P.P. Naolekar, C.J.@mdashThe facts necessary to indicate the back ground in which the dispute arose and the question raised in the appeal filed by the State and in the writ petition filed by the State of Assam and the Assam State Electricity Board (for short ''the Board'') in brief are-that in the year 1979 the Planning Commission sanctioned a project forproduction of 100 MW electricity. The project is known as "Karbi Langpi (Lower Barapani) Hydro Electric Project" in the State of Assam. At that time the approved cost of the project was Rs. 34.15 Crores. The Board was entrusted with the responsibility of setting up and commissioning of the said project. The Board commenced the work of the project to complete it within the targeted period i.e. by 1985. The Board procured 1.7 million Yen loan from the Overseas Economic Cooperative Fund and the Government of Assam procured a loan of Rs. 58 crores in 1993 from Japan through Government of India for purchase of Turbo Generator and other equipments at a very low rate of interest. But in spite of such financial assistance taken in the fomi of loan, for a long time the project work could not be completed, the Board virtually abandoned the project. The project work is entrusted to different contractors, including Rastriya Pariyojna Nirman Nigam Ltd, from time to time by the Board. Though efforts were made by the Board to complete the work within the time stipulated the work could not be completed within the targeted time and only 50% of the work was completed. Consequently further construction work of the project came to a standstill till the end of year 1982 duetonon avai lability of fund and the project was practical ly abandoned. At the end of 1992 a policy decision was taken by the State of Assam and the Board commensurate with the Central Government policy declaration that in order to speedy completion of the project private participation and capitals should be introduced. The Government of India changed the policy regarding private participation in power project and the State Government decided to transfer the project to an assisted Sector company. At this time, the Bharat Hydro Power Corporation Ltd. (hereinafter referred to as "the Company") came forward to undertake the project with participation of the Board and or the State Government. The State Government after negotiation approved the policy and gave its approval in the matter entering into a Memorandum of Understanding. The Memorandum of Understanding dated March 25,1993 was drawn with the consent of three parties, viz., the State of Assam, the Board and M/s Subhas Project & Marketing Ltd (for short "M/s SPML")and the same was signed by three parties. In accordance with the provisions of said Memorandum of Understanding (MolJ) a Deed of Assignment was executed and accordingly all assets and properties of the said project were transferred in favour of the company.
2. The relevant portions of the Memorandum of Understanding are as under:
A. Assam State Electricity Board has undertaken construction of 100 M W capacity Karbi Langpi (Lower Borpani) Hydro Electric Power Generation Project'' in the State of Assam. The contour Map of the entire project area tfiereof showing all the project features is annexed hereto and marked with the letter ''Z'' and the location map of the Project site thereof is annexed hereto and marked with the letter ''Z-1'' (hereinafter collectively referred to as the ''said Electric Power Generation Project") and that the construction activities of the said Electric Power Generation Project had started in the year 1980, but the said Electric Power Generation Project could not be completed till today due to various reasons.
B. The Government of Assam is desirous to complete the said Electric Power Generation Project as speedily as possible and in line with present liberalised policy of the Government of India, is desirous to complete the project with private participation.
C. M/s SPML in the meantime approached the Government of Assam to take over the said Electric Power Generation Project in as-it-is where-it-is condition, i.e. in the incomplete form to the extent as mentioned in the report furnished by the Power Department of the Government of Assam to SPML vide letter No.PEL/184/85/Vol.II/415 dated 19th January, 1993 and annexed hereto and marked with letter ''A'' (hereinafter referred to as the said project'') together with all its assets and liabilities as on the date of such takeover, and offered to complete the said Electric Power Generation Project by forming a new company having share holding of both ASEB and SPML as and in the manner hereinafter stated.
C-1. SPML has submitted a proposal with viability study to the ASEB, vide letter No. 0292: BD-7: AKS dated 15.1.93. The said
study is indicative only and all the calculations, tariff rate etc. will be governed by the guidelines of Government of India and revised detailed Project Report.
D. ASEB has in order to implement the said project, already incurred the following expenditure and have also committed several liabilities as hereinafter mentioned up to 31st December, 1992.
PARTICULARS AMOUNT(RS)
a) Expenditures incurred by ASEB 116,21,12,000,00
b) Current liabilities 2,49,38,880.27
c) Outstanding claims of
contractors but not yet settled. 4,24,48,05 1.31
d) Claim under litigation
not yet settled 7,56,31,123.35
EA11 the assets and other properties purchased for or acquired by ASEB on account of the said Electric Power Generation Project and as are appearing in the accounts of in respect of the said Electric Power Generation Project are lying at the site of the said Electric Power Generation Project and have not been removed from there and said accounts and lists up to the date of take over will be submitted to SPML by ASEB and the fixed assets and properties will b e physically handed over t o Company by ASEB.
F. The land showing in the maps and plans annexed hereto and marked with the letter ''N'' and letter ''N-1'' respectively are from time to time acquired by ASEB for the purposes of the said Electric Power Generation Project to be used to the extent as hereto stated:
a) For Dam, Power Houses, Roads and Temporary colony etc,
596.10Hec.
b) For permanent colony at Lengery
45.50 Hec.
Total 641.60 Hec.
(hereinafter referred to as the '' said land'') and since then the said Electric Power Generation Project is the sole and exclusive owner of land otherwise well and sufficiently entitled to the said land and is in peaceful possession thereof:
***
NOW THIS MEMORANDUM OF UNDERSTANDING WITNESSETH AND IT IS HEREBY AGREED RECORDED, CONFIRMED AND DECLARED BY AND BETWEEN THE PARTIES THAT THE TERMS AND CONDITIONS SHALL BE AS FOLLOWS:
***
2. The parties hereto shall form and get registered a Public Company with limited liabilities under such name as may be mutually agreed and approved by the concerned Registrar of Companies in the State of Assam (hereinafter referred to as the ''Company'') for the principal purpose of completion of the said Project Generating Power from the completed Project and also for the marketing of the power and to conduct all other business directly or indirectly related to and/or auxiliary and/or incidental thereto. The parties shall apply for clearance of the name of the Company to the concerned Registrar of Companies within 60(sixty) days from the date of these presents and the registered office of the company shall be located in the State of Assam. The Company shall be registered within a period of three months from the date oi" approval of the name of the Company by the concerned registrar of Companies.
* * *
4. The shareholding of the ASEB in the paid-up capital of the Company will be 11 % and that of SPML and of its list of associates attached as Annexure-II shall be 40% and the balance 49% share capital of the said company would be offered to the General Public for subscription. The public issue of the Company shall be handled by an established Merchant Banking Division of the Nationalised Bank and the Manager of the Public Issue will be any leading competent company and/or banks selected by Company. The shares of the Company will be listed in the Guwahati Stock Exchange along with other leading Stock Exchanges in India, such as, Bombay, Calcutta, Delhi and Ahmedabad. Bankers to the issue will also be a leading Nationalised Bank having a Branch at Guwahati. SPML and its associates shall subscribe to and agree to be bound by the terms of this MoU to the same extent and in the same manner as the parties hereto agree and unless they do so they shall not be entitled to hold shares of company.
5. The management of the Company shall vest in the Board of Directors to be constituted for the purpose. The Chairman and Managing Director of the Company shall be selected by SPML and shall act under the over all control, supervision, direction and guidance of the Board of Directors.
6.(a) The Board of Directors of the Company, other than nominees of the Financial Institutions extending term loan, shall consist of 6 Directors (hereinafter referred to as ''Promoter Directors''). The ASEB shall be represented by two Directors and SPML shall be represented by four Directors one of whom shall be the Managing Director of the Company.
(b) ASEB and SPML shall have the right to remove their respective nominees in the Board of Directors and they will have the right to appoint/nominate their nominees in place of Director so removed.
(c) The total number of nominee Directors appointed by the parties thereto shall not exceed 6 except with the mutual consent of the ASEB and SPML. However, this restriction shall not apply to the Directors who have been appointed pursuant to or under any agreement with the debenture holders or with other financial institutions giving them a right to appoint Directors on the Board of required broad basing of the Board.
(d) Provided always that at all stages the Ratio of promoter Directors of ASEB and SPML shall be defined in SI. No. 6 (a) above.
7. The parties hereto shall clause the company to ratify and confirm these presents.
***
19. It is recorded that all the rights, title, interest benefits, liberties, advantages and/or obligations whatsoever of the Government of Assam, the ASEB under and/or in respect of the said Project as also in respect of and/or to the said land and of all the assets equipments, plants, machineries, tools, articles, properties and/or goods forming part of the said project as also all the structures and/or buildings so far erected and/or constructed by ASEB on the said land (all hereinafter collectively referred to as the ''said properties'') together with all the said liabilities in as-is-where-is condition shall stand assigned, transferred and conveyed in favour of the Company, free from all encumbrances, charges and/or hindrances whatsoever, for the total consideration of Rs. l 16,21,12,000.00 (Rupees One hundred sixteen crore twenty one lac twelve thousand only) to be paid by the Company as aforesaid as and in the manner hereinafter stated, subject to the undertaking of the Company that the Company shall carry out at is own costs, charges and expenses all further works to be done for completion of the said project exactly in accordance with the drawings and/or maps an/or departmental reports and/or specifications and/or Guidelines and/or designs and sketch or layout prepared by the Consultants to be appointed by the Company, subject to such modification and/or alterations as may be made from time to time therein with the approval of ASEB (hereinafter collectively referred to as the ''said Guidelines") and shall also subject to what are herein stated, pay all the liabilities and shall indemnify ASEB against payments thereof. It is however, made clear that the company shall be at liberty to settle and/or enter into any compromise with any contractors or creditors of the said Electric Power Generation Project to reduce their claim against the said Project and in case such claims are reduced, then and in that event ASEB shall not be entitled to claim refund of such reduced claim
***
21. The aforesaid consideration of Rs. 116,21,12,000.00 (Rupees one hundred crores twenty one lacs twelve thousand only) being the total expenditure so far incurred by ASEB for and in respect of the said Electric Power Generation Project) (hereinafter referred to as the said amount of'' deferred liability'') shall so long the same is not paid or liquidated as in the manner herein stated be treated as deferred liability by ASEB to Company upon its formation.
It is hereby clarified that the consideration for transfer of the said assets and projects of the said Project has been determined at Rs. 116,21,12,000.00 (Rupees One hundred sixteen crores twenty one lacs twelve thousand only) (hereinafter called the CONSIDERATION AMOUNT) in the manner hereinafter stated. If there shall be any further liability of whatsoever or howsoever nature, prior to the take over of the said Project by the said Company in terms of this MoU the same shall be discharged by ASEB and ASEB shall keep the Company indemnified against in respect thereof and if Company will be made to pay such liabilities then the same will be adjusted and appropriated out of the said consideration amount.
22. The said amount of deferred liability mentioned in Clause 20 (sic 21) hereof shall be liquidated by supply of minimum 30% of the total Generated Power by the said project by the Company upon completion until the time the said deferred liability is fully not repaid and/or liquidated. For this purpose the Power Tariff rate chargeable to ASEB for supply of Poser shall be on the basis of the Guideline fixed and stipulated by the government of India and/or Government of Assam for the time being in force (hereinafter referred to as the ''said rate''). It is however, made clear that it will be discretionary on the part of the Company to increase the percentage of Power Generated to be supplied to ASEB from time to time. ASEB undertakes that all such extra supply of Power by the Company to ASEB shall be purchased by the ASEB at the said rate.
To finalise the tariff rate, the rate of depreciation of the Units already procured/erected/constructed, will be determined in each case, having regard to the nature and condition of the assets at the time of its acquisition by the Company as per guidelines of Government of India. Notwithstanding anything to the contrary anywhere contained, the entire liability of the Company towards ASEB on account of said deferred liability shall be liquidated within a period of 8 years. However, the said period may be altered by the parties by agreement.
* * * *
31. It is made clear that the share holding to the extent of 11% of the total paid up capital of the Company shall be issued in favour of ASEB as referred to in Clause 4 hereof out of the said consideration of Rs. 116,21,12,000.00( Rupees One hundred sixteen crores twenty one lacs twelve thousand only) being the total expenditure incurred by ASEB till date of taking over and the said consideration amount i.e. the said amount of deferred liability, shall be reduced by the amount covered by the Equity Share Capital issued in favour of ASEB.
3. From the clauses of the Memorandum of Understanding it is apparent that the Government of Assam was desirous to complete the said Project, viz.100 MV capacity Karbi Langpi (Lower Borapani) Hydro Electric Power Generation Project and the expenditure incurred till the date of Memorandum of Understanding was estimated to be Rs. 116,21,12,000.00. The project work was to be handed over to a public company with limited liabilities, which shall be formulated with the principal purpose of completion of the project and for marketing of the power generated and also to conduct all other business directly or indirectly related to and/or ancillary or incidental thereto. The shareholding in the said Company, which is to be created and he''d would be 11% by the Board, 40 by M/s Subhash Projects and Marketing Ltd and 49% would be offered to the general public for subscription. The Board of Directors shall manage the affairs of the Company. The Board of Directors of the Company, otherthannomineesof the Financial Institutions extending term loan shall consist of 6 Directors, out of which the Board shall be represented by two Directors and M/s Subhash Projects and Marketing Ltd. shall be represented by four Directors, one of whom shall be the Managing Director of the Company. All the rights, title, interest, benefits, liberties, advantages or obligations of the Government of Assam, the Board in respect of the Project or in respect the assets equipments, plants, machineries, tools, articles, properties and/or goods form part of the project and also all the structures, building so far erected/ constructed on the land together with all said liabilities in as-is where-is condition shall stand assigned, transferred and conveyed in favour of the company, free from all encumbrances, charges and/or hindrances for the total consideration of Rs. 116,21,12,00/-. It is further provided that share holding to the extent of 11% of the total paid up capital of the Company shall be issued in favour of the Board out of the consideration of Rs. 116,21,12,000/-. Thus 11% share shall be adjusted from the value of the property handed over to the Company. The balance amount shall be liquidated by the Company by supplying 30% of the total generated power by the Company upon completion of the project until the said deferred liability is fully repaid and or liquidated and for that purpose the power tariff rate chargeable to the Board for supply of power shall be on the basis of the guidelines fixed and stipulated by the Government of India or the Government of Assam for the time being in force. Under the MoU the project was to be completed in the year June 1999.
4. From the aforesaid MoU it is apparent to us that an amount of Rs. 116,21,12,000/-was assigned to be the value of the property handed over to the newly formed Company, which was the deferred liability or the Company to pay in the form of supply of electricity generated under the project. Out of the said amount of value of the property, the amount for purchase of 11% of the share in the Company shall be adjusted and the said amount of differed liability shall be reduced by the amount covered by the equity shares holding of the Board.
5. In accordance with the MoU a Deed of Assignment was drawn with the Company on 4th April 1993 incorporating si milar conditions as that of the MoU. Handing over of the project to the company took place in piece-meal.
6. As per the Board and the State the company formulated for completion of the project has not proceeded to complete the work at the expected speed and the State of Assam did not see that the completion of the project work could be completed by the Company within a reasonable span of time and, therefore, the Government has decided to take over the project back from the Company, in view thereof, the State Government has issued an Ordinance on 30th November 1996 taking over the possession of the project and also the record of the company . The ordinance was replaced by an Act, viz. "The Bharat Hydro Power Corporation Limited (Acquisition and Transfer of Undertaking) Act, 1996" (hereinafter for convenience shall be called "the Act"), which received the assent of the Governor on 6lh January, 1997. The Act was enacted for the acquisition, in the public interest, of the right, title and interest of the undertaking of the Bharat Hydro Power Corporation Limited and the matters connected therewith or incidental thereto from the appointed day i.e. 30.11.1996. The Act was virtually a replica of the Ordinance. The Company filed a writ petition before this Court challenging the Ordinance and the Act. The learned Single Judge by judgment and order dated 19.7.1997 struck down the Act, however, in appeal to the Division Bench, the order of the learned Single Judge striking down the Act was set aside, by its judgment and order dated 21.9.1998. We are informed that the matter is now finally concluded by the Supreme Court upholding the validity of the Act 1996 by its judgment dated 7th January 2004 in Civil Appeal Nos. 6487-6488 of 1998. In the meantime, as per directions issued by the Hon''ble Supreme Court inventories of the assets of which the possession was taken over under the Ordinance/Act was carried out at site in between February 1999 to December 1999. The Act provides constitution of a Commission by a sitting or retired High Court Judge, to ascertain the compensation payable to the Company by the State or by the Board for the work carried out by the company, fixed assets, plant equipments and other contractual obligations discharged by the company, by virtue of the Ordinance and the Act of 1996. On 6.2.97 by a notification a Commission was constituted of Justice D.M. Baruah (Retired High Court Judge). But the Commission did not sit for a single day for hearing from February 1997 to November 2000 and, therefore, the Commission was reconstituted headed by Justice DN Baruah by fresh notification dated 10.11.2000. The term of the Commission as provided was to be one year from the date of its first sitting by Corrigendum dated 13.11.2000. On Constitution of the Commission the Company has filed its claims for compensation on various heads as provided under the Act for the work carried out and other claims for which, as per the claimant company, they are entitled to receive the compensation under the provisions of the Act. The claimant company made claims under different heads amounting to Rs. 32,19,30,000/-alongwith additional claims of Rs. 7,41,28,874.04, in total Rs. 39,60,58, 874.04, plus interest alongwith other charges and with pre suit, pendente-lite, and future interest.
