Citation Codes

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Case Number

Civil Misc. Writ No. 1864 of 1973 connected, with Civil Misc. Writ Nos. 3806, 3807, 3808 and 4814 of 1973

Attorney(S)

B.C. Dey
Standing Counsel

Judges

G.C Mathur
J.M.L Sinha, JJ.

Acts

Electricity (Supply) (U.P Amendment) Act, 1972, which introduced Sec. 47-A in the Electricity (Supply) Act, 1948,
provisions of the U.P Government Electrical Undertakings (Dues Recovery) Act, 1958.
provisions of the U.P Government Electrical Undertakings (Dues Recovery) Act, 1952.
U.P Amendment Act and the Electricity (Suppply) Act, 1948, the U.P Amendment Act
Electricity (Supply) Act, 1948, or in the Indian Electricity Act, 1910.
Government of India Act, 1935. The U.P Amendment Act of 1972
ELECTRICITY SUPPLY ACT 1948
U.P Amendment Act and the Electricity (Supply) Act, 1948.
provisions of clause (2) of Art. 254 of the Constitution
Electricity (Supply) (Uttar Pradesh Amendment) Act, 1972,
Sec. 47-A in the Electricity (Supply) Act, 1948:47-A.
ELECTRICITY SUPPLY ACT 1948
Sec. 36 of the Electricity (Supply) Act, 1948,
Sec. 333-A of the U.P Municipalities Act
Sec. 47-A in the Electricity (Supply) Act,
provisions of the 1968 Recovery Act
provisions of the 1958 Recovery Act
Indian Electricity Act, 1910,
Indian Electricity Act.
Development) Act, 1957,
U.P Amendment Act

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Smart Summary

Structured Summary of the Opinion (G.C. Mathur, J.)

Factual and Procedural Background

Five writ petitions were filed by five licensees who held licences under the Indian Electricity Act, 1910, for generation and distribution of electrical energy. The U.P. State Electricity Board served notices on each licensee demanding various sums as security under Sec. 47-A introduced into the Electricity (Supply) Act, 1948 by the Electricity (Supply) (Uttar Pradesh Amendment) Act, 1972. The licensees challenged those notices by filing writ petitions, which were disposed of together because they raised several common questions.

Short descriptions of the principal petitioners and the notices they challenged (as stated in the opinion):

Writ Petition No. 3808 of 1973 — Banaras Electric Light and Power Company Ltd.: held a licence under the Indian Electricity Act, 1910; generated some power and also purchased bulk supply from the Board. Received a notice (Jan 17, 1973) demanding Rs. 13,50,000 (at Rs. 60 per K.V.A), later superseded by a May 16, 1973 notice demanding Rs. 20,02,000, stated equal to two months' average consumption charges.
Writ Petition Nos. 3806 & 3807 of 1973 — Martin Burn Limited: became licensee for Jaunpur and Faizabad. Jaunpur: notice dated April 2, 1973 demanding Rs. 1,50,000. Faizabad: notice dated Jan 1, 1973 demanding Rs. 1,80,000; subsequent notices of March 6, 1973 (additional Rs. 1,60,000) and May 18, 1973 (asked to deposit Rs. 2,50,000 as additional security).
Writ Petition No. 4814 of 1973 — Bareilly Electricity Supply Company Limited: held licence; after negotiations an agreement without a security clause was executed. The Board sent a notice (Feb 17, 1973) requiring Rs. 9,00,000 (stated to be two months' average bill). A later notice (May 25, 1973) threatened recovery of the amount as arrears of land revenue under the U.P. Government Electrical Undertakings (Dues Recovery) Act (the opinion at different places refers to this Act with varying years).
Writ Petition No. 1864 of 1973 — Mirzapur Electric Supply Company: originally a licensee; Board closed its generating station under Sec. 36 of the Electricity (Supply) Act, 1948, from Feb 1, 1962 and thereafter supplied electricity in bulk. Earlier notice (June 20, 1968) demanded Rs. 1,00,000 and was the subject of earlier litigation (writ dismissed by Gulati, J.; special appeal pending). A notice dated Jan 30, 1973 demanded Rs. 2,80,000, which is challenged in the present petition. The Advocate General stated the earlier 1968 notice is no longer in force.

Legal Issues Presented

Whether the Electricity (Supply) (Uttar Pradesh Amendment) Act, 1972 (introducing Sec. 47-A) is repugnant to the Electricity (Supply) Act, 1948 and therefore void under the Constitution.
Whether Sec. 47-A confers an arbitrary or naked power on the State Electricity Board to demand security, thereby violating Article 14 (equality before law) of the Constitution.
Whether Sec. 47-A infringes Article 19(1)(g) (right to carry on any occupation, trade or business).
Whether Sec. 47-A applies only prospectively (i.e., to new requisitions or additional supplies made after its enactment) or also to supplies/requisitions existing prior to its commencement.
Whether the Board must afford a hearing to a licensee before determining and demanding the amount of security (principles of natural justice).
Whether Sec. 47-A applies in the Mirzapur petitioner's case where the Board was under a statutory obligation to supply after the closure of the petitioner's generating station (i.e., whether a “requisition” is present).
In the Bareilly petition: whether an existing agreement that omits a security clause excludes the applicability of Sec. 47-A, and whether the amount of security can be recovered as arrears of land revenue under the U.P. Dues Recovery Act.

