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Cochin State Power And Light Corporation Ltd. v. State Of Kerala .
Factual and Procedural Background
The appellant held a licence dated 3 December 1935 to supply electricity in Ernakulam and surrounding areas. Under Clause 15(a) of that licence, the State (through the competent authority) could purchase the undertaking after 25 years and every subsequent 10-year period, provided a two-year notice was given pursuant to the then-applicable Section 7(4) of the Indian Electricity Act, 1910. The first purchasable date was 2 December 1960, making the last day for a valid two-year notice 2 December 1958. No such notice was served.
On 5 September 1959, the Indian Electricity (Amendment) Act, 1959 substituted Section 6 for the old Section 7, reducing the notice period to one year and expressly vesting the first option of purchase in the State Electricity Board (SEB).
The Kerala SEB served notices dated 11 February 1959 (Ex B), 24 October 1959 (Ex D) and 29 October 1959 (Ex E) electing to purchase the undertaking on 2 December 1960. The State of Kerala separately served a notice dated 20 November 1959 (Ex G) asserting the same right.
Challenging these notices, the appellant filed a writ petition before the Kerala High Court on 14 November 1960. A learned Single Judge dismissed the petition as against the State, holding that only notice Ex G survived because the SEB agreed to ignore its own notices. The Division Bench dismissed the appellant’s intra-court appeal. The appellant then obtained certificates under Articles 133(1)(a) and 133(1)(c) of the Constitution and appealed to the Supreme Court.
Legal Issues Presented
- Whether, in the absence of a valid two-year notice under the old Section 7(4) of the 1910 Act, the appellant had a vested right to continue the licence until 2 December 1970.
- Whether the amended Section 6(1)(a) allowed an option of purchase on 2 December 1960 despite the earlier lapse of the two-year notice period.
- Whether the reference in Section 6(1)(a) to “each such period as is specified in the licence” included the 25-year period that had already begun to run before the amendment.
- Critically, whether, after the SEB had served notices electing to purchase, the State Government could still exercise an option of purchase under Section 6(2).
Arguments of the Parties
Appellant's Arguments
- The lapse of the two-year notice under the old Section 7(4) vested a right to continue until 1970, which was not removed by the 1959 amendment.
- The phrase “each such period as is specified in the licence” in Section 6(1)(a) refers only to unexpired periods on which an option can lawfully be exercised, excluding the period ending 2 December 1960.
- Sub-sections (4) and (5) of Section 6 contemplate that the first exercisable period must expire at least 18 months after 5 September 1959; hence the 1960 date was excluded.
- Even if an option existed for 2 December 1960, the SEB had already elected to purchase; therefore the State Government had no residual right under Section 6(2).
Respondent State's Arguments
- The missed two-year notice did not confer a vested right on the appellant; the new Section 6 replaced the earlier safeguards and validly allowed purchase on one-year notice.
- Section 6(1) expressly applies to licences granted before its commencement; the 25-year period is “specified in the licence,” making the option available on 2 December 1960.
- Sub-sections (4) and (5) do not limit the scope of Section 6(1); they merely create procedural steps.
- Because the SEB failed to send an 18-month intimation to the State Government under Section 6(4), it must be deemed to have elected not to purchase, thereby transferring the option to the State Government under Section 6(2).
Table of Precedents Cited
No precedents were cited in the provided opinion.
Court's Reasoning and Analysis
The Supreme Court focused on the appellant’s fourth contention. Assuming without deciding the validity of the other three points, the Court held that Section 6(1) clearly vested the first option of purchase in the Kerala SEB. The Board had in fact served notices electing to purchase the undertaking on 2 December 1960.
The State relied on Section 6(4), which requires the SEB to give the State Government at least 18 months’ written intimation of its intention. Because Section 6 commenced on 5 September 1959 and the relevant period expired on 2 December 1960, compliance with the 18-month requirement was impossible. Invoking the maxim lex non cogit ad impossibilia (the law does not compel the impossible), the Court held that Section 6(4) could not apply where performance was impossible from the outset. Consequently, the Board’s failure to send the 18-month intimation did not divest it of its option.
Since the Board had validly elected, the necessary pre-condition for the State Government to acquire an option under Section 6(2)—namely, that the Board “does not elect to purchase”—was absent. Therefore, the State Government never acquired any right under its notice Ex G. The High Court’s contrary view, premised on the Board’s purported waiver, could not stand because waiver by conduct could not override statutory vesting when the Board had already exercised the option.
Holding and Implications
Appeal Allowed – The State of Kerala is restrained from taking any action pursuant to notice Ex G dated 20 November 1959.