7. The State of Assam has also filed claims u/s 10 of the Act making claim against the Company under different heads, which mns as follows:
| Head of counter claim | Claim Amount | Decision/Amount awarded |
| On metals and Minerals | 62,33,000.00 | Rejected Claim of Rs. 25 lakhs by claimant allowed |
| Loss of gate component | 5,00,000.00 | Rejected |
| Hydel construction | 3,78,00,000.00 | Rejected |
| Frontier construction | 55,07,000.00 | Rejected |
| Damage to cement | 24,04,000.00 | Rejected |
| Loss of Steel | 29,01,000.00 | 1,03,248.00 |
| Loss of scrap steel | 13,41,000.00 | 9,44,802.00 |
| Damage to explosives | 3,87,000.00 | Rejected |
| Loss to permanent and temporary buildings | 1,14,72,817.00 | Rejected |
| Energy bills | 46,45,252.89 | Rejected |
| Loss of tools and plants | 4,19,124.84 | Rejected |
| Neglect to take over in time | 1,32,44,567.00 | Rejected |
| Idle staff | 52,79,484.00 | Rejected |
| Loss to Electro-mechanical assets 25,132.00 1,85,132.00 | 9,57,09,800.00 | 1,60,000.00 |
| Non realization of dues | 1,13,48,402.00 | Rejected |
| Inspection report | 30,000.00 | |
| 18,91,92,447.73 | 12,63,182.00 |
The State''s counter claim has been allowed by the Commission under the heads, viz. loss of Steel materials Rs. l ,03,248/-, loss of scrap steel Rs. 9,44,802/-, 7 Nos. of 21 MVA, 11/ 134 KV Single Phase Generator Transformer Rs. 1,60,000/-, workshop Equipments Rs. 25,132/- and Reimbursement of expenses incurred by Inspection team Rs. 30,000/-i.e. in total Rs. 12,63,182/-. After disallowing certain claims made by the company and after deducting the amount payable against the counter claim and on adjustment of depreciation permissible under the Act, the Commission has awarded an amount of Rs. 30,86,89,180/-(Rupees thirty crores eighty six lakhs eighty nine thousand one hundred and eighty) only payable to the claimants with interest @ 12% per annum from the date the expenditure was incurred till the appointed day. On the said sum so worked out (principal plus interest), interest at the rate of 12% p.a. will be payable from the appointee-day till realisation. The respondent State and the Board were directed to pay the amount due within six months from the date of the report.
8. The Commission held that as per proviso to Section 12(2), the Company is disentitled to claim interest during the extended period of Commission under proviso to Sub-section (4) of Section 14, but as proviso to Sub-section (4) of Sub-Section 14 permits the State to grant extension, and as the Company has not failed to furnish the account, particulars, information and documents etc nor there was delay on the part of the Company and as the Commission had to seek extension not due to default and delay on the part of the Company, according to the Commission, it is entitled to interest @ 12% p.a. from 30.11.1996 till the date of payment.
9. Details of the amount awarded by the Commission in different heads are as follows:
2. INFRASTRUCTURES
B. Road communication 1,93,69,026.15
C. Temporary building 1,25,14,995.00
D. Permanent buildings 6,52,000.00
E. Plantation 14,99,999.50
F. Environment, ecology and afforstation 5,02,000.00
H. Power distribution lines 24,77,000.00
I. Distribution sub-stations 8,10,000.00
J. Street and flood lighting 2,12,000.00
K. Water Treatment plant 9,09,883.00 3. HEAD WORKS
A. Diversion Tunnel 2,24,678.00
B. Coffer dam 1,60,94,000.00
C. Hatidubi Dam 6,51,06,000.00
D. Instrumentation/
Electrification in dam 10,00,000,00
E. Radial, stop-log, intake draft tube,
Discharge tube gate, travelling gantry
and elevator including installation. 11,42,939.00 4. CONDUIT SYSTEM
a. Tunnels
i. Approach Channel, intake
structure Including intake
gate shaft. 10,10,000.00
ii. Low pressure tunnel 42,41,000.00
iii) Adit tunnel 1 and 2. 3,50,000.00
B. Anchors and saddles for penstock
Pipelines. 2,00,000.00
C. Butterfly valves. 10,00,000.00
D. Penstock tunnel 15,00,000.00 5. 2 X 50 MW HYDRO POWER STATION
A. General Excavation and Civil
works 37,67,000.00
B. 2x50 MW Turbo Generators 85,05,777.39
C. Supply and Erection of
AC Systems 1,34,000.00
D. Supervision of Erection and
Commissioning 27,00,000.00
E. EOT Cranes 1,92,000.00
F. Grounding, power house,
earth-mat, Cable-trays, HT Power
Cables etc. 48,77,425.00
G. Dewatering Expenses. 40,27,232.08 6. 220KV STEP UP SUB-STATION
A. Switchyard foundations and cable trenches and
related civil works, transformer,equipment
and cable erection of 220KV Sub-station
equipment. 1,02,31,000.00 7. MISCELLANEOUS FIXED ASSETS
C. Furniture and Fixtures.. 14,22,040.00
D. Vehicles l5,13,888,36
G. Instruments
(Micro Earth Station) 12,56,956.00
I. Computers 4,34,000.00 8. ENERGY AND DIESEL EXPENSES
A. Energy charges... 53,20,000.00
B. Social services during
implementation 1,40,000.00
C. Publicity and public relations
expenses 27,76,539.00
D. Report preparation expenses 12,00,000.00
E. Insurance during construction 14,09,125.00
F. Interest during construction 69,40,911.43
G. Salary and other establishment
Expenses during implementation.. 2,94,54,971.91
10. Preliminary and Capital issue expenses.. 94,25,000.00
11. Consultant�s fees 1,52,60,000.00
12. Repairs to plant and machinery. 29,69,101.41
13. Purchase of materials 57,32,000.00
14. Discharge of Old liabilities prior to
taking over by BHPCL. 34,50,000.00
15. Cost of shares issued to ASEB
5,10,00,000.00
TOTAL DEDUCTIONS 31,19,58,616.23 NATURE OF DEDUCTIONS
1. Depreciation 10,73,160.40
2. Deductions made on account of observations
by inspection team 9,33,094.00
Total ... 20,06,254.40
10. The Company has not filed any appeal challenging the award, whereas the State Government has filed the appeal against the award, whereby the counter claims of the State Government has not been fully allowed by the Commission, as claimed. The State Government and the Board has also filed a writ petition challenging the award made by the Commission in favour of the Claimant Company. The writ petition was filed, as appeal is permissible under Sub-section (7) of Section 14 by the claimant only. As the appeal has to be heard by not less than two Judges of the High Court, we have directed the writ petition filed by the State challenging the award made in favour of the claimant-Company also to be heard by the Division Bench with the appeal filed by the State and that is how the writ petition and the appeal filed by the State against the award are placed before us for consideration.
11. Before we refer to the arguments advanced by the learned Counsel appearing for the respective parties, it would be apposite to look into certain relevant provisions of the Bharat Hydro Power Corporation Limited (Acquisition and Transfer of Undertaking) Act, 1996(for short "the Act"):
Section 2(a) defines- "appointed day" means the day on which this Act comes into force;
2(b) "Board" means the Assam State Electricity Board,
2(c) "Company means the Bharat Hydro Power Corporation Limited;
2(d) "Commission" means the commission constituted u/s 14;
2(e) "fixed assets" includes works, spare parts, stores, tools, motor and other vehicles, office equipments and furniture;
2(g) "Project" means the Karbi Langpi (Lower Barapani) Hydro-Electric Project;
2(h) "prescribed" means prescribed by rules made under this Act;
2(i) "State Government" means the Government of Assam;
2(j) "Schedule" means the Schedule appended to this Act;
2(k) "undertaking" means the Bharat Hydro Power Corporation undertaking o wned and managed by the Bharat Hydro Power Corporation Limited.
Section 3 runs as follows:
3. On the appointed day the undertaking of the company and the right, title and interest of the company in relation to its undertaking shall, by virtue of this Act, be transferred to and vest in the State Government.
Provided that nothing herein contained or contained in any other law for the time being in force or in the Memorandum or Articles of Association of the company shall preclude from transferring and vesting the undertaking of the company to the State Government.
Section 4 runs thus:
4(1) On the appointed day the property, rights, liabilities and obligations specified herein below in respect of the company shall vest in the State Government:
(i) all the fixed assets of the company and all the documents relating to the company;
(ii) all the rights, liabilities and obligations of the company under hire purchase agreement, if any, for supply of materials or equipments made before the appointed day;
(iii) all the rights, liabilities and obligation of the company entered into bonafide before the appointed day not being a contract relating to borrowing or lending of money or to the employment of staff.
(2) All the assets specified in Clause (i) of Sub-section (1) shall vest in the State Government free from all debts, mortgages, or similar obligations of the company or attaching to the company:
Provided that debts, mortgages or obligations shall attach to the amount payable under this Act for the assets.
(3) * * *
(4) * * *
(5) ***
(6) All the liabilities and obligations, other than those vested in the State Government under Clauses (i) and (iii) of Sub-section (1) shall continue to be the liabilities and obligations of the Company after the appointed day.
Explanation: All the liabilities and obligations in respect of staff, taxes, provident fund, Employees S tate I nsurance, I ndustrial dispute and all other matters up to the appointed day, shall continue to be liabilities and obligations of the Company.
Section 6 says that - "6(1)
Notwithstanding anything contained in Section 3 and 4, the State Government may, if it is satisfied that the Board is willing to comply, or has complied, with such terms and conditions as that Government may think fit to impose, direct by notification, that the undertaking of the Company and the right, title and interest of the company in relation to its undertaking which has vested in that Government, vest in that Board either on the date of the notification or on such earlier or later date (not being a date earlier than the appointed day) a may be specified in the notification.
(2) Where the right, title and interest of the company in relation to its undertaking vest in the Board under Sub-section (1), the Board shall on and from the date of such vesting, be deemed to have become the owner in relation to such undertaking and all the rights and liabilities of the State Government in relation to such undertaking shall, on and from the date of such vesting, be deemed to have become the rights and liabilities, respectively of the Board.
Section 7 runs thus:
7. The State Government, for the right, title and interest of the company which shall stand transferred to and vested in the State Government u/s 3 or the Board u/s 6, as the case may be, shall pay an amount to the company that may be fixed by the Commission considering the value of the assets of the company after observing proper financial formalities.
Section 8 runs thus:
8. The gross amount payable to the company shall be the aggregate value of amounts specified below:
(a) if the company executed any work in the project (to be quantified) after the date the company took over till vesting on the State Government, the value of such assets to be determined by the Commission to be appointed under this Act less the depreciation calculated in accordance with the Schedule;
(b) the book value of all completed works in beneficial use pertaining to the project and taken over by the State Government excluding the value of such work executed prior to handing over to the company less depreciation calculated in accordance with the Schedule;
(c) the book value of all works in progress taken over by the State Government between the period of the Company''s taking over in April, 1994 till the appointed day.
(d) the book value of all stores including spare parts procured by the company for the project taken over by the State Government and in case of used stores and spare parts, if taken over, such sums as may be determined by the Commission;
(e) the book value of all other fixed assets in use on the appointed day excluding those existing on the date of handing over to the company less depreciation calculated in accordance with the Schedule;
(f) the book value of all plants and equipments existing on the appointed day excluding those on the date of handing over to the company, if taken over by the State Government but no longer in use owing/to wear and tear or obsolations to the extent such value has not been recorded in the books of accounts of the company less depreciation to be calculated in accordance with the Schedule;
(g) any amount paid actually by the company in respect of any contract referred to in clause(iii) of Sub-section (1) of Section 4:
Provided that the State Government shall resume the possession of the assets transferred to the company in the month of April, 1994 without paying any consideration thereof.
EXPLANTION: - The book value of any assets means the original cost and shall comprise of:
(i) the purchase price by the company for the asset including the cost of delivery and all charges properly incurred in erecting and bringing the asset into beneficial use as shown in the books of the company;
(ii) the cost of supervision actually incurred during the period from April 1994 till the appointed day, but not exceeding the ceiling as determined by the Commission constituted for the purpose;
Provided that before deciding the amount under this clause the company shall be given an opportunity by the State Government of being heard after giving the company a notice of at least fifteen days therefor.
(iii) when any asset acquired by the Company after the expiry of the period to which the latest annual accounts relates, the book value of the asset shall be such as may be decided upon by the State Government.
Provided that before deciding the book value of any such asset the company shall be given an opportunity by the State Government of being heard after giving a notice of at least fifteen days therefor.
Section 10 runs thus:
10. Where the State Government is of the opinion that the company due to its negligence or otherwise has caused loss, damage and deterioration of the assets taken over by them with the project during the period in their possession, the State Government shall be entitled to get the value of such loss, damage and deterioration assessed by the Commission under the Act and shall be entitled to deduct the amount so assessed from the amount payable to the company under this Act;
Provided that before making such deduction the company shall be given a notice, not later than 12 months from the date of receipt of the assessment report from the Commission under Sub-section (4) of Section 14, to show cause against such deduction within a period of fifteen days from the date of receipt of such notice.
Section 12 runs thus:
12(1) The net amount due to the company under this Act shall be paid by the State Government within six months from the date of receipt of assessment report form the Commission under Sub-section (4) of Section 14.
(2) The net amount payable shall bear interest at the rate of 12% per annum from the appointed day:
Provided that no interest shall be payable during any extension granted under proviso to Sub-section (4) of Section 14.
12. In nutshell, the Act provides re-taking of the project, viz. Karbi Langpi (Lower Barapani) Hydro Electric Project" which was handed over to the Bharat Hydro Power Corporation Limited by the State Government and the Board and to provide compensation to the Company for property, rights, liability obligation vested in State Government. Under the Act the appointed day means, the day on which the Act comes into fore i.e. 30.11.96 and the Company means, the Bharat Hydro Power Corporation Limited. Fixed assets includes work, spare parts, stores, tools, motor and other vehicles, office equipments and furniture. Project means the Karbi Langpi (lower Barapani) Hydro Electric Project. And undertaking means the Bharat Hydro Power Corporation undertaking owned and managed by the Bharat Hydro Power Corporation Limited. By virtue of Section 3, on the appointed date the Bharat Hydro Power Corporation and the right, title and interest of the undertaking stands transferred and vested in the State Government. Section 4 provides that on 30.11.96 i.e. on the appointed day, the property, right, liabilities and obligations specified in Clause (i) (ii) (iii) in respect of the company shall vest in the State Government. Section 4(i)(ii)(iii) provides that on 30.11.96 the property, rights, liabilities and obligations in all the fixed assets of the company and all the documents relating to the company, all the rights, liabilities and obligations of the company under hire purchase agreement, if any, for supply of materials or equipments made before the appointed day; and all the rights, liabilities and obligation of the company entered into bona-fide before 30.11.96 not being a contract relating to borrowing or lending of money or to the employment of staff shall vest in the State Government. Sub-section (6) of Section 4 clarifies that all the liabilities and obligations, other than those vested in the State Government under Clauses (i) and (iii) of Sub-section (1) shall continue to be the liabilities and obligations of the Company after the appointed day. The explanation to Section 4 provides that all the liabilities and obligations in respect of staff, taxes, provident fund, Employees State Insurance, Industrial dispute and all other matter up to 30.11.96, shall continue to be liabilities and obligations of the Company.
13. Chapter III of the Act is in regard to payment of amount of compensation, which contains Section 7 wherein the State Government takes the responsibility o f payment of compensation to the Company as may be fixed by the Commission considering the value of the assets of the company that has vested in the State after observing proper financial formalities. The Commission has been given authority and jurisdiction by virtue of Section 8 to calculate the gross amount payable to the company, which shall be aggregate value under different heads. Under Clause (a) of Section 8, the Company is entitled for the value of the assets, for the executed work of the project, which has been undertaken by the Company from the date of taking over till vesting in the State Government. This clause has a reference to the value of the assets, which shall be determined and assessed by the Commission. The amount so determined shall be less the depreciation calculated in accordance with the Schedule. Clause (b) provides the book value of all completed work, which has been executed by the Company. The value of the work executed prior to handing over of the project and the depreciation shall be deducted while arriving at the value of the completed work carried out by the Company. Clause (c) provides book value of all works in progress taken over by the State Government between the periods of taking over in April 1994 till the appointed day. Clause (d) refer to book value of all stores, which shall include spare parts procured by the Company for the project and in case of used stores and spare parts the same shall be determined by the Commission. Clause (e) is in regard to other fixed assets in use on the appointed day excluding those existing on the date of handing over to the company less depreciation. Clause (f) is in regard to the plants and equipments existing on the appointed day excluding those on the date of handing over to the company, if taken over by the State Government, but no longer in use owing to wear and tear or obsolations to the extent such value has not been recorded in the books of accounts of the company less depreciation. Clause (g) is in regard to the amount actually paid by the company in respect of any contract entered into by the Company bona-fide before the appointed day, which shall not the contract relating to borrowing or lending of money or to the employment of staff. Explanation to Section 8 lays down that the book value of assets means the original costs and shall include the cost of delivery and all charges properly incurred in erecting and bringing the assets for beneficial use as shown in the books of the Company, it shall also include the cost of supervision actually incurred dirring the period form April 1994 till the appointed day, but shall not exceed the ceiling as determined by the Commission.
14. Section 10 is in regard to the recovery of value of the assets from the company due to loss, damage or deterioration of the assets, taken over by the Company, due to its negligence or otherwise during the period the Company is in possession of the assets of the project. Under this section the Government is entitled to deduct the said amount from the amount of compensation, which is required to be paid by the State Government to the company. u/s 12, the net amount due to the company as assessed by the Commission has to be paid by the State Government within six months from the date of assessment report, and the net amount payable shall bear interest at the rate of 12% p.a. from the appointed day i.e. 30.11.96. The proviso to Section 12 puts a ceiling that no interest shall be payable during any extension granted to the Commission for making its award under proviso to Sub-section (4) of Section 14.