Arguments of the Parties

Petitioners' Arguments

The U.P. Amendment Act (introducing Sec. 47-A) is repugnant to the Central Electricity (Supply) Act, 1948 and therefore invalid.
Sec. 47-A vests an unstructured, arbitrary power in the Board to demand security without prescribing purpose, basis, limits, procedure, or safeguards; it offends Article 14.
Sec. 47-A violates Article 19(1)(g) (challenge on freedom of occupation/business grounds).
Sec. 47-A is prospective in operation — it applies only to requisitions made after its commencement (so cannot be used to demand security from existing licensees who made no fresh requisition).
The Board must give a hearing before determining the amount of security; absence of pre-determination hearing violates natural justice and makes the notices invalid.
Mirzapur petitioner: when the Board was statutorily obliged to supply after closure of the generating station, there was no “requisition” and hence Sec. 47-A is inapplicable.
Bareilly petitioner: a signed agreement (from negotiations) which omitted any security clause should prevent application of Sec. 47-A to that licensee; further, the Board cannot recover the demanded security as arrears of land revenue under the U.P. Dues Recovery Act since the security is not a “due.”

Respondent / Advocate General's Arguments

Sufficient guidelines for the Board's power exist in Sec. 47-A itself and in the Statement of Objects and Reasons of the U.P. Amendment Act, which shows the security is to secure payment for bulk supply where licensees were in arrears.
The Section is intended to safeguard the Board's interest because billing practice leaves roughly two months' payment outstanding; it is reasonable for the Board to require security as licensees secure their own collections from consumers.
The notices are only tentative proposals and objections raised by licensees will be considered by the Board; accordingly, no formal hearing before issuing the notice was necessary (contention advanced by the Advocate General).
Statement that the earlier 1968 notice against Mirzapur is no longer in force (as per Advocate General's statement recorded in the opinion).

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
State of Orissa v. M.A. Tulloch & Co., A.I.R. 1964 S.C. 1284	Principle that repugnancy may arise not only from direct conflict but also where Central legislation is intended to "cover the whole field"; used as a test for repugnancy between statutes enacted by different legislatures.	The petitioners relied on this decision to argue that the Central Electricity (Supply) Act covered the whole field and thereby repelled the U.P. Amendment. The court examined the decision but concluded that, because both central and state Acts were enacted under the same concurrent entry and the U.P. Amendment received the President's assent, Article 254(2) permits the State Act to prevail in the State; hence the petitioners' repugnancy argument failed.
Notified Area Committee v. Ram Singhasan Prasad Kalwar, 1970 A.L.J. 656 (Full Bench)	Interpretation principle that statutory language and purpose may show retrospective operation; specifically, phrases referring to entities "created in place of" covered entities created before the provision's enactment.	The court applied the Full Bench's reasoning to hold that the language and purpose of Sec. 47-A supports an interpretation that it covers requisitions made before its commencement as well as after; thus Sec. 47-A applied to licensees who were already receiving bulk supply prior to the Section's enactment.

Court's Reasoning and Analysis

The court addressed the issues in a structured manner, applying constitutional principles and statutory interpretation strictly as presented in the opinion:

