# THE RAJAHMUNDRY ELECTRIC SUPPLY CORPORATION LTD v. THE STATE OF ANDHRA

- **Citation:** [1954] 1 S.C.R. 779
- **Court:** Supreme Court of India
- **Decided:** 1951-04-27
- **Case number:** Civil Appeal No. 72 of 1952
- **Bench:** MEHR CHAND MAHAJAN c. J, Mukherjea, 779 S. R. DAs, VIVIAN BosE, Ghulam Hasan
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/the-rajahmundry-electric-supply-corporation-ltd-v-the-state-of-andhra-342
- **Pages:** 8

## Headnote

Madras
Electricity
Supply
Undertakings (Acquisition) Act-
{ Madras Act XLIII of 1949)-Volidity of-No entry in
the three
Legislative Lists of seventh schedule of Government of India Act,
193_5.
The Madras
Ele<tricity
Supply
Undertakings
(Acquisition)
Act (Madras Act XLIII of 1949) was beyond the legislative competency of the Madras Legislature because there was no entry
in
any of the three Lists of the Seventh Schedule
of the Govern1nent
of
India
Act, 1935,
relating to compulsory acquisition of
any commercial or industrial undertaking although s. 299 (2)
clearly
contemplated
a law authorising compulsory acquisition for
public purposes of a commercial or industrial undertaking.
State of Bihar
v.
Maharajadhiraja
Sir
Kameshwar Singli
([1952] S.C.R. 889) referred to.
C1VIL
APPELLATE
JuRISDICTJON:
Civil
Appeal
No. 72 of 1952.
Appeal under articles 132 ( 1) and 133 ( 1) (b) of the
Constitution of India from the J udgmeni: and Order
dated the 27th April, 1951, of the High Court of
Judicature at
Madras
(Rajamannar C. J. and Satyanarayana
Rao
J.)
in Civil
Miscellaneous
Petition
No. 4697 of 1951.
M. K. Nambiyar (U. Sethumadhava Rao, with him)
for the appellant.
M. Seshachalapathi for the respondent.
V. K. T. Chari, Advocate-General of Madras (Porus
A. Mehta and V. V. Raghavan, with him) for the Intervener (State of Madras).
1954. February 10. The Judgment of the Court
was delivered by
DAs }.-This is an appeal arising out of a judg-
. ment delivered on the 27th April, 1951, by a Bench of
the Madras High Court in C.M.P. No .. · 4697 of 1951
filed under article 226 of the Constitution for the issue
of a writ of certiorari or other appropriate writ to call
1954
Feiruary 10.
1954
The Rajahmundry
Electric Supply
Corporation Ltd.
v.
Tht State of
Andhra.
Das].
780
SUPREME COURT REPORTS
[1954}
for the records and quash the order of the Government
passed under section 4( 1) of the Madras Act XLIII of
1949 declaring the undertaking of the appellant company to vest in the Government.
The appellant company was formed and registered
under the Indian Companies Act in 1924 with the
object, inter alia, of generating and supplying electrical energy to the public in Rajahmundry. In 1949 the
Madras Legislature passed
the
Madras
Electricity
Supply
Undertakings
(Acquisition)
Act,
1949. The
Act received the assent of the Governor-General on the
18th January, 1950, and was published in the Official
Gazette on the 24th January, 1950. Upon the Constitution of India coming into force on the 26th January, 1950, the Act was submitted to the President for
his certification and on the 12th April, 1950, the President certified that the Act should not be called in
question in any court on the ground that it contravened
the provisions of clause (2) of article 31 or it contravened
the provisions of sub-section (2) of section 299 of the
Government of India Act, 1935. By an order in writing made on the 2nd September, 1950, the Government of Madras acting under section 4(1) of the Act
declared that the undertaking of the appellant company should vest ·in the Government on the date specified therein. Under the proviso to section 4(1) the
Government from time to time postponed the date of
vesting and the 2nd April, 1951, was the last extended date fixed for such vesting. On the 29th March,
1951, the appellant company filed C.M.P. No. 4697 of
1951, under article 226 for quashing the order of the
Government.
