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2006 (9) TMI 603

..... G. Umapathy, Rohit Singh, Ashok Kumar Singh, B.S. Banthia And Vibha Datta Makhija (NP), Advs For Respondents: Amrendra Sharan, ASG, Ravi Shankar Prasad, Sr. Adv., Ravish C. Agrawal, Suparana Srivastava, Pooja Mathani, Rajesh Srivastava, Amit Anand Tiwari, Gaurav Agrawal, V.K. Verma, Dharmendra Kumar Sinha And R.C. Agrawala (N.P.), Advs. JUDGMENT S.B. Sinha, J. 1. Interpretation and application of Section 58 of the Madhya Pradesh Reorganisation Act, 2000 (for short "the 2000 Act") arises for consideration in these writ petitions. Parliament enacted Electricity (Supply) Act, 1948 (for short "the 1948 Act"), in terms whereof the Madhya Pradesh State Electricity Board (for short "MPSEB") was established on 1.4.1957. It was a body corporate in terms of Section 12 thereof. The territorial jurisdiction of the Board was the entire State of Madhya Pradesh as notified and constituted by 'States Reorganisation Act, 1956' (for short "the 1956 Act"). 2. A new State known as State of Chhattisgarh comprising of 16 districts carved out of the State of Madhya Pradesh was formed on 1.11.2000. Distribution of assets and liabilities of the States are ind .....

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..... review of the said notification in regard to the basis of the apportionment of assets and liabilities. A writ petition came to be filed by the MPSEB before the High Court of Delhi inter alia against the CSEB for remittance of revenues illegally retained for the period 1.12.2000 to 14.4.2001. Provisionally, apportionment of assets and liabilities was confirmed by the Government of India, Ministry of Personnel by a letter dated 4.12.2001 with effect from 15.4.2001 opining that the revenue collected by the CSEB before the said date should be remitted to MPSEB. The Central Government appointed the Central Electricity Authority (CEA) as an independent agency for ascertaining the total liabilities of the two States and their classification in terms of the purported criteria laid down in the notification dated 12.4.2001. 5. The State of Chhattisgarh filed a writ petition in the High Court of Chhattisgarh questioning the said orders of the Central Government dated 12.4.2001 and 4.12.2001. A transfer application was filed by the MPSEB for transfer of the said writ petition to the High Court of Delhi which was allowed by an order dated 19.8.2002. The Central Government issued an order purpor .....

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..... the impugned Notifications/ Orders dated 2.11.2004 and 4.11.2004 being unconstitutional and in violation of Article 14 of the Constitution; (c) Direct Respondent No. 1 to dissolve MPEB in consonance with orders/ directions dated 12.4.2001, 4.12.2001 and 23.5.2003 passed by the Government of India under Section 58(4) of the MPRA; (d) Direct Respondent No. 1 to perform its constitutional and the statutory duty to lay down proper criterion for apportionment of assets, rights and liabilities in accordance with law and to ensure equitable, just, fair and reasonable apportionment of assets, rights and liabilities amongst the successor Boards on the basis of revenue potential so as to avoid undue hardship and disadvantage to any of the successor Boards; and (e) Pass any other order and/ or direction, as this Hon'ble Court may deem fit and proper in the facts and circumstances of the case. 8. The main contentions raised in the writ petition as also the transfer petitions are: (i) Fixation of a date of dissolution as 15.11.2000 is ultra vires Article 14 of the Constitution of India. (ii) Division of assets and liabilities had been made without giving due regard to revenue generation pot .....

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..... r granted to a new State to constitute its Electricity Board is an absolute one and it can be made functional with effect from the date of its constitution and having regard to the fact that the CSEB was constituted on 15.11.2000, the Central Government cannot be said to have acted illegally or without jurisdiction in fixing the said date as the appointed day in terms of Sub-section (3) of the 2000 Act. 11. The stand of the Central Government was that the provisional order dated 12.4.2001 provided for only an interim arrangement and, thus, it could fix a specific date in terms of Sub-section (3) of Section 58 of the 2000 Act. As CSEB came into existence on 15.11.2000, the date suggested by the MPSEB, viz., 15.4.2001 would itself have been arbitrary and unreasonable. Current assets and liabilities of the Board were required to be apportioned and the same having been done on the basis of power consumption ratio of the States, which is roughly 77:23, the same cannot be said to be arbitrary particularly when the current liabilities, mostly on fuel and power purchases, were directly relatable to the power consumption ratio. 12. The 2000 Act was enacted to provide for the reorganization .....