Direct Consequences: The appellant’s undertaking cannot be acquired by the State Government on 2 December 1960. Costs were awarded to the appellant in the Supreme Court, while parties bear their own costs in the courts below.
Broader Implications: The judgment clarifies that impossibility of compliance with procedural notice requirements under amended statutes does not automatically divest a statutory authority of its substantive option when that authority has already elected to exercise it. The decision reinforces the principle that statutory rights cannot shift to another body merely because procedural conditions have become impossible after legislative change.
Bachawat, J.— The short question in this appeal is whether the proposed acquisition of the electrical supply undertaking of the appellant by the State of Kerala in pursuance of the Notice Ex. G, dated November 20, 1959 is authorised by Section 6 of the Indian Electricity Act, 1910.
2. The appellant is the holder of a license for the supply of electrical energy in Ernakulam and other places in Cochin. The license was originally granted to the managing agents of the appellant under the Cochin Electricity Regulation 3 of 1902 then in force in Cochin and subsequently assigned to the appellant with the permission of the Cochin Government. On the merger of Travancore-Cochin with the Union of India, the Indian Electricity Act, 1910 was made applicable by the Part-B States Laws Act, 1951 (Act 3 of 1951) to the Travancore-Cochin area, and the Cochin Electricity Regulation stood repealed. The Electricity (Supply) Act, 1948 (Act 54 of 1948) was also made applicable to the Travancore-Cochin area by the Part-B States Laws Act, 1951. On March 31, 1957 the Kerala Electricity Board was constituted, and by Section 71 of Act 54 of 1948, any right and option to purchase the undertaking of the licensee under the Indian Electricity Act, 1910 was transferred to and vested in the Board. Now, the right or option to purchase the undertaking of a licensee under Section 7(1) of the Indian Electricity Act, 1910 then in force was exercisable “on the expiration of such period, not exceeding fifty years, and of every such subsequent period, not exceeding twenty years as shall be specified in this behalf in the license”. Sub-section (4) of Section 7 provided:
“Not less than two years' notice in writing of any election to purchase under this section shall be served upon the licensee by the local authority or the State Government, as the case may be.”
Clause 15(a) of the license held by the appellant provides:
“The option of purchase given by Section 7, sub-section (i) of the Regulation shall first be exercisable on the expiration of 25 years from the commencement of this license and on the expiration of every subsequent period of ten years during the continuance of this license.”
Section 7(1) of the Indian Electricity Act, 1910 corresponds to Section 7(i) of the Regulation, that is to say, of the Cochin Electricity Regulation. The date of the commencement of the license is December 3, 1935. The period of 25 years mentioned in clause 15(a) of the license expired on December 2, 1930. The last date for giving the two years' notice of the election to purchase on the expiry of December 2, 1960 required under Section 7(4) of the Indian Electricity Act, 1910 expired on December 2, 1958. On February 11, 1959, the State Electricity Board served on the appellant a notice, Ex. B, of its election to purchase the undertaking of the appellant on the expiry of December 2, 1960, but this notice not being in accordance with Section 7(4) was of no legal effect.
3. By the Indian Electricity (Amendment) Act, 1959 (Act 32 of 1959), Section 6 now in force was substituted for the old Section 7 of the Indian Electricity Act, 1910, with effect from September 5, 1959. Section 6 of the Indian Electricity Act, 1910 now in force reads:
“6. (1) 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 (Amendment) Act, 1959, on the expiration of each such period as is specified in the license; and
(b) in the case of a license granted on or after the commencement of the said Act, on the expiration of such period not exceeding twenty years and of every such subsequent period, not exceeding ten years, as shall be specified in this behalf in the license;
have the option of purchasing the undertaking and such option shall be exercised by the State Electricity Board serving upon the license a notice in writing of not less than one year requiring the licensee to sell the undertaking to it at the expiry of the relevant period referred to in this sub-section.
(2) Where a State Electricity Board has not been constituted, or if constituted, does not elect to purchase the undertaking, the State Government shall have the like option to be exercised in the like manner of purchasing the undertaking.
(3)Where neither the State Electricity Board nor the Government elects to purchase the undertaking, any authority constituted for an area within which the area of supply is included shall have the like option to be exercised in the like manner of purchasing the undertaking.
(4) If the State Electricity Board intends to exercise the option of purchasing the undertaking under this it shall send an intimation in writing of such intention to the State Government at least eighteen months before the expiry of the relevant period referred to in sub-section (1) and if no such intimation as aforesaid is received by the State Government the State Electricity Board shall be deemed to have elected not to purchase the undertaking.
(5) If the State Government intends to exercise the option of purchasing the undertaking under this section it shall send an intimation in writing of such intention to the local authority if any, referred to in sub-section (3) at least fifteen months before the expiry of the relevant period referred to in sub-section (1) and if no such intimation as aforesaid is received by the local authority the State Government shall be deemed to have elected not to purchase the undertaking.