Shortly stated the contentions of the appellant before the High Court were that the Act was ultra vires
in that (1) it was beyond the legislative competency of
the Madras Legislature to enact it, (2) it was not
enacted to subserve any public purpose, and (3) the compemation provided for was illusory.
The High Court
repelled each and all of the aforesaid contentions of
the appellant company. It held that the legislation
was with respect to electricity under entry 31 of the
•
:S.C.R.
SUPREME COURT REPORTS
781
concurrent list· in the
seventh
Schedule
to
the
Government of India

## Text

S.C.R.
SUPREME COURT REPORTS
THE RAJAHMUNDRY ELECTRIC SUPPLY
CORPORATION LTD.
v.
THE STATE OF ANDHRA.
[MEHR CHAND MAHAJAN c. J., MUKHERJEA,
779
S. R. DAs, VIVIAN BosE and GHULAM HASAN JJ.]
Madras
Electricity
Supply
Undertakings (Acquisition) Act-
{ Madras Act XLIII of 1949)-Volidity of-No entry in
the three
Legislative Lists of seventh schedule of Government of India Act,
193_5.
The Madras
Ele<tricity
Supply
Undertakings
(Acquisition)
Act (Madras Act XLIII of 1949) was beyond the legislative competency of the Madras Legislature because there was no entry
in
any of the three Lists of the Seventh Schedule
of the Govern1nent
of
India
Act, 1935,
relating to compulsory acquisition of
any commercial or industrial undertaking although s. 299 (2)
clearly
contemplated
a law authorising compulsory acquisition for
public purposes of a commercial or industrial undertaking.
State of Bihar
v.
Maharajadhiraja
Sir
Kameshwar Singli
([1952] S.C.R. 889) referred to.
C1VIL
APPELLATE
JuRISDICTJON:
Civil
Appeal
No. 72 of 1952.
Appeal under articles 132 ( 1) and 133 ( 1) (b) of the
Constitution of India from the J udgmeni: and Order
dated the 27th April, 1951, of the High Court of
Judicature at
Madras
(Rajamannar C. J. and Satyanarayana
Rao
J.)
in Civil
Miscellaneous
Petition
No. 4697 of 1951.
M. K. Nambiyar (U. Sethumadhava Rao, with him)
for the appellant.
M. Seshachalapathi for the respondent.
V. K. T. Chari, Advocate-General of Madras (Porus
A. Mehta and V. V. Raghavan, with him) for the Intervener (State of Madras).
1954. February 10. The Judgment of the Court
was delivered by
DAs }.-This is an appeal arising out of a judg-
. ment delivered on the 27th April, 1951, by a Bench of
the Madras High Court in C.M.P. No .. · 4697 of 1951
filed under article 226 of the Constitution for the issue
of a writ of certiorari or other appropriate writ to call
1954
Feiruary 10.
1954
The Rajahmundry
Electric Supply
Corporation Ltd.
v.
Tht State of
Andhra.
Das].
780
SUPREME COURT REPORTS
[1954}
for the records and quash the order of the Government
passed under section 4( 1) of the Madras Act XLIII of
1949 declaring the undertaking of the appellant company to vest in the Government.
The appellant company was formed and registered
under the Indian Companies Act in 1924 with the
object, inter alia, of generating and supplying electrical energy to the public in Rajahmundry. In 1949 the
Madras Legislature passed
the
Madras
Electricity
Supply
Undertakings
(Acquisition)
Act,
1949. The
Act received the assent of the Governor-General on the
18th January, 1950, and was published in the Official
Gazette on the 24th January, 1950. Upon the Constitution of India coming into force on the 26th January, 1950, the Act was submitted to the President for
his certification and on the 12th April, 1950, the President certified that the Act should not be called in
question in any court on the ground that it contravened
the provisions of clause (2) of article 31 or it contravened
the provisions of sub-section (2) of section 299 of the
Government of India Act, 1935. By an order in writing made on the 2nd September, 1950, the Government of Madras acting under section 4(1) of the Act
declared that the undertaking of the appellant company should vest ·in the Government on the date specified therein. Under the proviso to section 4(1) the
Government from time to time postponed the date of
vesting and the 2nd April, 1951, was the last extended date fixed for such vesting. On the 29th March,
1951, the appellant company filed C.M.P. No. 4697 of
1951, under article 226 for quashing the order of the
Government.