Repugnancy with Central Act: The petitioners’ reliance on the Tulloch precedent was considered. The court noted the difference in constitutional positioning here — both the Electricity (Supply) Act, 1948 and the U.P. Amendment were enacted under the same entry of the Concurrent List. Because the U.P. Amendment had been reserved for the President and had received his assent, Article 254(2) of the Constitution operates to allow the State law to prevail in the event of repugnancy. Accordingly, the contention that the U.P. Amendment was void for repugnancy failed.
Article 14 (Arbitrariness) challenge: The court examined Sec. 47-A and the Statement of Objects and Reasons of the U.P. Amendment Act. The Statement of Objects and Reasons explained the legislative purpose: to empower the Board to take security from licensees supplying electricity in bulk, in order to safeguard the Board against arrears in payment. The court concluded that Sec. 47-A had an intelligible principle: the security must be sufficient to cover the risk involved and correlated to the amount which generally remains in arrears (practically about two months' bill under the present billing method). This, the court held, supplied adequate guidelines to prevent classification of the power as naked or arbitrary; Sec. 47-A did not offend Article 14.
Article 19(1)(g) challenge: The court observed that the complaint based on Article 19(1)(g) could not be sustained because of the proclamation of emergency then in force (as stated in the opinion), and therefore that ground failed.
Prospective vs. retrospective operation of Sec. 47-A: The petitioners argued Sec. 47-A applied only to new requisitions after its enactment. The court examined the statutory language (the term “requisition to supply electricity” was not defined) and historical usage, concluding the term contemplates a demand by a licensee entitled to require supply and that it is not reasonably confined to requisitions made only after the Section came into effect. The court pointed to clause (b) of Sec. 47-A (which authorises discontinuance of supply where security was not given or became invalid/insufficient) and interpreted the word “discontinue” as indicating coverage of continuing supplies begun earlier. Relying on the Full Bench decision in Notified Area Committee v. Ram Singhasan Prasad Kalwar, the court held that Sec. 47-A covers requisitions made before, at, or after its commencement; the petitioners' construction was rejected, in part because it would undermine the statute's purpose and create discrimination between old and new licensees.
Requirement of a hearing (natural justice): The court analysed the nature of the Board's power — demand and determination of security — and found it to be a statutory power that materially affects the rights and business operations of licensees (amounts demanded were substantial). The court stressed that the determination of whether to demand security, the amount, the form of security (cash or immovable property) and ancillary terms (e.g., payment of interest) must be based on objective facts and the specific circumstances of each licensee. Given the significant interests affected, the court held that the Board could not exercise this power without first affording the licensee an opportunity to be heard; the issuance of the notices in the present cases constituted final demands (not tentative proposals), and therefore the absence of pre-determination hearings rendered the notices invalid.
Mirzapur petitioner (obligation to take supply): The petitioner argued that where a statute or schedule obliged the petitioner to take supply (and the Board to supply) there could be no “requisition.” The court rejected that argument: the fact that a licensee is under an obligation to take supply does not eliminate the character of a requisition. A requisition may exist even if the licensee is under a duty to make it. Consequently, Sec. 47-A applied to the Mirzapur petitioner.
Bareilly petitioner — agreement and recovery as land revenue: The petitioner argued that an agreement between the parties which omitted any security clause should exclude Sec. 47-A's application. The court rejected a reading of the non obstante clause that would make the section inapplicable where an agreement exists; the italicised words in the non obstante clause were read as ensuring the power exists even if no agreement had been made, not as excluding cases where an agreement exists. On recovery as arrears of land revenue, the court examined the relevant Dues Recovery Act referenced in the notices and concluded that the amount demanded as security is not a “due” in the sense of an indebtedness owed to the Board; rather it is a condition to supply and not an outstanding debt enforceable as land-revenue arrears. Therefore the Board could not validly threaten recovery of the demanded security as arrears of land revenue under that Recovery Act.

Holding and Implications

Holding:

All five writ petitions were allowed to the extent that the notices issued by the U.P. State Electricity Board demanding security without first affording the licensees an opportunity of being heard were quashed; additionally, in Writ Petition No. 4814 of 1973 the notice threatening recovery of the demanded security as arrears of land revenue was quashed.

Implications (direct consequences stated in the opinion):

The court upheld the validity of Sec. 47-A as having been validly introduced into the Electricity (Supply) Act, 1948 and rejected the contention that the U.P. Amendment was void for repugnancy or arbitrary under Article 14.
Sec. 47-A applies to licensees receiving bulk supply both before and after the Section's commencement; the Board may lawfully demand security consistent with the guidelines the court identified (security correlated to risk and arrears, e.g., approximately two months' average consumption in the factual context before the court).
However, the Board must afford affected licensees an opportunity of being heard before final determination and demand of the amount and terms of security; notices issued without such pre-determination hearings were quashed.
Notices threatening to recover security as arrears of land revenue under the U.P. Dues Recovery Act (as relied upon in one petition) were held to be without authority because the demanded security is not a "due" in the statutory sense.
The parties were directed to bear their own costs.

Note: The summary strictly follows the statements and conclusions as contained in the provided opinion. No facts, arguments, precedents, or outcomes have been added beyond what the opinion itself records.

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Mirzapur Electric Supply Company Limited, Jabalpur Road, Mirzapur v. State Of Uttar Pradesh And Others

G.C Mathur, J.:— These five writ petitions have been filed by five licensees who had been granted licences under the Indian Electricity Act, 1910, for generation and distribution of electrical energy. The U.P State Electricity Board has served notices upon each one of the licensees to deposit various sums of money as security. These notices have been challenged in these writ petitions. Since several common questions arise in these writ petitions, it will be convenient to dispose them of by one judgment.