(6) Where a notice exercising the option of purchasing the undertaking has been served upon the licensee under this section, the licensee shall deliver the undertaking to the State Electricity Board, the State Government or the local authority, as the case may be, on the expiration of the relevant period referred to in sub-section (1) pending the determination and payment of the purchase price.
(7)Where an undertaking is purchased under this section, the purchaser shall pay to the licensee the purchase price determined in accordance with the provisions of sub-section (4) of Section 7-A.”
4. On October 24, 1959, the State Electricity Board served upon the appellant a notice Ex. D, of its election to purchase the undertaking on the expiry of December 2, 1960. On October 29, 1959, the State Electricity Board served upon the appellant another notice, Ex. E, of its election. On November 20, 1959, the State Government served upon the appellant a notice, Ex. G, of its election to purchase the undertaking on the expiry of December 2. 1960. On November 14, 1960, the appellant filed a writ petition in the High Court of Kerala impleading the State of Kerala and the Kerala State Electricity Board and asking for the issue of appropriate writs and orders restraining them from taking any action pursuant to the notices. Exhibits B,D,E and G. On December 20, 1961, a learned Single Judge of the High Court passed the following order:
“In view of the representation made before me by both the learned Advocate-General appearing for the State, the Ist respondent, and Mr Krishnaswami Iyengar, learned counsel appearing for the Kerala State Electricity Board, the second respondent that for the purpose of this writ petition, the notices issued by the Kerala State Electricity Board, Exs. B, D and E can be ignored, it follows that neither the 1st respondent nor the 2nd respondent has any jurisdiction or power to take any action on the basis of Exs. B, D or E. In view of the fact that I am upholding the action of the State Government, who had issued the notice Ex. G, it follows that the 1st respondent alone is entitled to take further action under the Act, in pursuance of the notice, Ex. G, issued and sent along with the covering letter, Ex. F on 20-11-1959. It follows, subject to what is stated about Exs. B, D and E, that the writ petition has to be dismissed. There will be no order as to costs.”
The effect of this order was that the State Electricity Board waived and abandoned all its rights of purchase of the undertaking under the notices, Exs. B, D and E, and neither the Kerala State Electricity Board nor the State of Kerala had any jurisdiction or power to take any action on the basis of those notices, and save as aforesaid, the writ petition was dismissed, and it was held that State Government was entitled to take further action under its notice, Ex. G. Aggrieved by this order, the appellant filed an appeal in the Kerala High Court impleading the State Government only as the party respondent. The State Electricity Board did not file any appeal from the order of the learned Single Judge. By its judgment dated October 4, 1962, a Division Bench of the High Court dismissed the appeal. In para 15 of its judgment, the Bench observed:
“In its petition the appellant asked for reliefs both against the State Government and the State Electricity Board. However, in the course of the hearing of the petition, the Board gave up its claims under Exts. B, D and E, and only the claim of the State Government under Ext. G was canvassed. The petition was, in effect, allowed against the Board. The Board has not appealed and is not a party to the present appeal; and its notices may therefore be ignored except to the extent that they may affect the rights of the State Government.”
The appellant now appeals to this Court under a certificate granted by the High Court under Articles 133(1)(a) and 133(1)(c) of the Constitution.
5. On behalf of the appellant, Mr Vishwanath Sastry contended that (1) as the two years' notice in writing of the election to purchase the undertaking on the expiry of December, 2, 1960 was not served on the appellant as required by the old Section 7(4) of the Indian Electricity Act, 1910, the appellant acquired a vested right to hold the license until the expiry of a further period of ten years, that is to say, until December 2, 1970, and this vested right was not taken away either expressly or by necessary implication by the new Section 6 of the Indian Electricity Act, 1910 introduced by the amending Act 32 of 1958; (2) the expression “on the expiration of each such period as is specified in the license” in the new Section 6(1)(a) means a period which has not expired and on the expiry of which the option may be legally exercised, and since in the absence of the two years' notice required under the old Section 7(4), the option of purchase on the expiry of December 2, 1960 could not be legally exercised, the new Section 6(1) did not confer any option of purchase on the expiry of December 2, 1960 and the first option exercisable under the new Section 6(1) would be on the expiry of December 2, 1970; (3) sub-sections (4) and (5) of the new Section 6 show that the period on the expiry of which the option under sub-section(1) of Section 6 is exercisable, is a period which would expire at least 18 months after the coming into force of the new Section 6, that is to say, after September 5, 1959, and since the period expiring on December 2, 1960 is not such a period, the new Section 6(1) did not confer any option of purchase on the expiry of December 2, 1960; and (4) in any event, the State Electricity Board having duly elected to purchase the undertaking on the expiry of December 2, 1960, the State Government acquired no option of purchase under sub-section(2) of Section 7 of the Indian Electricity Act, 1910.