Shortly stated the contentions of the appellant before the High Court were that the Act was ultra vires
in that (1) it was beyond the legislative competency of
the Madras Legislature to enact it, (2) it was not
enacted to subserve any public purpose, and (3) the compemation provided for was illusory.
The High Court
repelled each and all of the aforesaid contentions of
the appellant company. It held that the legislation
was with respect to electricity under entry 31 of the
•
:S.C.R.
SUPREME COURT REPORTS
781
concurrent list· in the
seventh
Schedule
to
the
Government of India Act, 1935, and was not a legislation
with respect to corporations under entry 33 in list I as
contended by the appellant and that, therefore, the.
Madras Legislature was
competent to
enact it. It
further held that the Act having received the certificate of the President the challenge based on an alleged
absence of public purpose or the illusory nature of the
compensation was shut out and could not be raised.
The High Court, however, held that certain sections
and rule 19(2) of the Rules framed under the Act were
invalid and subject thereto dismissed the application
of the appellant company. The High Court granted
leave to the appellant company to appeal before this
court.
The appeal has now coine up for hearing before us.
•
Learned counsel appearing in support of the appeal
has not pressed before us the contention raised in the
High Court as to the absence of public purpose or the
illusory nature of the compensation provided by the
Act. He has confined his submissions to the question
of the legislative competency of the Madras Legislature
to enact this piece of legislation. In the High Court the
contest centred round the question whether the Act
was a law with respect to electricity under entry 31
of the concurrent list or with respect to corporations
under entry 33 in list I. The High Court held that
the Act was, in pith and substance, a law with respect
to electricity and was, therefore, within the legislative
competency
of the
Provincial
Legislature.
In his
arguments before us learned counsel contended that
th@ act is in substance and effect one for the acquisition of an electrical undertaking and, as
such,
is
ultra vires because-
( a) the
acquisition of an electrical undertaking
was not a legislative item in any of the three lists in
the seventh schedule to the Government of India Act,
1935, and
(h) in
so far as it relates
to the acquisition
of an electrical undertaking of a corporation 1t 1s
a law with respect to corporations under entry 33 in
list I. ·
1954
The Rajahmundry
Electric Supply
Corporation Ltd,
v.
The Stat• of
Andhra.
Das].
195+
T/ie Rajalunumlry
Ekctric Supply
Corporation IJd.
v.
TM Stat1 •/
Andhrc.
Das].
782
SUPREME COURT REPORTS
[1954]
In our opinion this appeal can be disposed of on
the first of the two grounds mentioned above.
Turning to the Act it will be noticed that the long
title of the Act is "an Act to make provision for the
·acquisition of undertakings in the Province of Madras
supplying
electricity."
The
preamble recites
the expediency of making Provision "for the acquisition of
undertakings in the Province of Madras engaged in
supplying
electricity."
Section 1 gives
the short title,
extent and commencement of the Act. Section 2 i,.s a
definition section. Section 3 provides that the Act
shall apply to all undertakings of licensees including
certain
undertakings therein
mentioned.
Section 4
empowers the Government to take over any undertaking by making an order in writing declaring that such
undertaking shall vest in the Government on a specified date. Section 5 provides for compensation
pay~
able to a licensee who is not a local authority. The
section gives an option to the licensee to claim compensation on one of three bases
therein
specified.
Section 6 deals with compensation payable where the
licensee
is a
local
authority.
Section
7
specifies
the properties or assets
which will vest according
as compensation is claimed under one basis or another.
Section 8 provides for
the
appointment of
a sole
representative to act as the sole and accredited representative of the licensee in connection with the handing
over of the undertaking and performing on behalf of
the licensee the functions thereinafter
specified. The
choice of basis of compensation is to be made within
one month under section 9 and such choice once intimated to the Government is not to be open to revision
except
with
the
concurrence of
the Government.
Section
10
authorises
the Government, in
case the
licensee has disposed of any of the assets otherwise
than in the normal course of events causing loss to the
Government as succeeding owners, to deduct from tl>e
compensation payable to the licensee an amount which
they
consider to he
the
loss
sustained
by
them.