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..... ) Any directions issued by the Central Government under Sub-section (1) in respect of the Board or the Corporation shall include a direction that the Act under which the Board or the Corporation was constituted shall, in its application to that Board or Corporation, have effect subject to such exceptions and modifications as the Central Government thinks fit. (3) The Board or the Corporation referred to in Sub-section (1) shall cease to function as from, and shall be deemed to be dissolved on such date as the Central Government may, by order, appoint; and upon such dissolution, its assets, rights and liabilities shall be apportioned between the successor States of Madhya Pradesh and Chhattisgarh in such manner as may be agreed upon between them within one year of the dissolution of the Board or the Corporation, as the case may be, or if no agreement is reached, in such manner as the Central Government may, by order, determine: (4) Nothing in the preceding provisions of this section shall be construed as preventing the Government of the State of Madhya Pradesh or, as the case may be, the Government of the State of Chhattisgarh from constituting, at any time on or after the appointed .....

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..... sor States, failing which such directions as may, from time to time found necessary, be issued by the Central Government. 16. Sub-section (3) of Section 58 of the 2000 Act empowers the Central Government to fix a date as it may by order appoint. Once such a date is fixed, the Board would cease to function. With effect from the date so appointed by the Central Government, the Board shall be deemed to be dissolved. Sub-section (3) of Section 58 of 2000 Act also provides for consequences of such dissolution, i.e., upon such dissolution, its assets, rights and liabilities shall be apportioned between the successor States. Such apportionment is to be made in the manner, in absence of an agreement between the two States, as the Central Government may by order determine. Sub-section (4) of Section 58, on the other hand, contains a special provision. It enables both the States to constitute respective State Electricity Boards. Such constitution of the State Electricity Boards could only be made on or after the appointed day, i.e., 1.11.2000. 17. In the event of constitution of such Boards by either of the States before the dissolution of the Board by the State concerned, the Central Govern .....

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..... enues collected to the MPSEB from 15.11.2000 to 30.11.2000. It had started independent collection of revenue with effect from 1.12.2000. MPSEB as also the State of Madhya Pradesh although had all along been aware that the CSEB had been realizing revenue from the consumers, and no protest was made. Only in the meeting it was recorded that no new State should do it unilaterally. The minutes of the said meeting or the direction of an officer of the Central Government was not and could not have been a direction in terms of Sub-section (4) of Section 58 of the 2000 Act. 20. There must have been some bickering between the two States with regard to collection of revenue. It appears that the Additional Secretary of MPSEB by a letter dated 21.11.2000 directed the Chief Engineer, CSEB "that the revenue collections should be kept in Chhattisgarh and should not be remitted to the Madhya Pradesh with effect from 21.11.2000. Yet again in the minutes of discussions between the Chief Ministers of the States of Chhattisgarh and Madhya Pradesh held on 25th November, 2000, it was acknowledged that the State of Chhattisgarh had already set up a separate Electricity Board with effect from 15.11.20 .....

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..... successor organizations may be enabled to become fully functional without any delay. 22. Yet again, the Chief Minister of the Government of Madhya Pradesh in a letter dated 27.12.2000 addressed to the Chief Minister of the State of Chhattisgarh recognized the necessity of having talks at their level so as to arrive at a mutually acceptable solution to the issues relating to the division of Electricity Board. From a circular letter dated 19th December, 2000 issued by the MPSEB, it appears that it was recognized that the CSEB had been constituted and it had started working independently with effect from 1.12.2000 stating: The new State of Chhattisgarh has been constituted w.e.f. 1.11.2000. Thereafter a separate Chhattisgarh State Electricity Board has been constituted for the new State, which has started working independently w.e.f. 1.12.2000. In respect thereof, it has been decided that after the issue of this circular, matters relating to the various offices/ employees of the Electricity Board situated in the State of Chhattisgarh may not be forwarded to the Board for its approval and all such pending matters may be returned after listing them out. The Minister of Power, Governmen .....

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..... ugh a complex task, be fair to both the States by ensuring that assets and liabilities are divided in the same proportion; and should not lose sight of the fact that, unlike the State Government, the MPEB is a commercial entity. You will agree that the earning capacity (turnover sales revenue) of any enterprise is by far the best index of its capability to discharge liabilities. While this capacity can be assessed by experts, in the interim suitable proxies should be used to estimate the situation closely enough so that neither of the successor Boards is handicapped at start. As you know, sales revenues of the Electricity Boards are dependant on the generation capacity (variable), the tariff rate and the consumer profile (which are relatively constant). Generation capacity is, thus, directly correlated with sales revenues and we have, therefore, suggested that this measure be used for distribution of liabilities instead of population, which has no economic nexus with the earning capacity of the Electricity Board. I request that the Government of India may abjure any unequal, interim division based on simplistic assumptions which will endanger the viability of the successor boards, .....

