Content Provider | Supreme Court of India |
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e-ISSN | 30484839 |
Language | English |
Access Restriction | NDLI |
Subject Keyword | Oriental Gas Company Act 1970 |
Content Type | Text |
Resource Type | Law Judgement |
Jurisdiction | India |
Act(s) Referred | Oriental Gas Company Act, 1960 (15 of 1960) |
Case Type | Writ Petition |
Court | Supreme Court of India |
Disposal Nature | Petition Dismissed |
Headnote | Oriental Gas Company Act, 1970-s. 8(1) (b) Capitalisation of net income for determining compensation payable-Validity of - Principles for determining compensation payable on acquisition of Public Utility Undertakings discussed. In 1958, the Government of West Bengal, being of the view that the appellant company which enjoyed a monopoly in the supply of gas in Calcutta was negligent in looking after the interest of the consumers appointed a Committee to enquire into the unsatisfactory condition of supply of gas in Calcutta and to suggest remedial measures, including valuation of the Undertaking for the purpose of taking it over. The Committee reported that the distribution system was in a bad state of disrepair and that the maintenance system was in a very poor state. It recommended that the distribution system should be taken over immediately under the management of the Government to ensure and maintain supply of gas to consumers in Calcutta. On the basis of this recommendation, the Oriental Gas Company (West Bengal Act XV of 1960) was passed by the State Legislature. Section 3 of the Act provided for the taking over for a limited period of the management and control and subsequent acquisition of the Undertaking of the Company, Section 7 provided for the acquisition of the Undertaking of the Company at any time within a period of five years. Section 8(l)(b) provided for payment of compensation for the acquisition of the Undertaking of the Company, by the method of cost less depreciation or the method of capitalisation whichever was less. Section. 9(2) provided that the compensation should be paid in bonds carrying interest at 3 % p.a. from the date of issue and payable in 20 equal annual instalments. The Act was amended in 1968. The amended Act provided for the determination of compensation on the basis of full market value of the Undertaking and payment of compensation in the shape of bonds carrying interest from the date of enactment of the 1968 Act. In 1970 the Act was again amended. It provided for the determination of compensation by the method of capitalisation and payment of compensation in bonds carrying interest from the date of acquisition. Aggrieved by the method of determination of compensation the appellant filed a writ petition under Art. 32 of the Constitution questioning the vires of s. 8(1)(b) and s. 9(2) of the Act. The petitioner contended that (1) the principle of capitalising net profit as the sole factor for determining compensation payable for the acquisition of a public utility undertaking was not a relevant principle because a public utility concern was under an obligation to provide services to the community irrespective of whether its activities resulted in profit or loss; (2) the choice of the period of five years immediately preceding the take over of the management and control of the company for the purpose of calculating the average annual income was arbitrary; (3) at the time when the Undertaking was acquired in 1962 the gilt edged securities were fetching 6% p.a. and therefore a higher multiplier than eight should have been provided and (4) the method of payment of compensation in the shape of bonds payable in twenty years at 3% interest had the effect of reducing the compensation to less than half of what was determined. |
Judge | Hon'ble Mr. Justice O. Chinnappa Reddy |
Neutral Citation | 1978 INSC 163 |
Petitioner | Oriental Gas Co. Ltd. & Ors. |
Respondent | State Of West Bengal |
SCR | [1979] 1 S.C.R. 617 |
Judgement Date | 1978-09-12 |
Case Number | 343 |
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