Section 11 prescribes the various deductions which the
Government shall be entitled to make from the compensation payable
under the Act. The manner of
S.C.R.
SUPREME COURT REPORTS
783
payment or deposit of compensation is laid down in
section 12.
Section 13 permits
the
Government
to
repay all loans, debentures, mortgages and the like
outstanding on the vesting date at any time before the
time fixed for repayment. Section 14 is the arbitration
section. Section 15 provides for the termination of
the
managing
agency.
Section
16
authorises the
Government to terminate the services of any person on
the staff of the licensee immediately before the vesting
date. Section 17 requires all licensees to prepare and
hand over to the Government a complete inventory of
all the assets. Section 18 gives power of entry to the
Government or any officer authorised by the Government upon any land or premises in the possession of
the lice'1see. Section 19 prescribes penalties for various
defaults
therein
specified.
Section
20 makes
certain
officers of a company liable for the offence committed
by the company.
Section
21 gives
protection
against
suit or prosecution for anything done in good faith
under any rule or order made under the Act. Section 22
confers
rule-making
power
on
the Government.
Section
23
provides that the
provisions
of certain
Acts in so far as they are inconsistent with the provisions of this Act shall have no effect. Section 24 gives
power to the Government to do anything which appears
to them necessary for
the purpose of removing any
difficulty. From the above summary it will be noticed
that the Act does not purport to make any provision
for the granting of licenses or maintenance of works for
generating or transmitting energy or for
supplying
electrical energy as one would expect to find in a law
dealing with electricity nor does the Act purport to
make any provision for
the incorporation, regulation
or winding up of trading corporations. On the contrary,
it is abundantly clear from the long title, the preamble
and the sections
that it is, in pith and substance,
nothing but an Act to provide for the acquisition of
electrical undertakings.
Section 299 (2) of the Government of India Act, 1935,
provided that neither the Federal nor a Provincial
Legislature would have power to make any law authorising the compulsory acquisition for public purposes
1954
Th• Rajalmwndry
Ekctric Supply
Corporation ltd.
...
Tii• Stale of
Andhra.
Das].
1954
The Rqjahmundry
Elect1ic Supply
Corporation lid.
v.
The State of
A.ndhra.
Das].
784
SUPREME COURT REPORTS
[1954]
of any land or any commercial or industrial undertaking
or any interest in or in any company owning any commercial
or
industrial
undertaking
unless
the law
provided for
the payment of compensation for the
property acquired. Compulsory acquisition of property
is undoubtedly an important sovereign right of the
State but this right has to be exercised
under a bw.
The legislative power
of the State was distributed by
sections 99 and 100 amongst the Federal Legislature
and the Provincial Legislatures in the manner provided
in the several lists set forth in the Seventh Schedule
to the Act. Section 100 read with entry 9 in list II
authorised the Provincial Legislature to make a law
with respect to compulsory acquisition of land. There
was no entry in any of the three lists relating to compulsory acquisition of any commercial or industrial
undertaking, although section 299 (2) clearly contemplated a law authorising compulsory acquisition for
public purposes of a commercial or industrial undertaking. The acquisition of a commercial or industrial
undertaking not being the subject-matter of any entry
in any of the three legislative lists, neither the Federal
Legislature nor the Provincial Legislature could enact
a law with respect to compulsory acquisition of a commercial or industrial undertaking. Under section 104,
however, the
Governor-General,
in
his
individual
discretion, could,
by
public
notification,
empower
either the Federal Legislature or a Provincial Legislature to enact a law with respect to any matter not
enumerated in any of the lists in the seventh schedule to the Act. It is, therefore, clear that although
Parliament
expressly
entrusted the Provincial Legislature with power to make a law with respect to compulsory
acquisition of land it did
not straightaway
grant any power, either to the Federal Legislature or
the Provincial Legislature, to make a law with respect
to compulsory acquisition of a .commercial or industrial
undertaking
but left it to the
discretion of the
Governor-General to empower either of the Legislatures
to enact such a law. There is no suggestion that the
Governor-General
had, in exercise
of his discretionary
powers
under
section
104,
authorised the Madras
S.CJl.