2. The Electricity (Supply) Act, 1948, was enacted by the Central Legislature for the rationalization of the production and supply of electricity and generally for taking, measures conducive to electrical development. It, inter alia, provides for the setting up of State Electricity Boards, for the generation of electrical energy by the Boards and for the supply of electrical energy by ‘the Boards to the licensees. All the petitioners are being supplied electrical energy in bulk by the U.P State Electricity Board. The Uttar Pradesh Legislature enacted the Electricity (Supply) (Uttar Pradesh Amendment) Act, 1972, whereby it introduced the following Sec. 47-A in the Electricity (Supply) Act, 1948:—

“47-A. Security—Notwithstanding anything in this Act and notwithstanding that no arrangements have been mutually agreed under Sec. 47 or that no regulations have been made in that behalf.—

(a) the Board shall not be bound to comply with any requisition to supply electricity to a licensee unless the licensee, within fourteen days after the service on him by the Board of a notice in writing in that behalf, tenders to the Board such security as the Board deems sufficient;

(b) the Board shall be entitled to discontinue such supply if the licensee has not already given security, or if any security given by him has become invalid or insufficient and such licensee fails to furnish security or to make up the original security to a sufficient amount, as the case may be, within seven days after the service upon him of notice from the Board requiring him so to do.”

3. It is under the provisions of Sec. 47-A introduced by the U.P Amendment that the security amounts have been demanded from the petitioner-licensees. In Writ Petition No. 3808 of 1973, the Banaras Electric Light and Power Company Ltd. is the main petitioner. It had obtained a licence under the Indian Electricity Act, 1910, for generation and distribution of electrical energy and the licence is still continuing and this company is generating its own power and is also purchasing electrical energy in bulk from the Board. It first received a notice dated January 17, 1973, demanding a security amounting to Rs. 13,50,000/- at the rate of Rs. 60/- per K.V.A This notice was superseded by another notice dated May 16, 1973. Under this later notice a sum of Rs. 20,02,000/- was demanded as security. The notice stated that the amount of security was equal to two months' average consumption charges.

4. In Writ Petition Nos. 3806 and 3807 of 1973, Martin Burn Limited is the main petitioner. By certain assignments the company became the licensee for the generation and distribution of electrical power for Jaunpur and Fizabad. In respect of the Jaunpur electric licence a notice dated April 2, 1973, was served on the petitioner, demanding a security of Rs. 1,50,000/. In respect of the Faizabad licence a sum of Rs. 1,80,000/- was demanded as security by a notice dated January 1, 1973. By a subsequent notice dated March 6, 1973, the Board demanded additional security deposit of Rs. 1,60,000/-. By a third notice dated May 18, 1973, the licensee was asked to deposit a sum of Rs. 2,50,000/- as additional security.

5. In Writ Petition No. 4814 of 1973, the Bareilly Electricity Supply Company Limited is the main petitioner. It holds a generating and distributing licence under the Indian Electricity Act, 1910. The Board, in 1961, declared a scheme in respect of the area of the petitioner company. Negotiations took place between the company and the Board for the regular supply of electrical energy. The Board sent a blank agreement form for execution to the petitioner company which contained a clause regarding the making of security deposits by the licensee. The petitioner company objected to this clause and ultimately, the Board agreed to delete this clause from the agreement. An agreement was entered into between the company and the Board and an agreement was executed between the parties. As agreed upon between the parties, the agreement did not contain any provision for making security deposits. The Board started a regular supply of electrical energy in bulk to the petitioner company under this agreement. By a notice dated February 17, 1973, the Board required the petitioner to deposit a security of Rs. 9,00,000/- which was stated in the notice to be equal to two months' average bill. Another notice dated May 25, 1973, was received by the petitioner company from the Board, threatening that, if the security demanded was not paid within 30 days from the date of service of the notice, the full amount will be recovered as arrears of land revenue under the provisions of the U.P Government Electrical Undertakings (Dues Recovery) Act, 1952. The petitioner company has challenged both these notices.

6. Writ Petition No. 1864 of 1973 has been filed by the Mirzapur Electric Supply Company. This company also originally held a licence for generation and distribution of electricity at Mirzapur. Under Sec. 36 of the Electricity (Supply) Act, 1948, the Board closed down the generating station of the petitioner company from February 1, 1962. Thereafter the Board started supplying electricity required by the petitioner Company. Originally, 3000 K.V.A was supplied to the petitioner company. On June 1, 1968, the petitioner company asked for an increase of the supply to 4000 K.V.A but this, demand was turned down. On June 20, 1968, even before the introduction of Sec. 47-A in the Electricity (Supply) Act, a notice was served on the petitioner company, demanding a security of Rupees one lac. This notice was challenged by the petitioner company in Writ Petition No. 3180 of 1969. The writ petition was dismissed by Gulati, J. on August 17, 1971. Against the judgment of Gulati, J. the petitioner has filed Special Appeal No. 563 of, 1971 which is also before us. Subsequently, a notice dated. January 30, 1973 was served on the petitioner company, demanding security to the tune of Rs. 2,80,000/- from it. It is this notice which is challenged in the present writ petition. We may mention here that the learned Advocate General has made a statement that the earlier notice dated June 20, 1968, demanding security of Rupees one lac is no longer in force.

