JUDGMENT G.C. Mathur, J.
1. 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 rationalisation 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 Section 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 Section 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." It is under the provisions of Section 47-A introduced by the U.P. Amendment that the security amounts have been demanded from the petitioner-licensees.
3. In Writ Petn. No. 3808 of 1973, the Banaras Electric Light & Power Company Ltd. is the main petitioner. It had obtained a licence under the Indian Electricity Act, 1910, for generating and dis-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 Petitions Nos. 3806 and 3807 of 1973, M/s. 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 Faizabad. 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, 1958. 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 Section 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 Section 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 & 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 Section 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 Article 254 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 & Co., AIR 1964 SC 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 one 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 evidences by its legislation an intention to cover the whole field, the enactments of the other legislature whether passed before or after would be overborne on the ground of repugnance."
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 Article 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 Article 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." By virtue of these provisions, if there is repugnancy between the U.P. Amendment Act and the Electricity (Supply) Act, 1943, 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.
8. The second contention of the petitioners is that Section 47-A introduced by the U.P. Amendment Act confers a naked and arbitrary power to demand security upon the State Electricity Board without laving down any guideline and as such offends Article 14 of the Constitution. Learned counsel have pointed out various other 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 Section 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 guidelines in 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 Section 47-A to arbitration.
"xxx At present there are sixteen private electric supply companies and thirteen municipal electric supply undertakings in the State. Merely 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 Section 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."
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 is 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.
10. Having considered the rival contentions, we are of opinion that the power conferred by Section 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 Section 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 Section 47-A from being classified as an arbitrary or" naked power. Section 47-A, thus, cannot be said to offend Article 14 of the Constitution.
11. The next point urged by the petitioners was that Section 47-A violates the provisions of Article 19(1)(g) of the Constitution. The attack on the ground of violation of Article 19(1)(g) of the Constitution cannot be sustained in view of the proclamation of emergency which is still in force.
12. The grounds, on which the constitutionality of Section 47-A was challenged, having failed, we hold that Section 47-A 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.
13. Learned counsel for the petitioners have contended that, upon a proper construction of Section 47-A, the section can have no application to the petitioners. It is urged that Section 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 Section 47-A, not receiving electricity in bulk from the Board or additional demands by licensees after the enactment of Section 47-A. For this contention, reliance is placed upon the following words of Clause (a) of Section 47-A:--
"any requisition to supply electricity to a licensee."
14. 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 Section 47-A are attracted, there must be a requisition or a demand made by the licensee for bulk supply of 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 Section 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 contended that, since all the petitioners in the five petitions were receiving bulk supply of electricity from before the enactment of Section 47-A and since none of them made any requisition for the supply of electricity after the coming into force of Section 47-A, no security could be demanded from any of them under the provisions of Section 47-A.
15. 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 Section 47-A or also cover requisitions made earlier, on the basis of which supply is continuing to the licensees even after the enactment of Section 47-A. In our opinion, these words cannot be confined to requisitions made after the commencement of Section 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 Section 47-A was enacted, there was considerable shortage of electric power and there was little scope of giving additional electricity in bulk to any licensee. If the construction suggested by the petitioners were accepted, then the whole purpose of Section 47-A would be defeated. It appears that the word 'requisition' in Section 47-A means any requisition made in the past or the present or which may be made in future. The provisions of Clause (b) of Section 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 demanded 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 All LJ 656 = (AIR 1970 All 561) (FB), 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 Section 333-A of the U.P. Municipalities Act covered the case of a Municipality created before the enactment of Section 333-A. The Full Bench held that the language and purpose of Section 333-A clearly showed that it operated retrospectively and that the words quoted above meant also "where a municipality has been created in place of a town area". The Full Bench held that municipalities created before the introduction of Section 333-A were also covered by the provisions of that section. For the same reasons, we are of opinion that Section 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. Section 47-A would became discriminatory, as security could be demanded from licensees getting new or additional supplies but could not be demanded 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 Section 47-A is applicable to all cases where electricity is supplied by the Board in bulk to licensees whether requisitions were made before Section 47-A was introduced or thereafter.
16. 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 the 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 involved in the bulk supply of 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.
17. 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 Section 36 of the Electricity (Supply) Act, 1948, the Board closed down the generating station of the petitioner on February 1, 1962. Section 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."
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. Section 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 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 if demanded by the petitioner. It is immaterial that the petitioner is also under an obligation to make a demand. The fact that the petitioner 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 Section 47-A.
18. 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, Section 47-A would not be applicable to the petitioner. Reliance is placed on the non obstante clause in Section 47-A which reads thus:--
"Notwithstanding any thing in this Act and notwithstanding that no arrangements have been mutually agreed under Section 47 or that no regulations have been made in that behalf."
It is urged that the words underlined indicate that the provisions of Section 47-A are to apply only when an agreement under Section 47 has not been executed between the parties. This is not a correct-reading of a non obstante clause. All that the words underlined mean is that even if no agreement under Section 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.
19. The other additional point raised by this petitioner is that the amount of security cannot be recovered as arrears of land revenue. It has 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 1958 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 licensee. 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. 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.
20. The writ petitions are accordingly allowed to this extent that the notices issued to each one of the petitioners 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 petitions, parties will bear their own costs.