1968 (3) TMI 117 - SC - Indian Laws

Summary

Issues Involved:
1. Inadequate and interrupted supply of electricity by the Company to Hind Lamps.
2. Direct supply of electricity by the State Electricity Board to Hind Lamps.
3. Alleged discrimination in the supply of electricity.
4. Public interest justification for direct supply.
5. Compulsory acquisition of property without compensation.
6. Violation of natural justice.

Issue-Wise Detailed Analysis:

1. Inadequate and Interrupted Supply of Electricity by the Company to Hind Lamps:
The Company held a license under Section 3(1) of the Indian Electricity Act, 1910, to supply electricity in certain areas in the State of U.P. Hind Lamps, which set up a factory within the Company's supply area, complained to the State Government about inadequate, interrupted, and fluctuating energy supply. Despite meetings between the Company, State officials, and Hind Lamps to resolve the issue, the supply did not improve.

2. Direct Supply of Electricity by the State Electricity Board to Hind Lamps:
Hind Lamps applied to the Government of U.P. for direct supply from the State Electricity Board. The State Government, exercising its powers under Section 3(2)(e)(ii) of the Indian Electricity Act, 1910, directed the Board to supply electricity directly to Hind Lamps. The Company's representations to reconsider this decision were rejected, and direct supply commenced.

3. Alleged Discrimination in the Supply of Electricity:
The Company argued that the Government's order resulted in discrimination between Hind Lamps and other consumers, and between Hind Lamps and the Company. The High Court allowed the Company to raise this contention but did not permit additional evidence. The High Court found no evidence of the rates at which energy was supplied to the Company and Hind Lamps on December 26, 1961, and thus rejected the discrimination claim.

4. Public Interest Justification for Direct Supply:
The High Court held that the State Government was the sole judge of whether direct supply was in the public interest, and this decision was not subject to judicial scrutiny. However, the Supreme Court disagreed, stating that if challenged, the Government must show that the exercise of power was necessary in public interest. The Court found ample evidence that uninterrupted supply to Hind Lamps was necessary for public interest, as Hind Lamps was a major industry providing employment and saving foreign exchange.

5. Compulsory Acquisition of Property Without Compensation:
The Company contended that the direct supply order amounted to compulsory acquisition of its property without compensation. The Supreme Court held that the grant of a license did not create a monopoly. The statute allowed the State to authorize direct supply within the same area. The Court noted that Article 31(2) of the Constitution did not apply as there was no transfer of ownership or right to possession of property to the State or a State-controlled corporation.

6. Violation of Natural Justice:
The Company argued that it was not given an opportunity to object to the direct supply order, violating natural justice. The Supreme Court found that the Company had sufficient opportunity to make representations before and after the order. The Company was informed about Hind Lamps' complaints, and meetings were held to address the issues. The Company's subsequent representations were also considered and rejected by the Government.

Conclusion:
The appeal was dismissed with costs. The Supreme Court upheld the High Court's decision, finding no evidence of discrimination, affirming the public interest justification for direct supply, and rejecting the claims of compulsory acquisition and violation of natural justice.