7. The first point urged in these petitions is that the Electricity (Supply) (U.P Amendment) Act, 1972, which introduced Sec. 47-A in the Electricity (Supply) Act, 1948, is repugnant to the provisions of the Electricity (Supply) Act, 1948 and is, therefore, void on account of the provisions of the Constitution. Electricity is a concurrent subject, being included in Entry 38 of List III of the Seventh Schedule to the Constitution. The Electricity (Supply) Act, 1948, was enacted under the corresponding entry in the Government of India Act, 1935. The U.P Amendment Act of 1972 was also enacted under Entry 38. It received the assent of the President on October 7, 1972. Learned counsel for the petitioners relied upon the decision of the Supreme Court in State of Orissa v. M.A Tulloch and Co. A.I.R 1964 S.C 1284.. It was held by the Supreme Court:

“Repugnancy arises when two enactments both within the competence of the two Legislatures collide and when the Constitution expressly or by necessary implication provides that the enactment of the Legislature has superiority over the other then to the extent of the repugnancy the one supersedes the other. But two enactments may be repugnant to each other even though obedience to each of them is possible without disobeying the other. …The test of two legislations containing contradictory provisions is, not, however, the only criterion of repugnancy, for, if a competent legislature with a superior efficacy expressly or impliedly evinces by its legislation an intention to cover the whole field, the enactment of the other legislature whether passed before or after would be overborne on the ground of repugnance.”

8. In the case before the Supreme Court, the competing statutes were the Orissa Mining Areas Development Fund Act, 1952, which was enacted under Entry 23 of List II and the Mines and Minerals (Regulation and Development) Act, 1957, which was enacted by Parliament under Entry 54 of List I. The argument before the Supreme Court was that there was no direct conflict between the two statutes and therefore, the Orissa Act was not superseded by the Central Act. The Supreme Court held that, even though there was no direct conflict, the scheme of the Central Act showed that Parliament intended to cover the whole field and in this sense, there was repugnancy between the two Acts. Since Entry 23 of List II itself indicated that legislation under this entry was subject to legislation under Entry 54 of List I, the Supreme Court held that the Orissa Act was superseded, by the Central Act. The Supreme Court was not concerned with any entry in the concurrent list nor with Art. 254 of the Constitution. Learned counsel placed reliance on the decision of the Supreme Court to show that repugnancy could arise, not only by direct conflict but also if the Central Legislation covered the whole field. Admittedly, there is no direct conflict or collision between the U.P Amendment Act and the Electricity (Supply) Act, 1948. What was urged was that the scheme of the supply Act showed that there was an intention to cover the whole field of electricity and therefore, the U.P Amendment Act was repugnant to the Central Act. Even if that be so, the U.P Amendment Act will prevail over the Central Act. Both the statutes have been Enacted under the same entry in the concurrent list. The U.P Amendment Act is a later Act and has received the assent of the President. Such a situation is fully covered by the provisions of clause (2) of Art. 254 of the Constitution which reads thus:

“254(2). Where a law made by the Legislature of a State with respect to one of the matters enumerated in the concurrent List contains any provision repugnant to the provisions of an earlier law made by Parliament or an existing law with respect to that matter, then, the law so made by the Legislature of such State shall, if it has been reserved for the consideration of the President and has received his assent, prevail in that State.”

9. By virtue of these provisions, if there is repugnancy between the U.P Amendment Act and the Electricity (Suppply) Act, 1948, the U.P Amendment Act will prevail. The contention of the petitioners that the U.P Amendment Act is void for repugnancy with the Central Act must fail.

10. The second contention of the petitioners is that Sec. 47-A introduced by the U.P Amendment; Act confers a naked and arbitrary power to demand Security upon the State Electricity Board without laying down any guideline and as such offends Art. 14 of the Constitution. Learned counsel have pointed out various oilier sections of the Electricity (Supply) Act, 1948 where guiding principles have been laid down for the exercise of the powers Conferred by those provisions. It is not necessary to refer to those sections. They have further pointed out that Sec. 47-A does not state the purpose for which the security is to be taken, it does not lay down the basis on which the security is to be demanded from each licensee, it leaves it to the discretion of the Board to demand security from any licensee it chooses and not to demand it from others, it lays down no procedure for determining the security or for arriving at the satisfaction and it does not lay down any maximum limit of the, security. Learned counsel have urged that there is no safeguard, or check against arbitrary exercise of the power under this section. There are no regulations framed to provide any guideline ill this respect. Though the Electricity (Supply) Act, 1948, provides for reference to arbitration in respect of a number of matters, there is no provision for referring a dispute arising out of a demand for security under Sec. 47-A to arbitration.