6. On behalf of the respondent. Mr V.P Gopalan Nambiar, the Advocate-General of Kerala, contended (1) that the absence of two years' notice under the old Section 7(4) of the Indian Electricity Act, 1910 did not confer upon the appellant a vested right to hold the license until the expiry of December 2, 1970, and the immunity from compulsory purchase under the old Section 7 arising from the non-service of the requisite two years' notice could be, and, in fact, was taken away by the new Section 6, which required only one year's notice of intention to purchase the undertaking; (2) assuming that the appellant acquired under the old Section 7 a vested right to hold the license until December 2, 1970, such vested right was taken away by the new Section 6, which expressly applies to licenses granted before its commencement, and the period of 25 years is a period specified in as the license on the expiry of which the option of purchase was legally exercisable; (3) sub-sections (4) and (5) of the new Section 6 did not cut down the plain meaning of sub-section(1) of the section and the option on the expiry of the period of 25 years was vested under sub-section(1) of Section 6, though this period did not expire 18 months after September 5, 1959; and (4) as the State Electricity Board did not send to the State Government any intimation in writing of its intention to exercise the option on the expiry of December 2, 1960 as required by sub-section(4) of Section 6, the Board must be deemed to have elected not to exercise this option, and consequently by sub-section(2) of Section 6, the State Government is vested with the option.
We think that the fourth contention of Mr Viswanatha Sastry is sound, and should be accepted. Assuming, without deciding, that the option of purchasing the undertaking on the expiry of the period of 25 years specified in the license was available under sub-section(1) of Section 6, such option vested in the State Electricity Board, and as the Board duly elected to purchase the undertaking, the State Government acquired no right or option of purchasing the undertaking under Section 6. On this ground alone, the appeal should be allowed, and in this view of the matter, we do not think it necessary to express any opinion on the other contentions urged before us. As far as the State Electricity Board is concerned, it has abandoned and waived its option of purchase on the expiry of 25 years.
7. Sub-section (1) of Section 6 expressly vests in the State Electricity Board the option of purchase on the expiry of the relevant period specified in the license. But the State Government claims that under sub-section (2) of Section 6 it is now vested with the option. Now, under sub-section (2) of Section 6, the State Government would be vested with the option only “where a State Electricity Board has not been constituted, or if constituted, does not elect to purchase the undertaking”. It is common case that the State Electricity Board was duly constituted. But the State Government claims that the State Electricity Board did not elect to purchase the undertaking. For this purpose, the State Government relies upon the deeming provisions of sub-section (4) of Section 6, and contends that as the Board did not send to the State Government any intimation in writing of its intention to exercise the option as required by the sub-section, the Board must be deemed to have elected not to purchase the undertaking. Now, the effect of sub-section (4) read with sub-section (2) of Section 6 is that on failure of the Board to give the notice prescribed by sub-section (4), the option vested in the Board under sub-section (1) of Section 6 was liable to be divested. Sub-section (4) of Section 6 imposed upon the Board the duty of giving after the coming into force of Section 6 a notice in writing of its intention to exercise the option at least 18 months before the expiry of the relevant period. Section 6 came into force on September 5, 1959, and the relevant period expired on December 3, 1960. In the circumstances, the giving of the requisite notice of 18 months in respect of the option of purchase on the expiry of December 2, 1960, was impossible from the very commencement of Section 6. The performance of this impossible duty must be excused in accordance with the maxim, lex non cogitia ad impossibile (the law does not compel the doing of impossibilities), and sub-section (4) of Section 6 must be construed as not being applicable to a case where compliance with it is impossible. We must therefore, hold that the State Electricity Board was not required to give the notice under sub-section (4) of Section 6 in respect of its option of purchase on the expiry of 25 years. It must follow that the Board cannot be deemed to have elected not to purchase the undertaking under sub-section (4) of Section 6. By the notice served upon the appellant, the Board duly elected to purchase the undertaking on the expiry of 25 years. Consequently, the State Government never became vested with the option of purchasing the undertaking under sub-section (2) of Section 6. The State Government must, therefore, be restrained from taking further action under its notice, Ex. G, dated November 20, 1959.
8. In the result, the appeal is allowed, and the respondent State of Kerala is restrained from taking any action under the notice, Ex. G, dated November 20, 1959. The respondent shall pay to the appellant the costs in this Court. We direct the parties to pay and bear their own costs in the courts below.
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