SUPREME COURT REPORTS
785
Legislature to enact the impugned Act and, therefore,
the Act was, prima facie, beyond the
legislative competency of the Madras Legislature.
The learned Advocate-General of Madras urges that
there was
implicit in every entry in the legislative
lists in the Seventh Schedule to the Government of
India Act, 1935, an inherent power to make a law with
crespect to a
matter ancillary
or
incidental
to
the
subject-matter of each entry. His argument is that
·each entry in the list carried with it an inherent
power to provide for the compulsory acquisition of
any property, land or any commercial or industrial
undertaking; while making a law under such entry. It
is quite true that the powers of each ·Legislature to
make
laws
with
respect
to
the
clifferent
subjects
assigned
to
it by the appropriate list were to be
regarded as wide and plenary and also covering matters
incidental or ancillary to such subject-matter, but it
is, nevertheless, clear from the provision of the Act
that the power to make a law for compulsory acquisition was, under entry 9 in list II, given only to
Provincial
Legislatures
and
that
such power of the
Provincial Legislatures was, under that entry, limited
·to m'aking a law for the compulsory acquisition of Janel
only and that unless the Governor-General made an
·order under section 104 of the Act the Provincial
Legislatures had no power to make a law for the compulsory acquisition of any property other than land
and that the Federal Legislature had no power to make
any law with respect to the compulsory acq'.lisition of
any property at all. If the argument of the learned
Advocate-General were correct then entry 9 in list II
was wholly unnecessary for under entry 21 in list II
the Provincial Legislatures could make a law for the
·compulsory . acquisition
of land.
A similar argument
was repelled by this court in the State of Bihar v.
Maharajadlziraja Sir Kameslzwar Singh( ). The matter
is placed beyond any doubt or dispute by the provisions of section
127 of the Government of India Act,
1935,
which provided that
the
Federal micrht,
if it
.deemed it necessary to acquire any land si;uate in a
(1) [1952] S, C.R. 889.
195~
T/le Rojahmundry
Ekctric Supply
Corporation LJd.
v.
Th• State of
Andhra.
Das],
195{
Th• Rqja/unundry
EU.lri< SuHIJ
Corpuration LJd.
v.
Th• State •f
A.ndhr•.
DasJ.
[95{
F1brnary 11.
786
SUPREME COURT REPORTS
[1954]
Province for any purpose connected with a matter with
respect to which the Federal Legislature had pow~i;. to'
make laws, require the Province to acquire the land on
behalf and at the expense of the Federation. If power
inhered in the Federal Legislature to make a law for
the acquisition of any property for any purpose connected with a matter with respect to which it had
power to make laws then section 127 would not have·
been
necessary
at all.
The absence
of any entry
empowering any Legislature to make laws with respect
to cmnpulsory acquisition of a commercial or industrial undertaking and the provisions of section 127 to·
which reference has just been made make it abundantly
clear that the contentions
urged
by
the
learned
Advocate-General cannot possibly be
sustained.
In·
our opinion, therefore, it must be held that the Madras
Legislature had no legislative competency to enact the·
impugned law. This is sufficient to dispose of this
appeal and it is not necessary to express any opinion
on the other points raised in the court below.
The result, therefore, is that this appeal must be
allowed with costs both in the High Court as well as in·
tJ1is court.
Appeal, allowed.
Agent for the appellant : M. S. K. Aiyangar.
Agent for the respondent : R. H. Dhebar.
Agent for the intervener : R.H. Dhebar.
THE STATE OF BIHAR
v.
ABDUL MAJID
[MEHR CHAND
MAHAJAN C. J., MUKlIEllJEA,
S. R. DAs, VMAN BosE and GHULAM HASAN JJ.]
Civil
servant-Wrongful
dismissal-Suit
for
recovery
of
arl'ears of salary-Whether competent-Rule of English law-Civil
servant-Holding office at the pleasure of Crotvn-Whether applic~
able in India.
Held, that the rule of English law that a civil servant cannot·
maintain a suit against the State or
against the
Crown for
the-