liabilities under the Act.
On
reading the impugned notice it could not have been clear to the
licensee that he had been called upon to sell the undertaking in
accordance with the law as it then stood.
We are unable to
accede to the request of the Attorney-General to read into the
notice worcls which are not there.
594
SUPREME COt:RT REPORTS
[1969] I S.CR.
For the reasons mentioned hcrembcforc we agree with the
A
High Court that the impugned notice is invalid and by virtue of
that notice the appellant ca1UJot compel the respondents to sell the
undertaking in question.
Accordingly this appeal fails and the same is dismissed with
costs.
R.K.P.S.
Appeal dismissed.
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