11. The learned Advocate General has, on the other hand, contended that sufficient guidelines for the exercise of the power appear from the previsions of Sec. 47-A itself and from the Statement of objects and Reasons for the U.P Amendment Act. The Statement of Objects and Reasons Reads thus:—

“At present there are sixteen private electric supply companies and thirteen municipal electric supply undertakings in the State. Nearly all the undertakings of the above two categories in the State are taking electricity in bulk supply from the U.P State Electricity Board and Supplying it to their consumers in their respective areas Many of these undertakings are in arrears in respect of the payments towards the bulk supply. With a view to safeguarding the interest of the Board, it is considered necessary that the Board be empowered to take security from the licensees for the bulk supply given to them so that in the event of any licensee failing to pay arrears in respect of bulk supply, the same may be adjusted from his security deposit. Accordingly it is proposed that a new Sec. 47-A is added in the Electricity (Supply) Act, 1948 and it may be specifically provided therein that the Board may compel all licensees to furnish security for the bulk supply taken by them. It is with this end in view that the Electricity (Supply) (Uttar Pradesh Amendment) Bill, 1972, is being introduced.”

12. This clearly shows that the security is to be taken for ensuring the payment by the licensees for the electricity taken in bulk supply from the Board. The evil, which the U.P Amendment Act sought to meet, was the non-payment for the supply by the licensees. It was pointed out that no advance payment is made for the supply of electricity. The bill for the month's supply is sent on or about the 7th of the next month and the licensee has 30 days time to pay the bill. Thus for about two months no payment is made for the supply. It was further pointed out that, in many cases, payment is not made even after two months. It in urged that it is to secure the Board for the payment of the supply that the provision regarding security has been enacted. It was further pointed out by the learned advocate general that the licensee is entitled to secure itself for the payment of electricity which it supplies to its consumers, and therefore, it is but reasonable that the Board should also, be likewise entitled to secure itself for the payment of electricity supplied by it to the licensees.

13. Having considered the rival contentions, we are of opinion that the power conferred by Sec. 47-A is not an arbitrary power and that there are guidelines for the exercise of that power. There can really be no doubt that the security is to be taken to secure the price of electricity supplied, by the Board to the licensees. The amount of security, which the Board can demand, has to be such as, is sufficient to cover the risk involved and has to be correlated to the amount which generally remains in arrears. According to the present method of billing, payment for about two months supply generally remains in arrears. The amount of security demanded in all the writ petitions before us is equivalent to the average charges for two months' supply. The guideline for the exercise of the power under Sec. 47-A is that security in such amount may be demanded as would safeguard the payment to the Board for the supply of electricity in bulk to the licensees. We think this is a sufficient guiding principle which saves the power under Sec. 47-A from being classified as an arbitrary or naked power. Sec. 47-A, thus, cannot be said to offend Art. 14 of the Constitution.

14. The next point urged by the petitioners, was that Sec. 47-A violates the provisions of Art. 19(1)(g) of the Constitution. The attack on the ground of violation of Art. 19(1)(g) of the Constitution cannot be sustained in view of the proclamation of emergency which is still in force.

15. The grounds, on which the constitutionality of Sec. 47-A was challenged, having failed, we hold that Sec. 47A is valid and has been validly introduced in the Electricity (Supply) Act, 1948. Two other contentions, which are common to all the writ petitions, may now be considered.

16. Learned counsel for the petitioners have contended that upon a proper construction of Sec. 47-A, the section can have no application to the petitioners. It is urged that Sec. 47-A is prospective and applies only to new demands by licensees for bulk supply of electricity, that is to say, demands by licensees who were, before the enactment of Sec. 47-A, not receiving electricity in bulk from the Board or additional demands by licensees after the enactment of Sec. 47-A. For this contention, reliance is placed upon the following words of clause (a) of Sec. 47-A:—

“any requisition to supply electricity to a licensee.”

17. The Board can demand security from a licensee who makes a “requisition to supply electricity” and in case the security is not given, the Board can refuse to make the supply. Before the provisions, of Sec. 47-A are attracted, there must be a requisition or a demand made by the licensee for bulk supply off electricity or additional bulk supply of electricity. In other words, the contention is that, if a supply was being made to a licensee from before the introduction of Sec. 47-A and he makes no fresh or additional demand for electricity, there is no “requisition to supply electricity” and no security can be demanded. It is further contendad that, since all the petitioners in the five petitions were receiving bulk supply of electricity from before the enactment of Sec. 47-A and since none of them made any requisition for the supply of electricity after the coming into force of Sec. 47-A, no security could be demanded from any of them under the provisions of Sec. 47-A.