Section 14 refers to constitution of the Commission, which shall be constituted for the purpose of determining the question arising in regard to Sections 7, 8,9,10,12, 15 and 26 by an order in writing. The Commission shall be headed by a sitting or retired High Court Judge. The Commissioner has been authorised to take assistance from the officers and staff of the State Government, the Board or the Company. Sub-section (4) of Section 14 imposes the duty on the Commission to complete the assessment and submits its award within one year form the date of appointed day. Sub-section (5) of Section (14) gives authority to the Commission to regulate its own procedure in all matters arising out of and in discharge of its functions. The Commission have the power as vested in a Civil Court under the Code of Civil Procedure, 1908, in respect of summoning and enforcing the attendance of any witness and examining him, the discovery and production of any document or other material object producible as evidence, the reception of evidence on affidavits, and issuing of any commission for the examination of witness.
15. On over all reading of the provisions of the Act 1996, it is apparent to us that the Ordinance and the Act were enacted to take over the immediate possession and management of the entire project from the company from the appointed day, i.e. 30.11.96. On thk day, the State Government took over charge of the project and also all the documents, which were in possession and maintained by the company. It is also apparent form the Act that the Legislature wanted the matter of compensation to be settled within a short span of time and, therefore, u/s 14 of the Act a Commission was constituted. As per Clause (4), the Commission has to complete the assessment and submit its report within one year form the appointed day. The legislature also wanted that the assessment award submitted by the Commission to be given finality. Keeping this in view, under Clause (7) of Section 14, provision has been made limiting the right of appeal to the claimant only, if the claimant is dissatisfied with the decision of the Commission for not awarding the amount as claimed him, he has a right of appeal, so far the amount awarded, it attained the finality, because the State or the Board not being the claimants have no right to file appeal against the award of the amount. The State''s right of appeal is restricted to claim made by the State u/s 10 of the Act and the award made thereunder, if the State is aggrieved by the award made by the Commission. Since the State Government and/or Board were not the claimant in the instant case, a writ petition has been filed by the State and the Board under Article 226/227 of the Constitution of India.
16. Before we consider various questions raised, we may determine the question as to what shall be the scope, ambit and reach of the Court''s jurisdiction in the matter of writ petition filed by the State and the Board against the award made by the Commission, when appeal is prohibited under the Act itself. The Courts have often faced with the puzzle propounded for solution of determining its jurisdiction while exercising its power under Article 226/227 of the Constitution of India and laid certain areas, where the Court may or may not exercise its jurisdiction.
In the matter of
(1) Certiorari will be issued for correcting errors of jurisdiction;
(2) Certiorari will also be issued when the Court or Tribunal acts illegally in the exercise of it undoubted jurisdiction, as when it decides without giving an opportunity to the parties to be heard, or violates the principles of natural justice.
(3) The Court issuing a writ of certiorari acts in exercise of a supervisory and not appellate jurisdiction. One consequence of this is that the Court will not review findings of fact reached by the inferior Court or Tribunal, even if they be erroneous.
(4) An error in the decision or determination itself may also be a menable to a writ of certiorari if it is a manifest error apparent on the face of the proceedings, e.g., when it is based on clear ignorance or disregard of the provisions of law. In other words, it is a patent e nor which can be c orrected by certiorari but not a mere wrong decision.
17. In the matter of
The common law writ, now called the order of certiorari which has also been adopted by our Constitution, is not meant to take the place of an appeal where the Statute does not confer a right of appeal. Its purpose is only to determine, on an examination of the record, whether the inferior Tribunal has exceeded its jurisdiction or has not proceeded in accordance with the essential requirements of the law which it was meant to administer. Mere formal or technical errors, event though of law, will not be sufficient to attract this extraordinary jurisdiction. Where the errors cannot be said to be errors of law apparent on the face of the record, but they are merely errors in appreciation of documentary evidence or affidavits, errors in drawing inferences or omission to draw inference or in other words errors which a Court sitting as a Court of appeal only, could have examined and, if necessary, corrected and the appellate authority under a statute in question has unlimited jurisdiction to examine and appreciate the evidence in the exercise of its appellate or revisional jurisdiction and it has not been shown that in exercising its powers the appellate authority disregarded any mandatory provisions of the law but what can be said at the most was that it had disregarded certain executive instructions not having the force of law, there is not case for the exercise of the jurisdiction under Article 226.
18. A Constitution Bench in
19. While considering the difference between Articles 226 and 227 of the Constitution in Umaji Keshao Meshram and Ors. v. Smti Radhikabai and Anr. 1986 Suppl. SCC 401 , the Apex Court says that the proceedings under Article 226 are in exercise of the original jurisdiction of the High Court while proceedings under Article 227 of the Constitution are not original but only supervisory. Though the power is akin to that of an ordinary Court of appeal, yet the power under Article 227 is intended to be used sparingly and only in appropriate cases for the purpose of keeping the subordinate courts and tribunals within the bounds of their authority and not for correcting mere errors. The power may be exercised in cases occasioning grave injustice or failure of justice such as when (i) the Court or Tribunal has assumed a jurisdiction which it does not have, (ii) has failed to exercise ajurisdiction which it does have, such failure occasioning a failure of justice, and (iii) the jurisdiction though available is being exercised in a manner which tantamounts to overstepping the limits of jurisdiction.
20. In
21. In
22. From the aforesaid decisions it can be safely said that the High Court''s power of judicial review under Article 226/227 of the Coaptitution is made limited by the courts by imposing on itself certain Limitations, particularly so when the legislature have not provided regular appeal or revision against the impugned award passed by the Commissioner. It is not the wisdom of the law, that the decision of the legislator can be reviewed for lack of discretion on the part of the legislature, in not providing appeal or revisional remedy in the Statute. The Court, while exercising the judicial review of the decisions of the Tribunal or Executive is subject to check, which are controlled by self imposed discipline of the judicial restrain and the guidelines laid down by the Apex Court in various decision, indicating the reach and extent, the conditions and circumstances and the restrain required and expected by the judiciary while exercising judicial review power. It is true that it is the duty of the High Court to keep all the authorities and Tribunals while discharging their judicial, quasi-judicial or statutory function within the bounds of their jurisdiction and to compel them, where necessary, to perform duties entrusted on them by law, strictly in accordance with the relevant statutory provisions, but it should be circumscribed by self imposed restrain and limitation, which are ofcourse, self imposed and guided by various decisions of the Apex Court. The High Court''s power under Article 226 of the Constitution is extra ordinary and has to be used sparingly. In spite of very wide terms in which this jurisdiction is conferred, there are certain recognised limitations on this power. The jurisdiction is not appellate and it cannot be a substitute for ordinary remedy of law, nor its exercise desirable if facts are to be formed on re-appreciation of evidence. The High Court is not called upon in exercise of the powers under 226/227 of the Constitution to substitute its own judgment to that of an authority, which has been entrusted to decide the matter. The scope is limited for enquiry by the Court to find out whether the technical requirements of law in arriving at a decision are followed or not, or whether the decision is vitiated by malafide or fraud etc. The High Court is not called upon nor is required to go into, to appreciate, while exercising the power under Article 226/227 of the Constitution, to determine the complicated question of facts, which are required to be determined by the authority or Tribunal as a fact finding Court, nor does it exercises its extra-ordinaryjurisdiction to go into the depth making detail enquiry into the finding reached by the Tribunal or the Authority based on the facts led before it by the parties. The power under Article 226/ 227 of the Constitution is not intended to enable the High Court to convert itself into a Court of appeal and examine for itself the correctness of the decision impugned and decide what is the proper view, which should have been taken by the Court below or the Tribunal or what order to be made. The Court would exercise jurisdiction when it reaches to the conclusion that the subordinate authority had committed gross illegality or an error of jurisdiction not vested in it. The Court/ Tribunal or the authority, which hasjurisdiction over a subject matter hasjurisdiction to decide it and when the legislature had not thought it proper to confer upon, the right of appeal against that decision, the Superior Court exercising only supervisory jurisdiction would not be justified in rehearing the case on evidence and substitute its findings in place of findings arrived by the authority/ Court/ Tribunal on appreciation of evidence. The jurisdiction of the court is corrective and not appellable and is confined to error of law or jurisdiction on the face of record.
23. After considering several Indian and English cases, Lahoti,i, recently speaking for the Bench, in the matter of Surya Dev Rai v. Ram Chander Rai and others 2003 AIR SCW 3872, has stated the relevant principles on broad basis, which more or less sum up thejurisdiction of the High Court orjudicial review in exercise ofthe power under Article 226/227 c Constitution, which runs as follows:
(3) Certiorari, under Article 226 ofthe Constitution, is i ssued for correcting gross errors of jurisdiction, i.e when a subordinate court is found to have acted (i) without jurisdiction � by assuming jurisdiction where there exists none, or (ii) in excess of its jurisdiction by overstepping or crossing the limits of jurisdiction, or (iii) acting in flagrant disregard of law or the rules of procedure or acting in violation of principles ofnatural justice where there is no procedure specified, and thereby occasioning failure ofjustice.
(4) Supervisory jurisdiction under Article 227 of the Constitution is exercised for keeping the subordinate Courts within the bounds o f their jurisdiction. When the subordinate Court has assumed a jurisdiction which it does have or the jurisdiction though available is being exercised by the Court in a manner not permitted by law and failure ofjustice or grave injustice has occasioned thereby, the High Court may step in to exercise its supervisory jurisdiction.
(5) Be it a wVit of certiorari or the exercise of supervisory jurisdiction, none is available to correct mere errors of fact or of law unless the following requirements are satisfied:(i) the error is manifest and apparent on the face oft he proceedings such as when it is based on cleai ignorance or utter disregard of the provisions of law, and (iii) a grave injustice or gross failure of justice has occasioned thereby.
(6) A patent error is an error which is self- evident, i.e., which can be perceived or demonstrated without involving into any lengthy or c omplicated argument or a long- drawn process of reasoning. Where two inferences are reasonably possible and the subordinate court has chosen to take one view of the error cannot be called gross or patent.
(7) The power to issue a writ or certiorari and the supervisory jurisdiction are to be exercised sparingly and only in appropriate cases where the judicial conscience of the High Court dictates it to act lest a gross failure of justice or grave injustice should occasion. Care, caution and circumspection need to be exercised, when any of the above said two jurisdictions is sought to be invoked during the pendency of any suit or proceedings in a subordinate court and error though calling for correction is yet capable of being corrected at the conclusion of the proceedings in an appeal or revision preferred there against and entertaining a petition invoking certiorari or supervisory jurisdiction of High Court would obstruct the smooth flow and/or to intervene where the error is such, as, if not corrected at that very moment, may become incapable of correction at a later stage and refusal to intervene would result in travesty of justice or where such refusal itself would result in prolonging of the us.
(8) The High Court in exercise of certiorari or supervisory jurisdiction will not covert itself into a Court o f Appeal and indulge in re appreciation or evaluation of evidence or correct errors in drawing inferences or correct errors of mere formal or technical character.
(9) In practice, the parameters for exercising jurisdiction to issue a writ of certiorari and those calling for exercise of supervisory jurisdiction are almost similar and the width or jurisdiction exercised by the High Courts in India unlike English courts has almost obliterated the distinction between the two jurisdictions. While exercising jurisdiction to issue a writ or certiorari the High Court may annul or set aside the act, order or proceedings of the subordinate courts but cannot substitute its own decision in place thereof. In exercise of supervisory jurisdiction the High Court may not only give suitable directions so as to guide the subordinate court as to the manner in which it would act or proceed thereafter or afresh, the High Court may in appropriate cases itself make a n order in supersession or substitution of the order of the subordinate court as the court should have made in the facts and circumstances of the case.
24. Having full realisation of the self imposed limitations put by tile High Court on its exercise ofjurisdiction, as indicated from time to time by the Highest Court of the land, Mr PK Goswami, the learned counsel for the appellant directed his argument, challenging the award of the Commission on the premises of the approach made by the Commission in arriving at its conc�usions. It is submitted that, the Commission, while appreciating the evidence on record, has taken into consideration the contents of the documents, although d ocuments are n ot proved in accordance with law, merely because they are exhibited and admitted in evidence. The Commission has proceeded and recorded its findings on the basis of the so ailed admission of the documents made by the appellant! petitioner in reply to the notice to admit documents and on the basis of inspection report prepared by the officers of the Board and the Company. It is contended that when the facts contained in the documents itself in question in the case, the statements contained therein has to be proved by examination of witnesses. This argument has specific reference in regard to the account books produced by the Company. The learned counsel for the petitioners urged that mere production oft he account book o fthe company do not prove that the entries made therein are correct. It is further submitted that for relying on the admissions made by the parties it should be unambiguous and with lid! knowledge of the parties. It is argued by the learned counsel for the petitioners that the accounts are admissible only when it is based on evidence. Mere production of account books does not prove the truth of the entries made therein and the entries in the account books could not have been relied upon by the Commission in awarding the compensation, therefore, the award as a whole, is to be set aside.
25. Challenging the legality and validity of the entire award made by the Commissioner, Mr Goswarni has also c hallenged the approach and method adopted by the Commission in arriving at the amount of compensation to be paid to the Company. According to the learned counsel, the method adopted by the Commission in arriving at the compensation amount payable to the Company u/s 7 and 8 of the Act, on the basis of the amount spent and entries made therein in the accounts book of the company under various heads, during the period the project was handed over to the Company till the appointed day, when the project w as taken over by the State by promulgamation of the Ordinance and thereafter by theAct 1996, is not correct. It is further contended that the Commission should have lound out the work carried by the Company on the project between the periods of handing over and taking over project to the Company, on the basis of the inventories prepared at the time of handing and taking over the project. The Commission after ascertaining the work done by the Company on the basis of the inventories should have appointed Expert(s) to assess the monetary value of the work done under different heads by the Company and the compensation should have been awarded on the basis of monetary value of the work done under different heads by the Company. The Commission having not adopted a correct method to arrive at the extent ofwork done by the Company during the period the project was under their possession, the entire award is liable to beset aside.
Mr Goswami has further challenged various individual heads for which the compensation was awarded by the Commission on the ground ofjurisdiction, which is not vested in the Commission under the Ordinance or the Act 1996, which we shall deal with separately.
26. In support of his argument the learned counsel for the petitioners has placed reliance on various authorities. We shall consider some of them laying down the principle of law on this point.
In
In
27. In
In its ordinary sense it signifies a collection of sheets of paper bound together in a manner which cannot be disturbed or altered except by tearing apart. The binding is of a kind which is not intended to be moveable in the sense of being undone and put together again. A collection of papers in a portfolio, or clip, or strung together on a piece of twine which is intended to be untied at will, would not, in ordinary English, be called a book. ... I think the term �book� in Section 34 aforesaid may properly be taken to signify, ordinarily, a collection of sheets of p aper bound together with the intention that such binding shall be permanent and the papers used collectively in one volume. It is easier however to say that is not a book for the purposes of Section 34, and I have no hesitation in holding that unbound sheets of paper, in whatever quantity, though filled up with one continuous account are not a book of account within the purview of section 34.
The Court has referred to with approval the decision of Mukundram (Supra) while dealing with the question what is meant by the �book of account� u/s 34 of the EvidenceAct, wherein it is observed thus:
�To account is to reckon, and I am unable to conceive any accounting which dos not involve either addition or subtraction or both of these operation of arithmetic. A book which contains successive entries of items may be a good memorandum book; but until those entries are totalled or balanced, or both, as the case may be, there is no reckoning and no account. In the making of totals and striking of balances from time to time lies the chief safeguard under which books of account have been distinguished from other private records as capable of containing substantive evidence o which reliance may be placed.
In paragraph 31 ofthejudgment in Central Bureau of Investigation (Surpa) the Court says - in our considered opinion to ascertain whether a book of account has been regularly kept, the nature of occupation is an eminent factor for weighment. The test of regularity of keeping accounts by a shopkeeper who has daily transactions cannot be the same as that ofa broker in real estates. It is not necessary that entry must necessarily be made in the book of account at or about the time the related transaction took place so as to enable the book to pass the test of �regularly kept�. After consideration of various authorities the Court has reached to the conclusion that even correct and authentic entries in the books of accwnt cariiot, without independent evidence of their trustworthiness, fix a liability upon a person. The entries in the books of account regularly kept in course of business are relevant, but such statement alone will not be sufficient to charge any person with liability The parties shall not be entitled to a decree only on the basis that the entries made in the books of account, even though it has been maintained in regular course ofbusiness. it has to be proved by some i ndependent evidence that the entries represent real and honest transactions and it has been in accordance with those facts.
28. From the principles laid down in the aforementioned authorities, we can safely say that the books of account are required to be duly proved and the duly proved books of account alone are not sufficient to charge the appellant with liability, unless the entries made in the books of account are proved and there is sufficient corroboratory evidence in support of the books of account. Where the transactions in dispute are numerous it is not necessary to prove each and every items in the books of account and it is sufficient to prove the accounts.
29. We shall now refer to the decision of the Commissioner to find out whether the aforesaid principles of law has been kept in mind by the Commissioner while relying on the books of account and other materials for awarding the compensation to the Company.