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..... hts and liabilities are qualified by the expression "take over". Whereas Sub-section (3) of Section 58 contemplates dissolution of the erstwhile Board, as we have noticed hereinbefore, the date on which the new Board takes over from the existing Board may be different from its dissolution. Constitution of two boards admittedly has been made from different dates. The Central Government was to fix any of them or specify another date. 28. Once an appointed day was fixed by the Central Government, this Court can interfere therewith only if it is violative of Article 14 of the Constitution of India being arbitrary in nature. The order impugned in the writ petition was admittedly passed by the Central Government upon giving an opportunity of hearing to both the parties. We have referred to some of the correspondences exchanged between the parties and/ or the respective State Governments inter se or with the Central Government only for the purpose of showing that there had been certain materials before the Central Government to appoint a day for the purpose of Sub-section (3) of Section 58 of the 2000 Act. Sub-sections (3) and (4) provide for a scheme. A meaningful interpretatio .....

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..... itable corollaries of that state of affairs. (See also ITW Signode India Ltd. v. CCE Scale 2003(153)ELT501(SC) 71. These decisions, therefore, show that whenever a legal fiction is created by a statute, the same shall be given full effect. [See also Bharat Petroleum Corporation Ltd. v. P. Kesavan and Anr. AIR2004SC2206 ] 32. What is, thus, contemplated by Clause (b) of Sub-section (4) of Section 58 of the 2000 Act is that upon dissolution of the existing Board, the assets, rights and liabilities instead of vesting or continuing to vest in the State as was contemplated under Sub-section (3) shall vest in the new Board. In that view of the matter, the submission of Mr. Tankha that the word "and" used in between Clauses (a) and (b) of Sub-section (4) of Section 58 of the 2000 Act must be read conjointly is devoid of any merit. The word "and" has been used for the purpose of showing the two different consequences arising therefrom. 33. Clauses (a) and (b) of Sub-section (4) of Section 58 of the 2000 Act operate in different fields. They have different consequences and, thus, both cannot operate simultaneously. When an order is passed by the Central Government under .....

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..... taking over of the assets of the Madhya Pradesh Electricity Board without there being any formal order of the Central Government in terms of Section 58(2) of the 2000 Act by itself may not be enough to arrive at the conclusion that the cut-off date fixed would be vitiated in law. It could have been a relevant consideration but not the only one. 38. We, therefore, are of the opinion that the cut-off date fixed by the Central Government cannot be said to be so arbitrary so as to attract the wrath of Article 14 of the Constitution of India. The logical corollary of our finding would be that the said date has been fixed in supersession of the earlier orders. We have noticed hereinbefore that the said order has been issued in supersession of all earlier orders. The writ petitions filed by the CSEB questioning the validity of the said orders, therefore, become infructuous. 39. The only question which survives now is as to whether the order dated 4.11.2004 regarding division of assets and liabilities between two successor Boards is just and proper. The apportionment of current assets and liabilities has been made on the basis of power consumption ratio of States. Any other variable might .....

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..... er Article 32 will not be competent to challenge any erroneous decision of an authority. (See Gulabdas & Co. v. Assistant Collector of Customs and State of J.&K. v. Mir Gulam Rasul.) A wrong application of law would not amount to a violation of fundamental right. Das, C.J. said in the case of Gulabdas & Co. that if the provisions of law are good and the orders passed are within the jurisdiction of the authorities there is no infraction of fundamental right if the authorities are right or wrong on facts. In the case of Gulabdas & Co. the petitioners challenged the order of the Assistant Collector of Customs The Customs Authorities assessed duty under Item 45(4) of the Indian Customs Tariff. The petitioners in that case contended that the duty should have been assessed under Item 45(a). This Court held that there was neither any violation of fundamental right under Article 19 or any unequal treatment and the petition was not maintainable. This Court in the case of Ujjam Bai v. State of U.P. as also in the case of Bhatnagars & Co. Ltd. v. Union of India held the same view that any erroneous decision would not be a violation of fundamental rights. 43. In Fertilizer .....

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