18. The word ‘requisition’ has not been defined either in the Electricity (Supply) Act, 1948, or in the Indian Electricity Act, 1910. This word was used only in clauses V and VI of the Schedule to the Indian Electricity Act. There the word was used in respect, of a consumer applying for an electric connection and for supply of electric energy. Under that Act, the word ‘requisition’ was used in the sense of a demand by a consumer who had a right to demand a connection and supply of electric energy and where there was a corresponding obligation on the licensee to give the connection and to supply, the energy. The word ‘requisition’ contemplates that the person requisitioning has a right to requisition and that the person, to whom the requisition is made, is obliged to comply with the requisition. But the real question is whether the words “requisition to supply” are confined, to requisitions made after the coming into force of Sec. 47-A or also cover requisitions made earlier, on the basis of which supply is continuing to the licensees even after enactment of Sec. 47-A. In our opinion, these words cannot be confined to requisitions made after the commencement of Sec. 47-A for, in that case, the Section will have a very limited application. Almost all licensees are receiving bulk supply of electricity from the Board before. At the time when Sec. 47-A was enacted, there, was considerable shortage of electric power and there was little scope of giving addition electricity in bulk to any licensee. If the construction suggested by the petitioners were accepted, then the whole purpose of Sec. 47-A would be defeated. It appears that the word ‘requisition’ in Sec. 47-A means any requisition made in the past or the present or which may be made in filature. The provisions of clause (b) of Sec. 47-A support this interpretation. Clause (b) provides that the Board shall be entitled to discontinue such supply if the licensee has not already; given, security, or…… “The word ‘discontinue’ clearly indicates that the supply was continuing from before and that power was given to the Board to discontinue the supply if the security damanded was not given or if the security given, for some reason, became insufficient or invalid. A full Bench of this Court, in Notified Area Committee v. Ram Singhasan Prasad Kalwar 1970 A.L.J 656 F.B., had occasion to consider the question whether the words; “where a municipality is created in place of a town area or a notified area” used in Sec. 333-A of the U.P Municipalities Act covered the case of a Municipality created before the enactment of Sec. 333-A. The Full Bench held that the language and purpose of Sec. 333-A clearly showed that it operated retrospectively and that the words quoted above meant also “whether a municipality has been created in place of a town area”. The Full Bench held that municipalities created before the introduction of Sec. 333-A were also covered by the provisions of that section. For the same reasons, we are of opinion that Sec. 47-A introduced in the Electricity (Supply) Act, 1948, covers cases of requisitions made before the coming into force of that Act. It was rightly pointed out by the learned Advocate General that, if the interpretation suggested by the petitioners were accepted. Sec. 47-A would become discriminatory, as security could be demanded from licensees getting new or additional supplies but could not be manded from licensees who were already getting supplies. For these reasons we think that the interpretation suggested by learned counsel for the petitioners cannot be accepted and it must be held that Sec. 47-A is applicable to all cases where electricity is supplied by the Board in bulk to licensees whether requisitions were made before Sec. 47-A was introduced or thereafter.

19. The last common point raised by the petitioners is that they were entitled to a hearing before the amount of security was determined and since this was not done, the notices demanding security are invalid for violation of the principles of natural justice. The Board is a statutory authority and when it decides to demand security from a licensee, determines the amount of security and then demands it, it exercises statutory powers. There can be no doubt that the exercise of this power of demanding security seriously affects the rights of the licensee. We have set out at the beginning of this judgment the various sums which have been demanded as security from each one of the petitioners. The amounts demanded are heavy and in one case, the amount demanded is Rupees twenty lacs. The demand of security may seriously affect, the running of the business of the licensee. Then the Board has to determine whether it should or should not demand security from a particular licensee. It has also to decide the form and nature of the security that may be demanded, that is to say, whether the security should be demanded in cash or security of immovable property may be accepted. It has also to consider the question whether, if life security is demanded in Cash, any interest is to be paid on the amount. One has to keep in mind the fact that the only guideline for the exercise of the power is that, the security should be sufficient to safeguard the risk invoked, in the bulk supply or electricity to the licensees and to secure the payment for the supply. It is obvious that the determination by the Board has to be objective and has to be based on objective, facts. The facts and circumstances of each licensee have to be considered by the Board before it decides to take security. That being so, it is obvious that the power cannot be exercised without an opportunity of hearing being given to the licensee or licensees concerned, so that they may bring all the relevant facts and circumstances to the notice of the Board. We are unable to agree with the learned Advocate General that the notices issued by the Board are only tentative notices and that, if any of the petitioners raises any objection, then it will be duly considered by the Board and therefore, no hearing was necessary before the notices were issued. The notices are clearly final demands of security and not merely proposals to demand security. There is a world of difference between a hearing given before the determination is made by an authority and a hearing; given after such determination has, been made. Rules of natural justice require a hearing before the determination is made. In the cases of the petitioners no such hearing was given by the Board. The notices issued by the Board demanding security from the petitioners are liable to be quashed:

20. In writ petition No. 1864 of 1973 an additional point has been raised. The Mirzapur Electric Supply Company Limited, which is the petitioner in this writ petition, had a generating and distributing licence. In exercise of the power under Sec. 36 of the Electricity (Supply) Act, 1948, the Board closed down the, generating station of the petitioner on February 1, 1962. Sec. 36 provides that, when the Board closes down the generating station of a licensee, the provisions of Part III of the First Schedule shall apply to the licensee if the station was a controlled station and the provisions of the Third Schedule shall apply if the station was not a controlled station. The generating station of the petitioner was not a controlled station and therefore, the provisions of the Third schedule became applicable on the closure of the station. Paragraph II of the Third Schedule provides:

“From the date of closing down the Board shall be under obligation to supply to the licensee, except where prevented by causes beyond its control and the licensee shall be under obligation to take from the Board the whole of the electricity required by the licensee for the purposes of his undertaking, except such quantity of electricity as the licensee may, for the time being, be entitled under Paragraph III to purchase from a source other than the Board or as he may be generating in another station not being a controlled station.”