30. In regard to the account books the Company has made allegations in the claim petition that the Company maintained its books of account on day-to-day basis and these books of account had been audited and returns were also filed after audit for the pur pose of the assessment of tax. The expendi ture shown in the books of account reflect the actual expenditure incurred towards the project. The details of expenditure under each head has been tabulated in Annexure- CA/1 appended to the claim statement and the state ment of expenditure incurred had been au dited in the relevant financial year, based on which tax returns had been filed by the claim ant company. The Books of account and the balance sheet had been audited by a firm of Chartered Accountants, known as Messrs Vijay KumarAgarwal for the year 1993-94 and Messrs S.R.Batliboi and Co for subsequent years. The break up of the amount shown under each head of the four financial years was based on vouchers in support of the said expenditure. It is further alleged that most of the amounts were paid by account payee cheques. However, cash payments were also been made where it pertained to day-to-day expenditure and other smaller amount. Such cash payments were made where it was not possible to make payment by cheque. To prove that the books of account, marked as Ext. 6 series, which are forthe years 1993- 94, 1994-95, 1995-96 and 1996-97, were regularly kept in regular course of business and they correctly reflected the expenditure incurred over the project work by the Com pany, the claimant Company has examined CW-3 Shri S.M.Pathak, CW-4 Shri Vinode Kumar Mishra, CW-5 Shri Vijay Kumar Agarwalla, CW 7 Md Alamgir, CW-9 Mahavir Prasad Verma, CW- 11 Amar Chand Bakliwal and CW- 13 Shri Anil Kumar Sethi. The Commission has considered their evi dence in-depth and reached to the conclu sion that these witnesses have proved the account books and the entries made therein and the account books have been regularly kept in usual course ofbusiness and that, they correctly reflected the expenses incurred by the Company. We may point out that the Company has been formulated to carry out project works only and the expenses incurred by the company towards the project only has been reflected in the account books. The ac count books of the Company do not contain any other entries in relation to other work, business or undertaking of the company ex cept the projectnamely, Kathi Langpi (Lower Barapani) Hydro Electric Project.
31. We shall briefly consider the evidence of the witnesses examined by the Company to find out whether the Commission has com mitted any error of facts or in law in relying on the books of accounts for arriving at its finding. CW-3 Shri S.M.Pathak, who was the Deputy Manager (Accounts) of the Board, has said that that he was working inASEB since 1968. He went to Kolkata along with Shri B.N.Talukdar (CW 6) and Shri K.K.Deb (CW 2). He has categorically stated that Ext.6 to Ext.6 (18) were the books of accounts produced before them at the time of inspection in Kolkata. That, some of the books of accounts contained his signatures. He further stated that the vouchers dated 25.1.94, 24.7.94 and 25.7.94 contained his signatures. In cross examination he has stated that from the books of accounts produced before him he found that those were kept in regular course of business. There was no cross examination on this by the respondents.
CW 4 Shri Binod Kumar Mishra, is a Chartered Accountant and is in employment of the Company. He has stated that he had joined the claimant Company in May, 1994 and had worked in the company till May, 1997. He deposed that the claimant company maintained the books of accounts in regular course of business. From 1994 till March, 1997 he was maintaining the books of accounts of the Claimant Company. He further stated that there were three sets of books of accounts- one in Kolkata, one at Guwahati and the third one at the site. In the books of accounts maintained in Kolkata, entries of expenses incurred in Kolkata had been en tered. The expenses incurred at Guwahati were entered in the books of accounts main tained at Guwahati and similar was the pro cedure at the site. He further stated that at the end of financial year on 31st March, the books of accounts of Guwahati and site were being brought to Kolkata for merging and for preparation of balance sheets and for final ization of accounts. Entries were made in the books of accounts at site office daily except on National Holidays. Similarly, in Kolkata and Guwahati Offices entries were made daily except on holidays. The entries made at the site office, Guwahati office and Kolkata of fice were made through computer. He further stated that Ext.6 series had been prepared by him. He produced the books of accounts before the auditor, The green tick marks in the books of accounts had been given by the internal auditors and the black! red tick marks had been given by the statutory auditors. The tick marks were put up by the auditors after the verification of vouchers and other documents when they found the accounts to be in order. After the preparation of the books of accounts, balance sheets were prepared by him. He prepared the balance sheets for the years 1 993-94, 1994-95, 1995-96 and 1996-97. The printed copies of the balance sheets for those years have been marked at Ext. 7, 7(1), 7(2) and 7(3). The original bal ance sheets, marked as Ext. 11, 12 and 12(3) had been produced. This witness has stated that raid was conducted in the premises of the Subhash Marketings Limited on 15.11.95. The Block assessment order Ext.8 was made and the Income Tax Authorities did not de tect any irregularities in the accounts of the claimant and issued NTL demand assessment order. This witness further stated that the books of accounts maintained by the Company were based on the vouchers Exts. 4 and 5 series.
32. CW-5 Shri Vijoy Kumar Agarwalla, is a Chartered Accountant. He was engaged by the claimant Company as a statutory auditor for the years 1993-94. He stated that the Company had maintained the books of accounts properly and in accordance with the provisions of law and to that effect he has given a report and that he had put tick marks after verification ofrelevant documents. He had put his signature after being satisfied with the maintenance of books of accounts. He put red tick marks, the green tick marks in the books, were of the Internaj Auditors. According to him, the books of accounts were prepared with the help of computer. He audited the books of accounts maintained in Kolkata and Gwuahati. In cross-examination he stated that he did not check all the vouch ers, but the vouchers which were required to be examined had been checked by him. The vouchers, he had examined, bore his initials. He further stated that it was not possible to change any thing in the books of accounts. In case of some mistakes occurring in the books of accounts maintained on computer, the accountant has to pass a reverse entry to correct the mistake. Such reverse entry would be visible in these books of accounts also.
CW-7 Md Alamgir, is an employee of the firm known as Maheshwari and Associates. The firm was entrusted with the job of internal auuitmg of the books of accounts by the Claimant Company for the years 1993-94 ti111996-97. His duty was to check and ex amine the accounting system as per the generally acce accwnting principles. On their inspection they found that the Claimant Corn. pany kept the books of accouliting in the regular course of business in accordance with the accepted principles of accountancy. They did not find anything wrong in the accounts. Ext. 6 to Ext. 6(18) were the books of accounts they had examined. The witness identified the green tick marks made by him, which appear in the books of accounts as well his signa tures in the books of accounts. Each book of accounts bore his signatures and from that he could vouch that those were the books of accounts they had examined.
CW-8, Ujjwal Banerjee, was the Manager (Finance) in the claimant Company from the moth of October, 1995 and was there till March 1997. He is a qualified Chartered Accountant. He found that the claimant Com pany used to maintain the books of accounts in the regular course of business. From October, 1995 to March, 1997 he used to look after the maintenance of books of accounts of the claimant Company at the project site. He stated that Ext. 6(5) and 6(10) were the books of accounts maintained by him. As the books of accounts were computerized, signatures were not necessary.
33. CW-9, Mahavir Prasad Verma joined the claimant Company in April 1993 as Accountant. From April 1993 to April 1994, he maintained the books of accounts in Kolkata. He stated that he he imself prepared the cheques and got them signed. He has stated about the preparation of cheques and its de livery to the concerned parties. The sugges tion made in cross-examination that the cheques prepared for payment without pmper check and verification and that the books of acounts were vague, false and indefinite wei denied. It was suggested to him that certain pages were inserted in the books of accounts in place of original in the books of accounts, which was denied by this witness.
CW-I0,Amit Dasgupta, is aMasterDe gree holder in Commerce, besides being a Chartered Accountant. At the relevant time he was working in MIs S.R.Batliboi and Company as Audit Manager. His firm was engaged by the claimant Company as StatutoryAudi tors right from 1994-95 onwards and con tinued till to-day. He along with his team audited the books of accounts of the claimant Company Ext.6 series are the books of accounts which they had audited. Ext. 12(1) to ext. 12(3) were the audit reports. In Ext. 4 series he scrutinized the vouchers and put his signatures at places. He stated that the ac counts have been maintained with the help of computer and it is not possible to substitute any page of the books of accounts as it would not tally with the balance sheet. For prepar ing the audit report they visited three places, namely, the site, Gwuahati arid Kolkata offices of the claimant Company. In cross- examination this witness has stated that his team had conducted substantive test, corroborative test, sampling test and evidence check for ascertaining various risk factors. This witness has stated that the books of accounts of the claimant Company were kept in regular course of business and they found on test verification that the books of accounts have been kept in regular course of business in accordance with law.
34. CW- 11, Amar Chand Bakliwal, was the Manager (Accounts) in the claimant Company from April 1993. He used to look after the accounts of the Guwahati office of the claimant Company. During the period from April 1994 to September, 1995, he super vised the accounts of the site office also. He stated that the Company maintained books of accounts in regular course of business. This witness gave details of the amount spent at the site office, Guwahati office and Kolkata office. In 1993-94 the Kolkata office spent Rs.l,52,93,000; Guwahati office spent Rs.8,73,000/-; site office spent Rs.4,00,000/ - making a total of Rs. 1,65,67,000/-. In the year 1994-95 Kolkata office spent Rs. 10,56,67,000/- Guwahati office Rs.55,00,000/- and site office Rs.77,61,000/- making a total of Rs.11,89,28,000/-. During 1995-96 Kolkata office spent Rs.6,14,73,000/-; Guwahati of fice Rs.46,43,000/- and site officeRs. 84,84,000/- making a total of Rs.7,46,00,000/-. In the year 1996-97 Kolkata office spent Rs. 5,71,60,000/-; Guwahati of fice Rs. 8,70,000/- and the site office Rs.27,70,000/- making a total of Rs.6,08,20,000/-.
CW- 13, Anil Kumar Sethi, is the Chair man of the Claimant Company. He has stated that the books of accounts were electronically prepared and any entry once made in the computerized books of accounts cannot be amended or modified unless a reverse en try is made. He further stated that the accounting software used by them would not permit such manipulation in the books of accounts unless a reverse entry is made.
The witnesses examined by the respon dents, RW-9 Swapan Kumar Saha and RW-11 Bharat Chandra Thakur, were from the accounts department. RW-9 was the Chief Auditor and RW- 11 was a retired employee of the Board. These witnesses have not stated anything contrary or creating doubt in the au thenticity of the books of accounts.
35. The account books of the company consist of ponderous books, numerous papers, they are voluminous documents, accounts and thus requirement of proof of each and every entry made in the account books, would not be required to be proved by witnesses reading it aloud in the Court or before the Commission and then the Commission putting exhibit numbers on each and every entry made in book of accounts after perusing them by the Commission, to our mind, it is a sheer wastage of precious time of the Commission besides carrying great inconvenience to the Commission and all concerned. The convenience of trial demands and allows the Commission to allow the documents, in the nature mentioned hereinabove, to be proved by competent witness, who has pre pared the entire books and tating thereafter summarily the net result. The witness, who is conversant of maintaining books of account of the Company and who has prepared and! or examined the accounts before entering the witness box, if deposed the general result of the accounts, in our view, proves documents with the contents therein. The witnesses exammed by the Company wen subject to cross examination of the contents or entries con tained in the account books and the entries in the account books can also be examined by the Commission. The books of account and other papers were produced by the Com pany before the Commission and exhibited by the Commission on the basis of the evi dence of the witnesses, who are skilled and specially trained for the job, of maintaining and preparation of the account books. They have, in f maintained the account books of the Company. Other witnesses are qualified and skilled to examine the account books of the Company have proved the account books and various supporting documents. Strangely and surprisingly, these witnesses have not been cross examined on the veracity ofthe documents nor have any entries in the books of account been tested, by sub jecting it to cross examination. No objection was taken when the documents were exhib ited in evidence. It is not a case where the claimant merely produced the balance sheet and profit and loss account of the Company. The claimant Company produced witnesses, who have maintained accounts of the Corn. pany to prove the entries made therein. These entries are not challenged at any stage of the proceedings, for the claimant company to prove such challenged entry by reference to that entry alone. The accounts are produced to establish the facts, which are referred to the enquiry. The writers of these accounts were examined and were available for cross examination, but their statements proving the account books and other documents have not been subjected to challenge at any stage. The Company has taken care to produce original documents before the Commission, which are proved by the witnesses, who have executed them. The Opposite Party have examined and inspected the entire set of documents pro duced by the Claimant before the Commis sion. In fact, there was no manner of doubt carried by the State or the Board in regard to genuineness of the documents, which is obvi ous in the absence of cross examination of the witnesses examined before the Commission when they have entered the witness box to prove documents.
36. The Commission is aware of the fact that merely the account books regularly kept in the regular course of business and the entries made therein are not sufficient to charge a person with liability unless theit is sufficient corroborative evidence in support of its consistency. This is reflected in the report of the Commission, when the Commission has specifically mentioned that �These books of accounts only gave some evidentiary value, but that was not enough. It was required to be corroborated by other evidence�. The Commission found support to the entries in the books of accounts maintained by the Company from the original vouchers, which tallied with the payment of amount shown in the books of accounts. The Commission found from those vouchers that the pa had been made by the account payee cheques as well as in cash. In the vouchers regarding cash payment the signatures of the payees were invariably taken except in one voucher of Rs. 140/- where no token of receipt of the amount was taken. In case of the payments made through account payee cheques no signature of the payee has been obtained. The Commission records, that it itself has checked most ofthe vouchers with the books accounts and found them in order The Commission has also recorded that one Shri Narayan Das, who has been assigned the duty by the Board to assist the Commission has also reported that that vouchers tally with the books of accounts. Before the Commission more than 10000 vouchers along with supporting de tails i.e. measurement sheets, goods receipt notes etc. were proved in evidence as Ext. 4 and Ext.5 series. The Commission has also recorded that as the account payees cheques by which payments have been made, were issued without obtaining signatures of the pay ees on the vouchers the Commission asked the claimant Company to submit the bank statements regarding those vouchers supported by a duly sworn affidavit. From the Bank statement the Commission found that the account payee cheques issued to various parties had been encashed by them in due course of time. Ninety two percent( 92%) of the payments made by the Company were made by the account payee cheques. On this verification and the statement of witnesses with the vouchers and the entries in the books of accounts, the Commission has reached to the findings that the account payee cheques issued through those vouchers tally with the books of accounts. Apart from this, there is evidence of CW-4, CW-8, CW-9 and CW-11, who have stated that they had themselves made payments reflected in the books of accounts. The Commission, as well as this Court, have not found any specific cross-examination in the direction, that the payments made through vouchers or through account payee cheques do not tally with any entries made in the books of accounts maintained by the Company. Besides, the Commission has found that the Income Tax Department in the assessment order Ext. 8 did not find any dis crepancy in the account books maintained by the Company. The Statutory Auditors and Internal Auditors have also vouched for genuineness of the acccunts maintained in the regular course of business. They have checked the entries in the account books with vouch ers and have not made any adverse comment.
37. From the aforesaid, it is clear to us that the accounts have been regularly kept in the regular course of business and the entries therein are being proved by the witnesses, who have maintained the books of accounts. The strict rule of Evidence Act has no application before a Commission, yet we find that the accounts have been proved as required underthe law The Commission�s findings that the books of accounts maintained by the claimant Company can safely be said to be the books of accounts maintained in the regular course of the business and the entries made therein are proved, does not call for any in terference from this Court in exercise ofju risdiction under Article 226/227 of the Con stitution of India. In the aforesaid factual foun dation, we do not find that the findings recorded by the Commission that the entries made in the books of accounts are supported by corroborative evidence and the account books can be relied upon to prove the expenditure incurred on the project by the Company under different heads, is in any way not in accordance with law.
38. We shall now take into consideration the submission ofMr Goswami, learned counsel for the petitioners challenging the award of the Commissioner to be on admission of the status reports and the report Ext-3 prepared by the Inspection Team of the Board merely on the basis of the admission, as urged by him. Before we consider the submission made by the learned counsel we may note that the strict rule of evidence has no application to the proceedings of the Commission even though they may be judicial in character. Under the Act itself the Commission has been authorized to lay down its own procedure, under Sub-section 5 of Section 14 of the Act,96 in all matters arising out of and in discharge of its functions. The law requires that the Commission should observe rule of natural justice in conduct of the proceedings before it and if they do so their decision is not liable to be impeached on the gtound that the procedure followed was not in accordance, which is observed in the court of law. The rule of natural justice requires that the parties should be given opportunities to adduce all relevant documents on which they rely, that the evidence of the deponent should be taken in its presence and that the opposite party should be given opportunity of cross examining the witnesses examined by the party and that no material should be relied, unless an opportunity of explaining is afforded. If these rules are satisfied then the procedure adopted before the Commission cannot be subject to challenge. The proceedings before the Commission are not open to challenge on the ground that the procedure followed for taking evidence and admitting evidence was not strictly followed in conformity with the Indian Evidence Act. Although the basic rule of evi dence has application in the proceedings be fore the Commission but the strict rule of evidence for proof of the documents is not required to be followed.
