9911796707
TMI Blog1962 (3) TMI 4X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of lands, buildings, works, materials and plant of the licensee therein mentioned to be added under the second proviso of that sub-section to such value on account of compulsory purchase shall be 20 per cent. " Under this clause, read with section 7 of the Electricity Act, the Government had an option of purchasing the undertaking on the expiration of fifteen years from the date of the licence and on the expiration of every subsequent period of ten years. In 1935, about a year after the grant of the licence, a public limited company under the name and style of the Fazilka Electric Supply Co. Ltd., which is the appellant herein, was incorporated, and it acquired the rights and privileges of the licence known as the Fazilka Electric Licence, 1934. The appellant carried on the business of generating and supplying electricity in the town of Fazilka in accordance with the terms of the licence for fifteen years. On the expiration of fifteen years from the date of the licence, the Government of the Punjab exercised its option and acquired the undertaking on July 23, 1949, on a total payment of Rs. 3,74,000, which was in excess of the written down value of the building, machinery and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect of any building, machinery or plant which has been sold or discarded or demolished or destroyed, the allowance being the amount by which the written down value thereof exceeds the amount by which the building, machinery or plant, as the case may be, is actually sold or its scrap value ; the second proviso to the clause states that where the amount for which any such building, machinery or plant is sold, whether during the continuance of the business or after the cessation thereof, exceeds the written down value, so much of the excess as does not exceed the difference between the original cost and the written down value shall be deemed to be profits of the previous year in which the sale took place. It is not disputed before us that if what took place on July 23, 1949, in exercise of the option given to the Government under clause 9 of the licence read with section 7 and other provisions of the Electricity Act, was a sale within the meaning of clause (vii), then the amount which the Income-tax Officer determined to be Rs. 77,700 would be taxable in the hands of the appellant as profits within the meaning of the said clause. Therefore, the answer to the question which was referre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e shall be bound to sell his undertaking, or direct that subject to such conditions and restrictions, if any, as it may think fit to impose, the provisions of the said sections or any of them shall not apply. Now, we may read section 7 so far as it is relevant for our purpose. " 7. (1) Where a licence has been granted to any person not being a local authority, and the whole of the area of supply is included in the area for which a single local authority is constituted, the local authority shall, 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 licence, have the option of purchasing the undertaking, and if the local authority, with the previous sanction of the State Government, elects to purchase, the licensee shall sell the undertaking to the local authority on payment of the value of all lands, buildings, works, materials and plant of the licensee suitable to, and used by him for, the purposes of the undertaking, other than a generating station declared by the licence not to form part of the undertaking for the purpose of purchase, such value to be, in case of d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder section 3, sub-section (2), clause (f). The applicant shall then publish a notice of his application by public advertisement, and such advertisement shall include, inter alia, the draft licence. Where any person desires to have any amendment made in the draft licence, he shall deliver a statement of the same. The rules further provide for a local enquiry if any person locally interested objects to the grant ; if and when Government has approved of a draft licence, either in its original form or in a modified form, a duty is cast on Government to inform the applicant of such approval and of the form in which it is proposed to grant the licence and if the applicant is willing to accept the licence in the form proposed, then Government shall on receipt of an intimation in writing of such acceptance publish the licence and notify that it has been granted. If, therefore, the provisions of the Electricity Act are read along with the rules made thereunder, it becomes manifest that the condition as to the option of purchase, either by the local authority or Government, is the result of an agreement between the applicant who has applied for the licence and Government who grants the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a draft licence has to be sent by an applicant for licence containing definite and specific terms on which the licence is sought. This amounts to an offer. The Government accepts it or rejects it. If it modifies it in any way, then the applicant or offerer must accept the modification. If the Government accepts the offer with or without modification, then it grants a licence. In my view a licence granted by the Government in such circumstances amounts to a contract between the parties. " On behalf of the appellant it has been contended, somewhat faintly, that all the elements necessary to constitute a contract are not present here. We are unable to agree. There was an undertaking on the part of the applicant for the licence to sell the undertaking to the local authority or Government upon certain terms set out in the licence, and the time at which the option was to be exercised and the price which was to be paid for the property were specified. There was consideration for the contract as the licence was granted on those terms. Therefore, all the elements necessary for a contract were present, and the sale in pursuance thereof was not a compulsory purchase or acquisition (See Saka ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