21. It was urged that when, under this provision, the petitioner was bound to take the supply, from the Board and the Board was bound to make the supply, there was no question of making any requisition when the petitioner's generating station was closed down. It was urged that, since no requisition was required to be made for the supply of electricity, Sec. 47-A did not apply to the petitioner's case. Learned counsel for the petitioner contended that, since there was no option in the petitioner to take or not to take electricity from the Board, no question could possibly arise of its making, a requisition. According to him, requisition implied making of a demand by a licensee where it was open to the licensee either to make the demand or not to make it. We are unable to agree with this contention. As stated earlier in this judgment, a requisition means a demand by a licensee where the Board is bound to make the supply. In the case of the petitioner also, the Board is bound to make the supply mean is that even if no agreement if demanded by the petitioner. It is immaterial that the petitioner is also under an obligation to make a demand. The fact that the petitioners is bound to make the requisition does not mean that the requisition ceases to be a requisition. The case of the petitioner is thus covered by Sec. 47-A.

22. In Writ Petition No. 4814 of 1973, two additional points have been urged. The petitioner in this petition is the Bareilly Electricity Supply Company Limited. It held a licence for the generation, supply and distribution of electrical energy in Bareilly. In November, 1961, the Board published a scheme in respect of the area of the petitioner company. The petitioner company started taking an initial stand by supply from the Board. In 1964, negotiations took place between the petitioner company and the Board for entering into an agreement. In the draft agreement, a clause regarding, demand of security was inserted but, on objection raised by the petitioner company, it was agreed to delete the clause. Thereafter an agreement was duly signed between the parties which contained no clause regarding the giving of security. It is urged by learned counsel for the petitioner that, since there is an agreement between the parties, Sec. 47-A would not be applicable to the petitioner. Reliance is placed on the non obstante clause in Sec. 47-A which reads thus:—

“Notwithstanding anything in this Act and notwithstanding that no arrangements have been mutually agreed under Sec. 47 or that 110 regulations have been made in that behalf.”

23. It is urged that the words italicised indicate that the provisions of Sec. 47-A are to apply only when an agreement under Sec. 47 has not been executed between the parties. This is not a correct reading of a non obstante clause. All that the words in italics mean is that even if no agreement under Sec. 47 has been entered into, the Board shall have the power to demand security. These words do not mean that where an agreement has, in fact, been executed, the section shall not apply.

24. The other additional point raised by this petitioner is that the amount of security cannot be recovered as arrears of land revenue. It he already, been mentioned above that, after demanding security of Rupees, nine lacs from this petitioner by notice dated February 17, 1973, the Board sent another notice dated May 25, 1973, to the petitioner, threatening to recover the amount as arrears of land revenue under the provisions of the U.P Government Electrical Undertakings (Dues Recovery) Act, 1958. It is urged by learned counsel for the petitioner that the provisions of the 1968 Recovery Act cannot be utilised for realising the amount of security demanded by the Board. The contention seems well founded. The provisions of this Act are applicable only to “dues payable by a consumer to a Government electrical undertaking.” We are satisfied that the amount of security demanded cannot be called “dues”. The word “dues” connotes an amount owed as a debt. In the present case the amount of security demanded is not owed as a debt to the Board. It is only an amount demanded as a condition to the supply of electricity by the Board to the licenste. The licensee is not obliged to pay this amount, if it chooses, it may not pay the amount and may take the consequence of its supply being discontinued. It is thus clear that the amount of security demanded by the Board is not “dues” payable by the petitioner to the Board.

25. That being so, the provisions of the 1958 Recovery Act cannot be utilised for recovering the amount of security demanded from the petitioner. The notice threatening to recover the amount as arrears of land revenue under the 1958. Recovery Act is without authority of law and is liable to be quashed.

26. The writ petitions are accordingly allowed to this extent that the notices, issued to each one of the petitioner without first affording it an opportunity of being heard are invalid and are quashed. In writ petition No. 4814 of 1973, the notice dated May 25, 1973, threatening to recover the security demanded as arrears of land revenue, is also quashed. In the circumstances of these petitioners, parties will bear their own costs.

27. Petitions allowed.

Mirzapur Electric Su... v. State Of Uttar Prade...