39. When the argument is that the Commission has misdirected itself in the matter of law in its approach in deciding the question in issue, and while doing so, it has been impressed, persuaded and overshadowed by the view not supported by law, the appellate or the writ court should be cautious in its approach, and its endeavour should be to read the judgement of the Commission as a whole, and not in piece meal or to read some pas sages or paragraphs from hear and there, to form its opinion in regard to the approach of the Commission and then to hold that ultimate finding arrived at is not permissible. The writ court has to appreciate the judgement in its over all perspective before finding fault with the approach of the Commission, in the process of evaluating the facts on record. It is contended by the learned counsel forthe petitioner that the Commission�s approach on relying on the contents of the documents, namely, the status reports and the inspection report on the sole basis of they being admit ted by the petitioners herein, is contrary to the well established principles of law and, therefore, the ultimate result of the findings arrived at by the Commission are not correct either in law or on facts. The learned counsel for the appellant/petitioner submitted that the Commission has taken into account inadmissible evidence which the Commission could not have considered for assessment of the work carried out by the company, during the period, the project work was in the hands of the Company, and thereupon assessing the worth of the project work and ultimate order, for payment of compensation to the claimant Company. The argument proceeded on the premises that the grounds on which the satisfaction of the Commission is based should be legally admissible. The Commission could not have taken the admission of the documents Ext �3 and the various status reports at the admission of the fact contained therein and thereby the Commission has com nutted an error of law and facts. The learned counsel relied upon various authorities, but we need not burden ourjudgernent with number of authorities when the principle of law is well settled, and we mayrefer to some of them only.
40. In
An admission is not conclusive as to the truth of the matters stated therein. It is only a piece of evidence, the weight to be attached to which must depend on the circumstances under which it is made. It can be shown to be erroneous or untrue, so long as the person to whom it was made has not acted upon it to his detriment, when it might become conclusive by way of estoppel.
The court further stated that �
It is no doubt true that what a party himself admits to be true may reasonably be presumed to be so. But before this rule can be invoked, it must be shown that there is a clear and unambiguous statement by the opponent, such as will be conclusive unless explained. A statement by a party that certain proceedings were fraudulent and not collusive in character would not, be sufficient, without more, to sustain a finding that the proceedings were collusive.
41. In
42. in
43. From the aforesaid decisions it is apparent that admission of the fact cannot be relied upon solely for the purpose of granting the claim made, unless the court is satisfied that the statements therein are unambiguous, clear and conclusive proof of facts contained therein.
44. Three members team of the Board was sent to Kolkata for inspection of the records of the Company as the records were voluminous. The team inspected the records of the Company at Kolkata as per permission granted by the Commission on an application moved by the Board! State and submitted its report which was produced in evidence and marked as Ext-3 dated 5-6-2001. The team has inspected the vouchers, measurement sheets, stock register, goods receipt notes, audited oalance sheets, status report, rough erection register, bills submitted by various contractors and suppliers of work orders, books of statement. These documents are marked as Ext-4 to Ext 4(121) and Ext-5 to Ext-5(389) Ext-4 series consists of 122 volumes and Ext-5 series consists of 390 volumes. The vouchers were available in various volumes in Ext-4 and 5 series. The Com mission found it difficult to find out each voucher, bills of contractors, measurement sheets and goods receipts and other docu ments supporting the claim made by the claim ant under different heads as they were scattered over different files and therefore, the Commission directed the company to separate them �claim headwise� and prepare the photo copies of them and kept them in separate files �clam headwise�. The file so prepared were 118 in number. The appellant petitioners herein accepted them without any objection. The Commission took care to check them and compare them by the Secretary to the Commission Shri NC Das, Manager (Accounts) who found them in order. (The fact is recorded by the Commission in its order). The report Ext-3 dated 5-6-2001 has been prepared by the inspection team of the Board for placing it before the Board. The inspection note Ext-3 of the team, constituted for examining the vouchers/documents of the claimant, in the case pending before the Com mission, has noted that during their inspec tion the claimant company has produced un der mentioned documents before them, which were inspected, verified and checked with reference to the claim of the Company:
1, Cash book
2. Journal book
3. Bank book
4. Ledger book
5. Work order/Supply order/Purchase order
6. Offer letter from different parties
7. Measurement book/sheets
8. Log book/sheets � photo copies
9. Bills
10. Payment vouchers (cheque)
11. Cash vouchers
12. Journal vouchers
13. Material issue vouchers (MW)
14. Goods return notes (GRN)
15. Stock register
16. Consumption statement of steel
17. Consumption statement of cement
18. Purchase bill register
19. Material reconciliation statement
20. List of employees working during 01-04-1993 to 30-11-1996
The inspection team�s note says that as the vouchers/documents for the period are quite voluminous it was found extremely difficult to inspect/verify all the documents/vouchers during the period of inspection. However, the voucher, contract documents and measurement b ooks relating to work! purchase involving heavy expenditure were inspected thoroughly and observations were accordingly made. The other vouchers were verified at r andom. All the vouchers/ documents which were taken out on a sample! random basis were compared with the list of expenditure given by the claimants before the Commission and with their books of accounts. The vouchers were also cross-checked with the corresponding entries in Bank books of the claimants, the bills ofvarious agencies and entries in bank statements. In case of any doubts, clarifications were sought from the representatives ofthe claimants.
45. To prove the report Ext-3, the claimant has examined before the Commission the members of the inspection team sent by the Board for inspection of the records of the claimant company at Calcutta and who have prepared the Ext-3. CW 2 Kajal Kanti Dev is an Executive Engineer (Civil) of the Board and has stated in his deposition that he was deputed to make inspection of the documents at Calcutta. The purpose for inspection was to ascettain the genuineness ofthe documents. Small amounts are paid in cash and the big amounts by the account payee cheques. He has verified some of them and found them to be correct. The inspectiont tearn did not find any anomaly in genuineness of the documents except few where they have made observations in the report Ext-3. CW 6 Bhabendra Nath Talukdar, Superintending Engineer (Electrical) in the office of the Chief Engineer, ASEB deposed that he went to Calcutta along with two other officers for inspection of the documents and he was senior most. They were sent to Calcutta for inspection of the documents relating to the claim made by the claim ant company. That they were shown all the records which they desired to see. Ext-3 is the inspection report and the report bears his signature. At no point of time the claimant company showed any reluctance to show any document. CW 13 Anil Kumar Sethi, Chairman of the claimant company has proved the status reports ext-21 (205) to Ext-21(213) submitted by the claimant company to the Board and had been asked question in regard to the inspection report only relating to the signature contained in the inspection report.
46. The report prepared by the team has been relied upon by the Commission for the purpose of holding that the documents pro duced by the claimant company to corrobo rate the entries in account are genuine documents. There is no ambiguity in the statement made in the report Ext- R3. It is a report prepared by the inspection team constituted by the Board for the purposes of inspection of the claimant company�s documents at Calcutta and the basic aim of the inspection team was to find out whether the documents of the company are genuine or not. The inspection team accepted the genuineness of the documents. This is an admission made by the inspecting team of the Board and in our view the Commission has not committed any error or irregularity, legal or factual, when it relied upon the report Ext-3 for the purposes of holding that the documents inspected by the inspecting team, formed by the Board, are genuine documents. The admission of the genuineness of the documents of the Company in the inspection note Ext-3 has been further proved by the members of the inspect ing team, who were examined as witnesses. They had entered the witness box but were not cross examined on the point of genuine ness of the documents, maintained by the claimant company nor they were put any question challengingthe findings arrived at by them as the result of the inspection of the documents of the company. The Commission has rightly relied upon the admission made in the report prepared by the inspecting team of the Board.
47. During the progress of the work, as required under the Deed of Assignment and the Memo of Understanding, Clause 14 of which reads � �the Ad hoc Board/ Committee shall ensure that the company kees ASEB intonmed from time to time ofthe affairs of the company and its projects and the progress made in the implementation of the said project and the working of the company in such forms as may be prescribedby the ASEB�, 9 (nine) progress reports were sent by the Company to the Board. They are dated 12-1-95, 1-2- 95, 1-5-95, 3-5-95, 14-8-95, 30-9-95, 31-12-95, 31-3-96 and 31-10-96. Uptill the date 31-12-95 the work done by the company on the project and the cost incurred thereto was show to Rs. 16,75,60,000/- (Rupees sixteen crores severity five lacks sixty thousand). The status reports upto 31-12-95 havebeen ad mitted by the petitioners when the notice to admit documents have been served on them by the Company. In the progress report dated 31-3-96 the work carried out by the company in the project and the cost incurred till that date was indicated to be Rs.2040.30/- lacks (Rupees two thousand forty and point thirty lacks). In the progress report dated 31- 10-96 the work done till that time in the project and the amount spent for the work done was shown to be Rs.2525.20/- lacks (Rupees two thousand five hundred twenty five and point twenty lacks). These two re ports have not been admitted by the petition ers Board and the State in reply to the notice to admit documents in reply to notice to admit documents. In respect of these two documents it is said �receipt admitted, contents denied�. From the notice to admit document it is apparent that the status reports uptill 31- 12-95 have been admitted whereas for the two reports the petitioners have admitted receipt of the reports but specifically denied the contents therein.
48. It was submitted before the Commission by the claimant company that as per the admitted status reports the claim in regard to the work carried out by the company till 31- 12-96 to the tune of Rs. 16,75,60,000/- (Rupees sixteen crores seventy five lacks sixty thousand) is admitted by the Board and the State. As the documents have been admitted without denial of the contents therein, as has been done for the status reports dated 31-3- 96 and 31-10-96, it should be taken as proof of the work carried out by the company till that date and the amount spent thereon as an admitted claim, because admission of documents without specific denial is a substantive evidence, to prove the claim made by the claimant company, particularly so when those status reports with its contents have been admitted. As none of the figures referred therein by the claimants being disputed or commented upon by the petitioners, Board and the State, they must be taken to be correct. It was also contended before the Corn mission that the observations made in the in spection report Ext-3 were admissions, which ought to carry the greatest possible weight, and these have formed a substantive evidence for proof of the fact of the expenses incurred by the company.
49. The Commission has noted in its order that the respondents/appellants (petitioners heiein) in their written argument very fairly did not dispute admission of the inspection report. The Commission stated that it is well settled that the documents admitted in notice to admit as well as documents such as, in spection reports can be accepted without asking for any proof. However, on scrutiny I find that those documents had also been exhibited and not challenged in the cross examination by the respondents. Therefore, for the foregoing discussion it can be stated that the claimant company maintained Ext series � the Books ofAccounts in regular course of business and those Books of Accounts tally with the various vouchers in Ext-4 and 5. Therefore, a conclusion can be arrived at on the basis of the foregoing discussions that the Books of Accounts can be accepted safely and the documents mentioned in the above paras had been admitted. In these circumstances, the Books ofAccounts and the documents filed including the status report and in spection report and also other documents which were specifically admitted by the respondents can be safely accepted. The Commission has also noted the argument advanced by the claimant�s counsel wherein the counsel submitted that even though the respon dents have admitted the documents the claimant company did not rely solely on the admission. Although at first sight, an impression is created that the documents Ext-3 and the status reports have been taken into consider ation by the Comissionssion as admission by the petitioners and part of the award is based on admission, but on overall reading of the award it is clear that the Commission based its awaitl not only on the basis of admissions but on the basis of various documents independently in Ext-4 and 5 series and admission for adjudicating the claim of the claimant has not been made sole basis, it has been taken as a corroborative piece of evidence.
50. Under the Act of 1996, the Commission is entitled to lay down its own procedure. Accordingly the Commission has taken immaculate care in giving opportunity to the parties to lead their evidence, to crossexamine the witnesses and to submit documents. The materials placed by the claimant before the Commission in the form of documentary evidence have not been put to test by cross-examination of the witnesses. The documents have come from proper custody and source. Those have not been subjected to cross-examination. Facts contained in status reports and the report submitted by the Inspecting Team have been independently proved by the witnesses, on the basis o f numerous documents, on examination of which the Inspection Team prepared its report. Those documents, on which the Inspection Team has relied upon for preparation of its report, has also been proved before the Commission by the witnesses. Those documents were also not subjected to cross examination when the witnesses tendered those documents. From the inspection report prepared by the Inspecting Team, sent by the Board, it is apparent that the genuineness and authenticity of the documents are beyond any doubt. When the notice to admit documents has been served on the petitioners, in reply to the notice to admit documents, some documents are admitted whereas in regard to other documents it is said �receipt admitted, contents denied�. When cliiferent terminology is used, viz, �admitted� for one set of documents and �receipt admitted, contents denied� for the other set of documents, it is apparent that the intention of the admission for first set of documents (status reports) is not only to admit receipt ofthe documents but to admit the contents thereof, and also in second set of documents where the respondents did not want to admit the contents, they have only admitted the receipt and denied the contents. The different phraseology used while replying the notice to admit documents clearly difl�rentiate the intent of the party differently. The status report was prepared and served on the electricity board under the MoU when the project work was in progress and was handled by the claimant. On the date the status reports were sent to the Board, the project belongs to the Company and there was nothing in the air that the project would be taken over by the State from the company, for the company to put before the Board inflated facts and figures of the work carried out in the project and the expenses incurred thereon, to get futurebenefit on a future date. The status reports were sent when the project belongs to the claimant company and was to be completed by the claimant company. Even at the stage when the dispute arose between the parties and the matter was under consideration before the Commission for ascertaining the compensation payable by the State to the claimant company for the project work carried out by the company, with open eye the status reports have been admitted. On the aforesaid circumstances we do not find any fault in approachofihe Commission forrel on the documents Ext-3 report of the Inspection Team and the status reports as a corroborative piece of evidence for proof of the entries in the books of accounts of the company. The approach made by the Commission in placing reliance on the inspection report and the status reports is perfectly in accordance with law.
51. Other facet of the award of the Commission, which makes it untenable in law, according to the learned counsel for the petitioners, is non-application of mind by the Commission to the obvious factors emerged from bare reading of the claim petition and the status reports and Detailed Project RePorts (DPR). Submission ofMr Goswami is that the claims made under different heads does not commensurate with the DPR reports prepared at the time of handing over the project to the claimant company or with the project report prepared by the claimant company during the progress of work on the project. The learned counsel has placed be fore us the different head of the claim petition which, according to him, does not tally with the DPR and the status reports and on that basis urged, that the Commission has com mitted a grave error, in its approach, in not direc its enquiry to these discrepancies and as the result of non-application of mind to these facts by the Commission the Commission has committed a factual mistake which is apparent on the face of the record which can be corrected by this court in exercise of its writ jurisdiction. The petitioners referred to the difference of amount claimed in the claim petition and as reflected in the status report and the DPR which are in regard to Road Communications, Temporazy Buildings, Plan tation, Diversion Tunnel, Coffer Dam and Hatidubi Dam, Butterfly Valve, Low Pressure Tunnel, 2x50 MW Turbo Generators, Security Services. The learned counsel has also challenged certain expenses incurred under different heads and the amounts of compen sation claimed by the company for them and contended that no reasonable and prudent person could justify the claim for those amounts, as has been claimed to have been spent by the company during the period the project was taken charge ofby the company till it was returned back on the date of vesting of the company in the State.
52. In answer to the submissions made by the learned counsel for the petitioner, Mr Markanda, learned counsel for the company submitted that while adducing argument on the basis of difference between the DPR and status reports and claims made under differ ent heads the learned counsel for the peti tioner has missed very important aspects, namely-
1) The data given reflects the expenditure incurred upto a month before the date on which the report was given, e.g. the Status Report of October 1996 would reflect the works done upft September 1996 as it took nearly 20-30 days to compile a report. Thus. Status Reports did not reflect (a) the works done in the month in which the report was given, (b) the pending bills of the contractors for works done or (b) the work carried out subsequent to the date of the report.
2) The status report Ext-21(213) shown an amount of Rs.142,50 lacs under the head �Purchase of Materials�, where the amount claimed before the Commission was only Rs,57.32 lacs for the unused materials left at site. While booking expenses, the materials purcha were all shown under the head �Purchase of Materials�. Later, on reconciliation of Material Issue Vouchers and consumption statements, the purchases were booked under various heads of construction and that is a major reason for the difference o f a mounts s hown under various heads which was due to non-incorporation of amount of �Purchase of Materials�.
3) Some heads of expenditure were clubbed or merged with other heads to make the data available on one page (e.g. diversion tunnel, coffer dam and Hatidubi dam were clubbed under one head �Dam and Intake Works�; afforestatioii and plantation were booked under the head �Afforestation and others�; works on adit tunnels, penstock tunnels, low pressure tunnels, butterfly valves were clubbed under the head �Penstock tunnel and butterfly valve�).
4) At the end of each financial year the total claim remained constant. This was so because the conipany, which is a public limited company, used to strike balances and prepare balance sheets etc, which were in turn submitted to number of statutory authorities such as Registrar of Companies. Income Tax etc. These balance sheets were also submitted to the share-holders and directors of the company.
It was also urged that so called discrepancies and the difference in the amount claimed under the different heads in the claim petition and the status reports and the DPR could have been best appreciated by the Commission had this question been raised before the Commission and particularly to the witnesses who are connected with the work and preparation of the accounts, when they were in the witness box. At the stage when the matter is pending before the writ court the court cannot be asked to undertake the detailed and in-depth scrutiny ofthe materials placed on record to arrive at a particular conclusion and thereafterto draw an inference thereon. The question has not been agitated at the stage it should have been raised. Now the Court cannot be asked under its writ jurisdiction to draw an inference that the Commission has not approached properly in conduct of the enquiry.
53. The learned counsel for the respondent placed before us the various other reasons, apart from the reasons mentioned here inabove, for difference in amount claimed under the different heads and the amount reflected in the DPR or in the status report. We do not propose to go in details in the said question for the purposes of finding out whether the Commission has proceeded with its enquiry in a proper manner because we are of the opinion that for finding out the mis take in approach ofthe Commission we will be required to go into details of each and every item where the difference is claimed and also in to the reasons put forth before us by the respondents for as certaining the difference in the status reports, DPR and the claim made, and to find out whether the reasons put forth by the respondent are correct or not. In our view it is not the scope of enquiry in the writ petition nor this can be said to be an error apparent on the face of the record of the case. The enquiry on the topic should have been before the Commission and not for the first time before the writ court.
54. The submission of the learned counsel for the petitioner is based on difference in claimed amount under different heads in the claim petition and the DPR and the status reports. Ambiguity or difference alleged could be best brought about by cross-examination of the persons who has made the claim or the witnesses who have been examined by the claimant company. The best person can be the persons who were in the midst of the project and who were handling and execut ing the project and also the persons who have prepared the account books ofthe company. They could have been confronted with the fact of difference between the amount claimed and the status report and the DPR. Those per sons could have been in a position to reveal true state of affairs, as to whether, there is a real difference in the amount claimed and the amount reflected in the DPR and the status reports or there is re-adjustment, under dif ferent heads, of the amount shown in the sta tus reports or the DPR bybringing them un der one head, while making the claims under different heads. The claimant has examined witnesses who have proved the expenses in curred by the company on the project. Strangely none of the witnesses have been cross-examined either by the State or by the Board on this aspect. No witness has been put the question as to why there is discrepancy, if any, in the amount claimed in the petition under particular head and the amount reflected in the DPR anchor status report. Not only that, no witness examined by the State has deposed that the amount claimed under the different heads would not fall within the DPR or the status report. The best person to explain and prove the expenses were in the witness box who could have explained, in formed and clarified the alleged discrepan cies. They were answer able to all the ques tions directed on this aspect and could have satisfied the query and the questions raised before us for challenge, of correctness and the authenticityofthe claims made in the claim petition. These witnesses were neither put such questions nor any answer was sought from them to the questionable expenses. The Commission�s approach has been challenged on its failure to address itself on the discrep ancy or the difference between the claim made under the different heads, on the basis that the status reports and the DPR does not include them. The fact remains, that the amount claimed, under the different heads in the claim petition would not represent the amounts in the DPR and/or the status reports having not been challenged by the State before the Commission, the Commission was not called upon to address itself on this issue. This court is also not called upon to go into these questions by holding deeper scrutiny of the facts. On the submission of the learned counsel for the petitioner and the counter to it by Shri Markanda, learned counsel for the respondent company one thing is clear to us, that is, we cannot decide these issues on the basis of error of facts or law apparent on the face on record. Even to determine, prima facie, who is right in his submission, we will be required to undertake an exercise of consideration of the voluminous documents produced by the parties, which according to us are neither permissible nor desirable in exercise of our jurisdiction under Art 226 and 227 of the Constitution of India. Even assuming we hold that the claim made in the claim petition does not tally with the status report or the DPR that will not negative the claim because the claim heads have been differently arranged, so long the claimant proves the fact of the work carried out in the project and the expenses incurred thereon. We do not find any error in the approach of the Commission while deciding the matter.
55. Further it is submitted by the learned counsel for the petitioners, that the approach adopted by the Commission, while awarding the compensation for the work carried out by the Company, is not based on proper footing, the Commission could have ascertained the work done by the Cor. on the basis of the inventories. Countering the argument, the learned counsel for the respondent Mr Markanda has submitted that on the basis of the inventories prepared at the time of hand ing and taking over of the project, it could not have been possible for the Commission or any Expert to find out the work carried out by the Company when the project work was in the hands of the Company. He has placed before us the inventories of the majpr works carried out on the project Dam Site, Diversion tunnel, Massioning Coffer dam, as an example, to show the improbability and impossibility of arriving at the extent of find ing of the work carried out by the Company on the basis of those inventories. The Inventories prepared when the project was handed over is reproduced hereunder:
| Originally of ASEB | Originally of BHPCL | Status /Remarks |
| MASONINGCOFFERDAM: | During BHPCL�s period 5100 bags of grouting was done (to be ascertained by relevant documents later) | During ASEB period the status was as follows: Coffer dam is completed excepting a small Portion of right alignment key. Coffer dam is repairable some places. Grouting will also be required. The coffer dam was handed over to BHPCL by ASEB basing upon the facts, figures and information furnished by ASEB Officials. Present status is as follows: Diversion tunnel is to be cleared with necessary repair and coffer dam is to be re strengthened. The leakage through the coffer dam was controlled after grouting was done by M/S BHPCL |
From the aforesaid inventories prepared, it is apparent that on 9.4.99 all the details of the works done at the site were not ascertained. In the diversion tunnel physical verification could not be done due to flowing of water. At the Masoning Coffer Dam, the diversion tunnels are to be cleared with necessary repairs and coffer dam is to be re strengthened. The leakage through the coffer dam was however controlled after grouting was done by the Company.
56. It is submitted by the learned counsel for the Claimant Company that even on the basis of the inventories prepared at the time of handing over to the claimant company the project with its assets, the inventories were prepared on 20.1.94 but they too would not disclose the true state of assets handed over to the claimant company, so as to make the assessment of the work carried out on the basis of the inventories prepared at the time of handing over of the project. He has placed before us an example of the inventories prepared on 20.1.94 of the roads, which is reproduced below.
|
SL No |
Inventory sheet No. |
Taking over sheet No. |
Description |
Status at the time of taking over from ASEB in 1994 |
|
1 |
206 |
120 |
10 Km. Pt To Aduit-I Hard Cast Metallic Road. |
Road was completely damaged due to landslide. There were many pot holes. Road was partly covered with jungles on both sides. Drain was partly damaged and also filled with grass and mud. |
|
2 |
212 |
132 |
Lankman wooden bridge |
Bridge was partly damaged. |
|
3 |
205 |
142 |
10 Km Pt To audit-I Hard Cast Metallic Road |
Drain was provided but was filled with jungles. Last 60 m. road was damaged filled up with pot holes. |
|
4 |
180 |
146 |
Approach Road to Anchor Saddle |
780.0 m 100% damaged 170 m length 50% damaged |
|
5 |
197 |
154 |
Main road to Lengery Colony towards Type-I and II buildings. |
4.2 in width road at Ch.720 was filled with grass and mud. |
|
6 |
197 |
155 |
At Ch.1128.00 (stop) road upto type-1 colony. |
Road was filled with grass an mud. |
|
7 |
198 |
155 |
By pass road (at Ch 522) to left side metallic type |
After 240 m road was damaged by local people to transfer water form the pond for fishing. Some parts of the road was filled with mud. No drain was provided. |
|
8 |
198 |
156 |
Erector�s Hostel road starts from Ch.73 in the main road. |
Road was filled with grass and mud. |
|
9 |
198 |
157 |
Type V Colony road. Hard Cast Metallic Road. |
Road and drain were full of grass and mud. |
|
10 |
199 |
158 |
Main road of Lengery Colony. By pass road between main colony road and by pass road at Ch.522. Type of road Hard Cast Metallic Type. |
Road was not provided with side drain. |
|
11 |
199 |
159 |
By pass road between main road and by pass road start from Ch.522m. Type of road: Hard Cast Metallic. |
No side drain was provided. |
|
12 |
200 |
161 |
Lengery Colony Office premises. By pass road from main road(Ch. 720m) Type of road: Katcha road. |
No side drain was provided Road was built by filling mud in the paddy filed, So on one side toe wall is required. Covered with grass. End of the road was filed with bounder. |
|
13 |
200 |
161 |
By pass road from main road Ch. 690 m. Type of Katch road: 255m |
Out of 255m 75m was covered with thick jungle. |
The remarks reflect the status of roads of the project at the time of taking over of the project from the Electricity Board in the year 1994. It is stated that the road was completely damaged due to landslide. There were many pot holes. Road was partly covered with jungles on both sides. Drain was partly damaged and also filled with grass and mud. From the aforesaid inventories, it cannot be made out as to exactly what was the condition of the roads and what was the work which was required to be carried out and to what extent the work was required to be carried out on the roads. The exact condition of the roads cannot b e ascertained from the inventories prepared on 20.1.94. It would not have been possible for the Commission to appoint Expert to prepare complete inventories, when the project was handed over to the State, to find out the state of affairs, on the date the project was handed over on 30.11.96. The Commission held its first sitting on 10.12.2000 by that time nearly 4 years have elapsed. The Commission in its report has mentioned that the Commission has visited the site on 1.6.2002 for local inspection along with officers of the Claimant Company and Respondent No. 2 with their Counsel, where the Commission held its inspection at two locations. The Commission found that after taking over the project on 30.11.96, no work worth mentioning had been carried out till the local inspection. The Commission has inspected the Cement Godown, where the cement was stored in a most dilapidated condition. These godowns cannot keep the cement stock in good condition and there was no weather proof and some of the glass panels were seen broken and the gap between the wall and roof was found uncovered and wind can very easi ly pass through. This may lead to complete damage of cement even if it was in good condition. Besides this, the Commission saw heaps of iron and steel materials kept in open places, exposed to weather. Weather has already caused damage and deterioration and this can be determined even on visual inspection. The Commission also noticed wild grass and shrubs creeping out through these iron and steel materials. According to the Commission this itself was sufficient to indicate that these iron and steel materials were lying abandoned and rusted for a longtime. The commission also saw that in Jagiroad Godown huge steel gate structures were lying in the open yard exposed to the atmosphere and the state of affairs were similar there too and it was a pitiable condition. The remarks of the Commission in its local inspection clearly indicate that the project after taking over has not been properly maintained and there was lackof supervision/maintenance in keeping the articles properly. In these circumstances, it would have been impossible for the Commission to adjudicate upon the nature of work carried out by the claimant Company, when the proj ect was in their hands by the help of Expert. The condition and quality as was existed on 30.11.96, the appointed day, could not have been ascertained by the Commission when it held its first sitting on 10.12.2000 or on the subsequent date. It is clear to us that it was not possible for the Commission to assess the work carried out by the Company on the basis of the inventories prepared at the time of handing and taking over of the project. From the aforesaid materials, one cannot say that the Commission has committed any error in adopting the method of finding out the work of the company carried out on the project on the basis of the expenditure incurred.
57. From the provisions of the Act, particularly Section 8, the gross amount payable to the company would be the aggregate value of amounts specified in Clause (a) (b) (c) (d), (e) (f) and (g) of the said section. When the aggregate value is to be taken from the amount specified in Clause (a) to (g) of Section 8, the items falling under different heads would be different, as aggregate value of the assets would be sub total of combined assets. Under Clause (b) (c) (d) (e) and (f) it is the book value of the items mentioned therein has to be found by the Commission. Under Clause (g), the Commission has to find out the amount actually paid by the Company in respect of any contract referred to in Clause (iii) of Sub-section (1) of Section 4, whereas, under Clause (a) if the company executed any work in the project after the date the company took over till vesting, the value of such assets to be determined by the Commission, less the depreciation calculated in accordance with the Schedule of the Act. Quantification of the value of the assets does not necessarily mean that the quantification is to be done by actual measurement of the work executed. Quantification means determination of value of the assets. The quantification can also be done on the basis of the expenditure incurred in execution of the works in the project and on the basis of project reports, measurement books and other documents, from the date the Company has taken over the proj ect till it is vested on the State Government. The expenses incurred for execution of the work carried out in the project and permissible under the Act, would indicate the value of such assets and the Commission''s adoption of the method to ascertain the value of the assets on the basis of various documents could not be said to be outside the purview of the power of the Commission.
58. We shall now take up the specific heads under which compensation has been awarded by the Commission and is challenged by the petitioners before us on the ground of competency of the Commission to award the compensation under the provisions o f the Act The claimant company claimed Rs. 80,98,000/- as interest paid during construction on borrowed capital. The Commission has awarded interest of Rs. 69,00,000/- to the claimant company on the borrowed capital by the company. It is submitted by the learned Counsel for the petitioner that the award of compensation of interest on the capital borrowed does not fall within thejurisdiction of the Commission under the Act 1996. On the other hand the submission of the respondent''s counsel Shri SS Ray, is that interest on the borrowed capital is added to the cost of the assets, which have been taken over by the State by virtue of the enactment of the Act 1996, and thus it will form part of the book value of the asset. It is the case of the claimant company that during the construction work of the project the claimant was required to borrow huge amount to meet the construction cost of the project and they have paid interest o f Rs.69,00,000/- over the amount borrowed which was utilised in creation of the different assets of the project that was handed over to the company. As per the respondents the payment of interest, is added to the cost of the fixed assets, created out of the borrowed amount, and as such, borrowed amount with interest is the book value of the assets, and therefore, while calculating book value of the assets the interest paid should be treated as part of the fixed assets. Strong reliance is placed on the decision of the Apex Court in the matter of
59. The question arose in that case was, whether the interest payment represent an element of the actual cost of the machinery, plant, etc, to the assessee and as such depreciation and development rebate are admissible with reference to the amount also ? The assessee company had borrowed considerable amounts of money from the Industrial Finance Corporation of India for installation of machinery and plant and for the period prior to commencement of its business the assessee paid the interest thereon. The case of the assessee was that the payment of interest added to the cost of the machinery and plant of the assessee and as such while calculating depreciation admissible to the assessee, the interest paid should be treated as part of the cost of the machinery and plant to the assessee. The court has considered, what should be the ''written down value'' of the assets and said that ''written down value'' in its turn depends upon the actual cost of the assets to the assessee. The expression ''actual cost'' has not been defined in the Act and the question is whether the interest paid before the commencement of production on amounts borrowed for the acquisition and installation of plant and machinery can be considered to be part of the actual cost of the assets to the assessee. After reference to various books on the topic the court held that ''actual cost'' should be construed in the sense which no commercial man would misunderstand and, therefore, it is necessary to ascertain the connotation of the expression in accordance with the normal rules of accountancy prevailing in the commerce and industry and said-
It would appear from the above that the accepted accountancy rule for determining the cost of fixed assets is to include all expenditure necessary to bring such assets into existence and to put them in working condition. In case money is borrowed by a newly started company which is in t he p rocess o f c onstructing a nd erecting its plant, the interest incurred before the commencement of production on such borrowed money can be capitalized and added to the cost of the fixed assets which have been created as a result of such expenditure. The above rule of accountancy should, in our view, be adopted for determining the actual cost of the assets in the absence of any statutory definition or other indication to the contrary.
We have already referred to Section 208 of the Companies Act which makes provision for payment of interest on share capital in certain contingencies. Clause (b) of Sub-section (1) of that section provides that in case interest is paid on share capital issued for the purpose of raising money to defray the expenses of constructing any work or building or the provision of any plant in contingencies mentioned in that section, the sum so paid by way of interest may be charged to capital as part of the cost of construction of the work or building or the provision of the plant. The above provision thus gives statutory recognition to the principle of capitalizing the interest in case the interest is paid on money raised to defray expenses of the construction of any work or building or the provision of any plant in contingencies mentioned in that section even though such money constitutes share capital. The same principle, in our opinion, should hold good if interest is paid on money not raised by way of share capital but taken on loan for the purpose of defraying the expenses of the construction of any work or building or the provision of any plant. The reason indeed would be stronger in case such interest is paid on money taken on loan for meeting the above expenses.
60. From the above it is apparent to us that the interest on borrowing can be capitalized and added to the fixed assets which have been accrued as a result of such expenditure and the book value of that asset would be the actual expenditure incurred plus interest paid on the borrowed amount which has been utilised for the purpose of creation of the asset. The above rule of accountancy should be adopted for determining the actual cost of the assets in the absence of any statutory definition or other indications to the contrary.
On the aforesaid proposition of law laid down by the Apex Court, there would not have been any difficulty to hold that the interest paid by the company on the borrowed capital would be the book value of the asset created by the company on application of the borrowed capital on the project, which has been taken over by the State as a result of the promulgation of the Act, 1996, but for the explanation to Section 8 of the Act is a provision whichindicates intention of the Legislature to the contrary. The explanation to Sec 8 makes it crystal clear that interest on the borrowed capital would not constitute the book value of the assets, argued the learned Counsel for the petitioner. The explanation to Section 8 says that the book value of the assets mean the original cost and shall comprise of- (i) the purchase price by the company for the assets including the cost of delivery and all charges properly incurred in erection and bringing the asset into beneficial use as shown in the books of company; and (ii) the cost of supervision actually incurred during the period from April, 94 till the appointed day, but not exceeding the ceiling as determined by the Commission constituted for the purpose. Therefore, by virtue of the explanation, book value of the work carried out on the project by the claimant company would be the original cost of asset which shall comprise of price of the items utilised by the company for creation of the assets which shall be added with the cost of delivery of those items and the charges property incurred for erection and bringing that asset into beneficial use which has been reflected in the Books of Accounts. It will also include the cost of supervision actually incurred subject to the ceiling limits fixed by the Commission for the period April 94 till the appointed date. The explanation says that the book value of the assets means the original cost and should comprise of the items (i) and (ii) of the expla-nation. The explanation does not exclude original cost of the asset but includes the original cost of asset, the purchase price of the asset, the cost of delivery and charges incurred for creation of assets and bringing it to beneficial use, and the cost of supervision. The book value of the work in project, during the period the project was taken over in April, 94 till the appointed date, will include the original cost. The original cost would be the cost incurred by the company for creation of the assets by utilization of the borrowed amount plus the interest paid thereon. We do not find explanation to section expresses intention contrary to established principle of accountancy.
61. It is submitted by the learned Counsel for the petitioners that u/s 4 subclause (iii) all rights, liabilities and obligations of the company entered into bona fide before the appointed day, except which are relating to the borrowing or lending of money or employment of staff, would be vested in the State Govt on the appointed day and, therefore, when the contract relating to the borrowing having not vested in the State Govt, the interest paid on the borrowed amount would also not be vested in the State Govt and it shall be the responsibility of the claimant company to deal with a contract relating to borrowing and to discharge the liabilities arising thereon. At the first sight, the argument appears to be attractive but, for the fact that it is not a case of the Company, where the Company is claiming an amount, which has been borrowed by the company and not utilised in creation of the assets, and further the interest p aid thereon. The case of the claimant company is that the borrowed amount has already been utilised for creation of the assets and those assets being taken over by the State Govt the State Govt is liable to pay the book value of the asset created out of the borrowed amount and as the borrowed amount is converted into a fixed asset, while assessing the book value of the asset it will include the interest paid on the borrowed amount to form the book value of the asset. u/s 8 the gross amount payable to the company shall be the aggregate value of the amounts which includes the book value of the works in progress taken over by the State Govt between the period of its taking over in April, 94 till the appointed day. On plain reading of this c lause the amount payable by the State Govt is of the book value of the work in progress which has been taken over by the State Govt. The liability to pay the borrowed amount to the persons from whom the amount is borrowed by the company is not the responsibility of the State Govt by virtue of Sub-clause (iii) of Section 8 of the Act. Under Sub-clause (iii) of Section 4 the State Govt does not bind itself for the contract relating to the borrowing, that is to say, if any contract relating to the borrowing is entered into by the company with the lender of money, the responsibility under that contract to be discharged shall remain with the company and it shall not be the responsibility of the State Govt. It may be clarified by example, suppose an amount of Rs. 3000/- is borrowed by the company from A, then the company has the responsibility to pay that amount back to A under the contract of borrowing and it shall not be the responsibility of the State Govt. In case the same amount is utilised for creation of an asset then the State Govt will pay the amount to the company for the value of the asset created with interest thereon as book value of the asset will be including of interest in the original cost of the asset, which is being taken over by the State Govt, which in turn shall be paid by the company to A from whom the amount i s borrowed, with interest as per contract of borrowing. For the aforesaid, the Commission was right in awarding an amount of Rs. 69,00,000/- towards interest on the bonowed capital which has been utilised for creation of the asset of the project.
62. It is urged that on true reading of Section 12 read with Sub-clause (3) and (4) of Section 14, the Commission has no authority to pay the interest for more than one year. It is then submitted by the learned Counsel for the petitioners that the Commission has committed an error in awarding the pre-suit interest when there is an express prohibition of such interest being awarded u/s 12 Sub-clause (2) of the Act.
The Commission has held, that there is no prohibition in the Act on payment of pre-suit interest or accruing interest during construction. The question is whether the claimants are entitled to interest prior to the appointed day. The interest is nothing but compensation blockage of capital, therefore, the Legislature has provided for payment of interest from the appointed day. This Act is, however, silent about the payment of interest from the date of expenditure till appointed day. This Act is a Special Act and normally the provisions of this Act will be applicable, but when in aparticular matter the Act is silent, 1 am of the view that General Acts shall be applicable when justice and equity demands. The Legislature considered it fit to award interest of 12 % per annum from the appointed date as it thought that by awarding such interest the loss sustained by the claimant company would be mitigated. If this is the reason for awarding interest, in my view the same principle for granting interest would be applicable in respect of interest from the date of expenditure till appointed day. The present Act, though silent about this, the other Acts namely CPC etc empowers the courts/ authorities to award pre-suit interest. This Act does not prohibit granting of interest. In the facts and circumstances of the case, I am inclined to hold that the claimant company is entitled to interest. And in my view this cannot be said as interpolation of the Act. Thus the claimant company is entitled to interest for this period. It may also be mentioned that no objection had been taken in the written statement to the claim for pre-suit interest. Issues were not framed with regard to non-admissibility of any claim of the claimant company. Thus both parties were ad idem on admissibility and adjudicability of these claims. On 23.6.2002 the learned Counsel for the respondents very fairly conceded that interest was payable if any amount had been spent, however, his only objection was that the rate of interest at 18% per annum claimed by the claimant company was excessive. Section 34 of the CPC was based on justice, equity and good conscience and hence, if the court or any authority reaches the conclusion that money has been paid and withheld, the party who invested the money is liable to be compensated in the form of interest.
On the aforesaid the Commission has found no impediment in granting pre suit interest for the expenditure incurred by the claimant company on the project and directed that instead of 24 % per annum and 18 % per annum the claimant company shall be entitled to get interest at the rate of 12% per annum from the date the expenditure was in-curred. Although the calculation for pre suit interest was submitted by the claimant company through an affidavit which was not disputed by the respondents the Commission has directed that there is a difficulty for calculation of interest from the date of expenditure till the appointed day because the expenditure had been incurred by the claimant company on various dates which is laborious and technical job and that too in respect of voluminous records. The Commission is not in a position to calculate the amount despite the service of Shri NC Das. This is an expertise job and, therefore, the calculation should be made by an expert hand preferably by engaging a nationalized bank or any recognized financial institution. The said bank or financial institution shall do thejob of calculation as per die accepted practice of bank/ financial institution and arrive at the final figure of interest as awarded above. The calculations made by such bank or financial institutions shall be final and binding on both parties. The cost of engaging the bank or financial institutions shal 1 be borne by the claimant company and the respondents equally. From the amount of interest so worked out, the amount found payable under claim 9(F) shall be deducted and the net amount calculated would be payable to the claimant.
63. To determine the question, as regards payment of interest beyond the period of one year, it shall be necessary for us, to take into consideration certain facts. On 6-2-97 notification was issued appointing �Justice Baruah Commission� u/s 14(1) of the Act and to submit its report within one year from the appointed day, that is, 30-11-96. As no work could be taken up by the Justice Baruah Commission during the period and as no extension was given by the State Govt a fresh second notification has been issued appointing �Justice Baniah Commission� u/s 14(1) of the Act to submit report within one year from the appointed date, that is, 30- 11-96. This notification was issued on 10-11-2000. This was an impossibility because one year from appoint day has already expired. Therefore, on 30-11-2000 a corrigendum was issued, that the second notification may be read as �report to be given within one year of the date of its first sitting and not within one year of the appointed day�. The Commission held its first sitting on 1-12-2000. On 6-9-2001 a joint petition was moved before the Commission by the Petitioners and the Respondent. The Commission felt it necessary to extend the period of Commission by six months and made recommendation for extension of the period of Commission for six months. On 3-10-2001 the Govt has issued a notification for first extension for six months upto 1-6-2002. Again a joint application was moved by the parties before the Commission requesting the Commission to extend the period for three months and accordingly, the Commission also, on consideration of the stage at which the pro ccedings of the Commission have reached, recommended further extension of the period by three months on 11-3-2002. On 27-3-2002 the Commission passed an order on the joint petition moved by the parties that con sidering the various factors three months ex tension would not be sufficient and it should be six months extension and directed recom mendation of the period of extension by six months instead of three months. The State issued notification on 8-5-2002 extending the period of the Commission for six months upto 30-11-2002. Within this period the Commission has prepared its report on 14-9-2002 which was served on the Government on 3-10-2002. Mr SS Ray, learned senior counsel for the respondent has taken us through the order sheets of the Commission. Those order sheets reveals that extension of the Commission�s time had not been due to Company�s failure to furnish all details in re gard to the accounts, particulars of the documents or any information.
64. By virtue of Sub-section 2 of Section 12 the net amount which is required to be paid by the State or the Board under the Act shall carry interest at the rate of 12 % per annum from the appointed day. Sub-section 4 of Section 14 requires that the Commission constituted shall complete the assessment and submit the report within one year from the appointed day. Thus, the submission of the learned counsel Shri. Goswami is, that the payment of interest can only be for the period of 12 months from the appointed day. As the Commission has to complete its work within one year from the appointed day,that is w.e.f. the date 30-11-96 on which the Act came into force in any case, not after one year from the date of first sitting of the Commis sion. It appears that the intention of the Legislature was to constitute the Commission simultaneously with the enforcement of the Act and therefore it is provided that the Commission will decide the matter of compensation within one year from the appointed day. But in the present case the Commission has been constituted by issuance of the second notification on 10-11-2000 which is much beyond one year from the appointed day, i.e., 30-11-96. Proviso to Sub-section (4) of Section 14 says that the period of one year, for submission of the report by the Commission, may be suitably extended by the State Govt. Second part of the proviso says that if the claimant company fails to furnish or delays furnishing of accounts, information, particulars or documents as mentioned in Section 15, by virtue ofproviso to Sub-section 2 of Section 12 no interest shall be payable during any extended period of Commission. The period for the Commission to complete and submit its report is one year from the appointed day. The proviso to Section 12(2) of the Act restricts grant of any interest during the extended period of the Commission, if the Company fails to furnish or delayed furnishing any information, books of accounts or documents. The combined reading of these provisions, in the facts of the case, where the Commission has not been constituted within one year of the appointed day, would be that the Commission�s period of submission of the report can be extended by the State Govt by issuance of notification beyond the period of one year from the appointed day, as it has been done in the present case. The Commission�s right to allow the interest would be restricted for the extended period of the Commission, if the extension is required to be made because of Company�s failure to furnish or delays furnishing of accounts, information or particulars, that is, if the extension was required because of the failure on the part of the Company to furnish accounts, information, particulars the company would not be entitled to interest for the period the Commission is to sit for the extended period. In the present case it has not been established, reading the order sheets of the Commission, that the delay has been caused on account of the Company�s latches or delaying tactics to furnish accounts, information, particulars or documents which are required for adjudica tion of compensation by the Commission, therefore Commission�s jurisdiction to pay interest for the extended term of the Commission is in accordance with the provisions of the Act, 1996.
65. The question next falls for our consideration is whether the Commission has rightly given interest after the date of award till realization of the amount of the award. Sub-Section (2) of Section 12 says that net amount of the award awarded by the Commission shall bear interest at the rate of 12 % per annum from the appointed day. Therefore, as per the learned counsel for the petitioner, power of Commission to give interest under the Act at the rate of 12 % per annum would be only from the appointed day till the award is made. On the other hand submission of Mr Ray, learned Counsel for the Respondent is that all the assets of the company have been taken possession of by the State on the appointed day. Taking possession of the Immovable properties generally implies an agreement to pay the interest on its consideration for deferred payment and thus till the payment is made of the awarded amount the company is entitled for the interest.
66. In a court of equity when the seller parts with some immovable property the purchaser becomes its owner, while seller receives money as consideration in lieu of the property. The seller, therefore, is entitled to interest in place of his retaining possession of the property from the date the purchaser takes possession of the property, till the date of payment. On these premises, the Company�s claim for interest is made against the State, after the property was acquired by the State, and till the payment is made as compensation. It is further submitted that this principle was extended in equity to recompensate the owner for deprivation of his possession and enjoyment thereof, in accordance with law. It was, therefore, held in equity that the owner is entitled to interest on the principal amount of award from the date of taking possession under the statute under which the property is acquired, except expression of contrary in tention in the statute. It is on these premises that the right to receive interest takes the place of right to retain possession and its enjoyment.
67. In
68. On the basis of the aforesaid decisions of the Apex Court there is no manner of doubt that the claim for interest proceeded on the assumption that when the owner of Immovable property loses possession of it he is entitled to claim interest in place of right to retain possession. The rule has long been established in the interpretation of the statutes that they are not to be held the deprived individuals of property without compensation, unless the intention to do so is made quite clear and that right to receive interest takes the place of a right to retain possession and is within the rule. From the aforesaid principles laid down by the Apex Court it is clear that the Company is entitled for the interest on the awarded amount from the appointed day till realization of the amount by the Company.
69. It is submitted by the learned Counsel for the Petitioner that the Commission has committed an error in granting interest on the amount of expenses incurred by the Company for the project work during the period the project was handed over to the Company and the project was taken over by the State on the appointed day. The argument further proceeds that the question is not relating to the Petitioner�s right to claim interest prior to the appointed day by virtue of the acquisition of the property of the project created by the company, but the question is relating to jurisdictional issue and trace the jurisdictional power of the Commission acting under the Act regarding award of the interest. The submission is that the interest may be payable on the equitable grounds but the power to grant interest in the proceedings taken up by the Commission, who derives its power under the Act itself having restricted, to grant interest only from the appointed day, the power which could have been exercised by the Commission under the equity has no application, on the principle that the authority created under the statute is bound by the limits and parameters laid down under the Act itself and is permitted to exercise his jurisdiction as permissible under the Act and nothing more nothing less. It is also contended that Sub-section (2) of Section 12 permits giving of interest at the rate of 12 % per annum from the appointed day only and therefore, direction of the Commission for payment of interest on the amount spent by the claimant company for creation of the assets prior to appointed day is not permissible under the Act. On the other hand submission of Mr SS Ray, learned Counsel for the Respondent is that the company has created assets even before the appointed day when the project was taken over from the State Government till the ap pointed day. Therefore, the company has incurred expenses in creation of the assets prior to the appointed day and in such a situation the court has jurisdiction and authority to award interest on equitable grounds even if there is no provision in the Act providing for payment of interest. It is also the submission of the learned Counsel for the company that there having been concession made by the learned Counsel appearing for the Petitioner appearing before the Commission for payment of pre suit interest the State cannot be permitted to retract from that position and thus the Commission has not committed any error while giving directions for calculation and payment of interest prior to the appointed day.
70. For the purposes of submissions made by learned counsel for the Respondent that the Petitioners State and Board are bound by the concession made by the learned Counsel, the learned Counsel has brought to our notice the order sheet dated 26-3-2000 of the Commission which records that �the company had filed a petition No.109 seeking interest at the rate of 18 % per annum also from the date of expenditure till the appointed day. Mr Barkataky, learned Counsel submits that there is no objection in giving interest for the period mentioned in the petition. But according to him the rate of interest is too high and not permissible in law. After hearing the learned Counsel the decision regarding the rate of interest is reserved and will be gone into at the time of giving report.� Thus according to the learned counsel, there is clear cut admission for giving interest of the period mentioned in the petition, i.e. from the date of the expenditure till the appointed day, i.e. interest pre-appointed day.The only objection is in regard to the rate of interest. The company has claimed interest at the rate of 18 % which has been objected to by the learned Counsel appearing for the Petitioners. The learned Counsel relied on the decision of the Apex Court for the proposition that the record of the proceedings made by the court is sacrosanct and cannot be challenged subsequently. The decisions are reported in
The question whether the Company is entitled to pre suit interest or not as per Act of 1996 is really a question of law and in our view any admission made by the party before the Commission for pre suit interest would not bind the party, if in law the party has no right to claim such interest or where it is found that award of pro suit interest is be yond the powers conferred on the Commission
71. For the proposition that court has power to award interest although not provided for in the relevant statute, on equitable grounds the counsel for the Company relied on two decisions of the Supreme Court in
6. Relying upon the province of Section 34 of the Civil Procedure Code, the learned Counsel for the Appellant submitted that Appellant was entitled to the payment of interest at the rate at which moneys are lent or advanced by Nationalised Banks in relation to commercial transactions. Referring to l.A. 2 filed in this Court and Banking Law and Practice in India issued in 1991, she had contended that the appellant was entitled to the payment of interest minimum at the rate of 19.4 per cent per annum. The general submission made in this behalf cannot be accepted in view of the provision of Section 14 of the Act. There was no contract between the parties regarding payment of interest on delayed deposit or on account of delay on the part of the opposite party to render the services. Interest cannot be claimed u/s 34 of the CPC as its provisions have not been specifically made applicable to the proceedings under the Act. We, however, find that the general provision of the Section 34 being based upon justice, equity and good conscious (conscience) would authorize the Redressal Forums and Commission also grant interest appropriately under the circumstance of each case. Interest may also be awarded in lieu of compensation or damages in appropriate cases. The interest can also be awarded on equitable ground as was held by this court in
And the decision reported in Ghaziabad Development Authority v. Union of India and Ors. AIR 2000 SC 2003, where the Court has confirmed the statement of law that the interest on equitable grounds can be awarded in appropriate case.
72. On the aforesaid decisions there is no manner of doubt that the courts have jurisdiction in equity to grant pre suit interest but in the present case the real question which we have to consider is whether the application of this rule is intended to be excluded by the Act of 1996. The learned counsel for the Petitioner relied upon in the matter of
73. Section 3 of the Act, 1996 provides for transfer and vesting of the undertaking of the company in the State from the appointed day. Section 4 provides for general effect of the vesting. Section 5 of the Act lays down specifically that the liabilities of the Undertaking of the company, if incurred in any period prior to appointed day, shall be liability of the company and shall be enforceable against it and not against the State. Chapter-3, Sections 7 and 8 of the Act provides for payment of amount for the right, title and interest of the company which stood transferred and vested in the State Section 8 specifically provides the different heads and the method of calculation of the compensation. Section 10 is a provision wherein the right is given to the State Government to claim loss, damages and deterioration cost to the assests of the project when the project was taken over by the company and when it was handed over possession. Section 11 enunciated different heads whereunder the State Government is entitled to deduct the amount from the gross amount payable under the Act to the company. Section 12 of the Act provides that the net amount due to the company under the Act shall be paid by the State Government within 6 months from the date of receipt of the assessment report from the Commission. There is a liability created under the Act on the State Government to pay the net amount assessed by the Commission within 6 months from the date of receipt of the assessment report. Section 13 contemplates an eventuality where the amount payable to the State Government by the company is more than the amount pay able by the State Government to the company, the State Government can recover the amount from the company as the arrears of land revenue. u/s 14 of the Act the Commission is constituted and the method and manner in which the Commission shall regulate its procedure is provided therein. Sub-section (7) of Section 14 provides for appeal against the decision of the Commission to the Gauhati High Court. It also provides that such appeals shall be heard and disposed of by not less than two Judges of the Gauhati High Court. What shall happen to the employment ofcer tam employees, has been specified in Section 15. Section 16 is in regard to the provident fund, superannuation fund, welfare fund and other funds for the benefit of the officers and employees in the undertaking. Section 19 provides for penalty for certain acts mentioned therein. Section 20 imposes an embargo on the court not to take cognizance of an offence punishable under the Act except the previous sanction of the State Government. Section 22 is a provision wherein protection is given of the action taken in good faith by the State Govennnent or by the Board or an employee of the State Government or the Board or the Commission or any other person acting under the direction of the State, Board or the Commission. Section 23 creates a bar on the jurisdiction of the court which says that not withstanding anything contained in any other law for the time being in force, no Court or Tribunal shall call in question any order, in vestigation or any otherAct done or purported to have been done under the Act. By virtue of Section 24 the provisions of the Indian Electricity Act, 1910 and Electricity (Supply) Act, 1948 are excluded so far as it is inconsistent with any other provisions of the Act. Section 26(1) provides for arbitration. Section 27(1) gives State Government power to frame rules for carrying out the purpose of the Act.
74. The aforementioned provisions of the Act clearly establishes that the Act, 1996 is a complete code in itself and thus the rights and the liabilitites which are to be discharged by the claimant company or by the State or the Electricity Board and the power of the Commission to provide for the compensation for taking over of the project is clearly set out in the Act itself. Section 12 provides that the net amount due to the company under the Act shall be paid by the State Government within 6 months from the date of receipt of the assessment report from the Commission. The net amount so payable shall bear interest at the rate of 12 % per annum. The interest shall be chargeable from the appointed day. There fore, the Act restricts the power of the Com mission to give interest at the rate of 12 % per annum from the appointed day. Appointed day is a sine qua non for the time from which the interest can be claimed by the company under the Act and can be granted by the Commission in exercise of the powers under the Act. Commission being the creature of the Act it has to act within the bounds of the power conferred on it under the Act. There is no manner of doubt that an equitable principle of law, as laid down by the Apex Court, the company would be and may be entitled to interest from the date the amount is spent on creation of the assets of which the posses sion has been taken over by the State on en actment of the Ordinance and thereafter the Act. But the claim for interest prior to the appointed day could be agitated before a differnt forum, not before the Commission who has limited jurisdiction to direct payment of interest on the amount of compensation awarded only from the appointed day, i.e. 30- 11-96, till payment is made. There is a clear exclusion under the Act itself for grant of interest for the period prior to the appointed day. The Commission has committed an error in directing payment after calculation of the interest prior to appointed day.
75. It is submitted by the learned Counsel for the Petitioners that the Commission has no jurisdiction to issue directions for payment of an amount of Rs.5.1 crores to the Company towards the value of the shares. When the project was handed over to the Company by the State of Assam and the Assam State Electricity Board a Memorandum of Under standing (M0U) was arrived at between the State ofAssam,Assam State EleciricityBoaRi (ASEB) and M/S Subhash Projects and Marketing Ltd.(SPML).Under the MoU the parties have agreed to register a Public Limited Company with the paid up capital of shareholding of 11 % of the ASEB, 40 % of the SPML and its list ofAssociates mentioned in Annexure-II to MoU and 49% share capital from general public by subscription. Under the MoU all rights, title, interest, benefits, liberties, advantages, obligation of the State ofAssam and ASEB in respect of the project and also in respect of the land over which the project stands and of all the assets, equipments, plants, machineries, tools, articles, properties, goods forming part of the said project as also all the structures, buildings so far erected on the date of MoU or constructed by the ASEB along with all the liabilities shall stand assigned, transferred and conveyed in favour of the Company. Thus on the date whatever work carried out by the ASEB along with its all assets, equipments, plants, machin eries, tools, articles, properties, goods with liabilities have been transferred to the Company so formed. The total consideration of all this has been set at Rs.1 16,21,12,000.00/-, which was said to be deferred liabilities, which shall be liquidated by the Company, after the project is completed, by supply of minimum 30% of the total generated power by the project of the Company. Out of this deferred liability,by virtue of Clause 31 the share value paid for the 11 % share of the ASEB in the Company has been reduced from deferred liability when Clause 31 says ��It is made clear that the share holding to the extent of 11% of the total paid up capital of the Company shall be issued in favour of the ASEB as referred to in Clause 4 hereof out of the said consideration of Rs. 116,21,12,000.00/-(Rupees one hundred sixteen crores twenty one lacs twelve thousand) being the total expenditure incurred by ASEB till date of taking over and the said consideration amount, i.e. the said amount of deferred liability shall be reduced by the amount covered by the Equity Share Capital issued in favour of ASEB�. From the terms of the MoU it is clear to us that the property worth Rs.5. 1 crores has been invested by the State and the Board for purchase of the share capital of 11% of the Company which has been formed under the MoU. Share value of the Company can be made good by payment of money or in kind. From the MoU it is clear that at the time of formation of the Company 11% of the share worth Rs.5,1 crores was allocated to the Board and the share value of the shares has been paid from the properties of the Board and the State. There was no transaction of payment of the share value in cash either by the State or by the Board. Share value of the Company has been paid in the form ofprop erty of the Board or the State. Thus on the date the MoU was entered into and on for mation of the Company and from the date the project was handed over to the Company the property worth Rs.5.1 crores, has been transferred for allocation of the share and has been vested in the Company, as it would have, in the case of the cash payment, the cash paid would have become property of the Company. The net result is, on the date the project was handed over to the Company the Company took over of the project with Rs.5.1 crores worth of the property of the project. Under the Act, 1996 the State or the Board has a liability to pay the price ofproperty of the Company created from the project has been handed over till the appointed day.The property may be in the form of the work executed by the Company, the completed work, work in progress, different parts including spare parts, other fixed assets, plants and equipments and the amount paid actually by the Company of the contract referred to in Clause (iii) of Sub-section (1) of Section 4 of the Act, 1996. Therefore, when the property worth Rs.5. 1 crores of the project belonging to the Company,has been taken over by the State under the Act, the State Govt. is liable to pay that amount under the Act, as compensation, to the Company who has become the owner of the property. It appears to us to be so in equity also, as the Company still exists with its shareholding, although the entire property of the project has been taken over by the State Government, ifwe hold that the Company is not entitled for the share price, which had been paid by the State and the Board in the form of project property, then although the Board shall hold the share in the Company but it will be without any payment of price, because the price of the share, which has been paid in the form of project property has been taken over by the State Government and the Board.
76. On the aforesaid consideration, we are of the view that the Commission has neither exceeded its jurisdiction nor has committed any error of law, apparent on the face of record, in granting compensation to the Company for the share value of the shares held in the Company.
77. The Company has claimed Rs.24,84,629.15 on behalf of their contractor M/s Superec India. The Commission has directed payment of an amount of Rs.1,92,403.09 as compensation for payment to M/s Superec India and also have recorded certain findings in respect of the contract between M/s Superec India and the Respondent No.2, the Board. In our view, the jurisdiction of the Commission under the Act does not extend to settlement of disputes and to award compensation in respect of the claim made by the third party M/s Superec India with the Company or with the Board and thus the finding arrived at in respect of the payment of M/s Superec India and the award of Rs.1,92,403.09 with interest at the rate of 12% is set aside.
78. We shall now deal with the question of payment of compensation for the expenses incurred by the Company even before the project was taken over by the Company. In our opinion, the expenditure incurred by the Company before the project was handed over, cannot be paid under the Act. The Act 1996 has been enacted with a specific purpose to take over the project from the Company and to pay to the company, for all the work executed in the project after the date the company took over, till vesting on the State Government. u/s 8 the State is required to compensate the claimant company for the book value of the completed work in beneficial use pertaining to the project and taken over by the State Government exciud ing the value of such work executed prior to handing over to the company. The book value of all works in progress taken over by the State Government between the periods of the company�s taking over of the project till the appointed day. The book value of all stores including spare parts procured by the com pany for the project, book value of all other fixed assets in use on the appointed day excluding those existing on the date of handing over of the company fixed assets would be works, spare parts, spare tools, materials and other vehicles, office equipments and furniture. The book value of all plants and equipments existing on the appointed day excluding those which are handed over to the Company on the date of handing over and amount paid actually by the Company in respect of the contract referred to in Clause (iii) of Sub-Section (1) of Section 4, that is all the rights, liabilities and obligations of the Company entered into bonafide before the appointed day excluding contract of borrowing or lending of money or of employment of staff. On entire reading of Section 8 it is clear to us that Clause (g) has to be read in consonance with Clause (a),(b),(c),(e) and (f) of Section 8, which allows the Company to have compensation for the things done during the period the company has taken over the project till the vesting of the project in the State Government. On this view of the matter, under the Act the compensation for which the company is entitled would be all things done and the expenses incurred for the same during the periods the project has been taken over till the appointed day, i.e. 30-11-1996, except the items mentioned in Clause (d) the stores including spare parts procured by the Company for the project and in case of used stores and spare parts, if taken over, the sum as may be determined by the Commission. For application of this clause it is not necessary for the Company to purchase stores, including spare parts during the period the project was in charge of the Company, there may be a case where the stores or spare parts are pur chased by the Company prior to taking over of the project but the same is utilized in the project work or used for project work when the project came in possession ofthe Company, only requirement under this clause is that items mentioned should be procured by the Company are for the project.
79. The Commission on the basis of the evidence placed on record reached to the conclusion that the project was actually handed over to the Company on 10-1-1994 we do not find any reason to differ with the findings arrived at by the Commission, thus we will take it that the project was handed over to the Company on 10-1-1994. The Company, thus would be entitled for compensation for whatever has been done for the items mentioned in Section 8(a) to 8(g) excluding items under Clause (d) of Section 8 of the Act from 10-1-1994 till the appointed day,i,e. 30-11 -1996. It is an admitted position that the Commission has awarded compensation for the items for which the expenses have been incurred before 10-1-1994. Those are under the following heads:
| Head of expenditure | Amount |
| Furniture and fixtures | 96,831.27 |
| Security Services | 97060.00 |
| Social Services Publicity and Public | 1,00,000.00 |
| Relations Expenses | 5,39,700.38 |
| Vehicle maintenance | 34,045.18 |
| Telephone expenses | 3,21,089.04 |
| Staff welfare | 63,563.50 |
| Salary and allowances | 1,07,031.62 |
| Repair and maintenance | 21,039.90 |
| Rent | 2,65,880.00 |
| Recruitment expenses | 46,479.00 |
| Printing and stationary | 1.34,256.48 |
| Postage and courier | 4,646.25 |
| Legal services | 1,08,102.50 |
| General expenses | 45,715.00 |
| Freight expenses | 802.00 |
| Entertainment expenses | 64,972.00 |
| Director�s fees | 9,000.00 |
| Conveyance | 1901.80 |
| Consumable stores Preliminary and capital | 13,564.00 |
| issue of expenditure | 23,25,515.00 |
| Consultant�s fees Repairs to plant | 3,34,500.00 |
| and machinery | 3.00 |
| Total | 47,35,697.97 |
The Commission, under the Act, 1996, has no jurisdiction or authority to grant compensation for the expenses incurred before 10-1-1994 except items falling under Clause (d) of Section 8 of the Act. The items which will fall under Clause (d) of Section 8 of the Act are furniture and fixture worth Rs.96,831.21 and consumable stores worth Rs. 13,564.00 which has been purchased prior to 10-1-94, but being utilized for the purposes of the project and, therefore, the award of the amount by the Commission for the charges under different heads prior to 10-1-1994 amounting to Rs. 47,35,697.97 - 1,10,395.27 = Rs. 46,25,302.70 is set aside.
80. We shall now take up the appeal filed by the State, u/s 10 of the Act and consider the claim filed by the State. It is urged before us by the learned Counsel for the State that the State made a claim before the Commission by filing the petition u/s 10 under various Heads, which were rejected by the Commission, some of the rejected claims are challenged before us by the State in this appeal. The claim was made against the Company by the State for an amount of Rs.67.33 lakhs on account of the burden of interest on the Board due to the negligence of the claim ant company in not making timely payment of the dues payable to M/s Om Metals and Minerals Ltd. An amount of Rs.378.34 was claimed on account of the burden of interest on the Board due to negligence ofthe Respondent No.1 in not making timely payment of dues payable to M/S Hydel Construction Ltd, and an amount of Rs.55.07 lacks was claimed for the burden of interest on the Board due to negligence of the respondent No.1 in not making timely payment of the dues payable to MIS Frontier Construction Company. Claim was also made for amounts of Rs.5 lacks for loss of gate components, Rs.25.04 lacks for damage to the cement, Rs. 1,14,72,817.00 for loss to the permanent and temporary buildings (Rs.9 1.37 lacks for permanent buildings and Rs.23.56 lacks or temporary buildings), Rs. 1,32,44,567.00 for loss caused on account of the negligence of the company in taking over the project in time and Rs.52,72,484.00 for the payment made to the idle staff.
81. It is contended by the learned Counsel for the Company Mr Markanda that the appeal filed by the State challenging the order of the Commission would be governed by Article 116 of the Limitation Act, 1963, wherein the period for filing the appeal to the High Court from any decree or any order would be 90 days from the date of the decree or order, where there exists no special law or local law providing appeal, the Limitation Act will apply. On the other hand, it is contended by the learned counsel for the appellant that as the provisions of Bharat Hydro Power Corporation (Acquisition and Transfer of Undertakings) Act, 1996 is a special enactment, which provides under Sub-clause (7) of Clause 14 that appeal against the decision of the Commission lays to the Gauhati High Court and it does not provide any period of limitation for filing appeal before the High Court, thus, the appeal would not be governed by Article 116 of the Limitation Act, 1963 and the appeal can be preferred within a reasonable span of time.
82. To consider the question raised it may be necessary to have a glance on certain dates. On 14.9.2000 the Commission have decided the matter under the Act 1996. The report of the Commission was served to the Appellant-State on 3.10.02. On 3.2.03 a writ petition was filed by the State ofAssam as well as by the Assam State Electricity Board. However, the appeal was filed by the State against the decision of the Commission on 3.3.03, which is admittedly beyond the period of 90 days, the period prescribed under Article 116 of the LimitationAct, 1963. The appeal does not accompany with an application u/s 5 of the Limitation Act. Mr Markanda, the learned Counsel for the Company has mad emphasis that Article 116 of the Limitation Act is applicable on the basis of Section 29 read with section 3 of the Limitation Act. The cumulative effect of section 29(2) and Section 3 of the Limitation Act, 1963 is that where any special or local law prescribes period of limitation, different from the provisions made in that regard, in the Schedule to the Limitation Act, then Section 3 shall be applicable, as if, such period has been prescribed by the Schedule and for ascertaining the period of limitation prescribed for any proceeding, by any special or local law. Section 4 to 24 shall be applied to the extent to which there is no express prohibition or application of such special or local law. The first essential condition for application of Section 29(2) is that the special or local law prescribes the period of limitation, which is different than the period of limitation prescribed in the Schedule to the Limitation Act. In the present case, the Special Act 1996 having not prescribed any period of limitation, the period for filing the appeal in the High Court against the decision of the Commission would not be governed by Article 116 of the Limitation Act
83. In the matter of
84. The learned Counsel for the State Mr Mishra has submitted that neither Section 8 nor Section 10 of the Act, 1996 envisages either filing of a claim or counter claim and, therefore, the Commission acted illegally in calling for the claim and counter claim and thereafter adjudicating the matter as if the Commission was acting as an Arbitrator or a Civil Court, allegedly on the basis of evidence on record. Under the provisions of Section 17 of the Act, the claimant company was called upon to file the inventories within 90 days from the appointed day, of all fixed assets together with books of accounts and audited balance sheets and, therefore, the intention of the Legislature is clear that the Commission is appointed to quantify the work done by the company by looking at the fixed asset said to have been created by the company and all its accounts, documents submitted by the Government in the manner prescribed u/s 17 and also by cross checking the same on the spot, by taking assistance of the officers of the State Government or the Board, as provided u/s 14(3) of the Act and thus there is no question that the Commission could have decided the matter on the basis of the pleadings, evidence etc. The task entrusted on the Commission was to look into the inventory submitted u/s 17(1) of the Act, by the company, to the Government and thereafter decide the matter without there being any hearing of the parties.
85. We cannot agree with the submission made by the learned Counsel for the Appellant, first � the Commission has an authority and jurisdiction u/s 14(5) of the Act to regulate its own procedure in all matters arising out of discharge of its functions. Thus, how the matter is to be adjudicated has to be decided by the Commission and secondly the State itself has agreed to the procedure adopted by the Commission and has partici pated in the proceedings by filing counter claim, written statement to the claim made by the Company and production of evidence, not only that, by cross examining the witnesses produced by the Company. On the request of the State and the Board the Inspection Team was sent to Calcutta for inspection of the documents. The order sheet of the Com mission dated 13-12-2000 shows that both the parties before the Commission has sought time to file their claims. On 3-1-2001 the claimant company filed its claim and the Respondent No.2, the Board, has filed its claim in part. The counsel for the respondents, i.e. the Government ofAssarn and Assam State Electricity Board sought 10 day�s time to file further claims. Thereafter, further time was asked for on 12-1-2001 for filing written statement to the claim and additional counter claim. The Board sought further time to file wrii statement and counter claim on 22- 2-2001. The State of Assam and the Board has filed joint written statement to the claim petition and the State of Assam has also filed counter claim which included the counter claim earlier filed by the Board. On 12-7-2001 both the parties, i.e. the claimant company and the State of Assam and the Board have filed their list of witnesses. Thereafter, as many as 16 witnesses were examined by the State and the Board, before the Commission. In the aforesaid facts it is too late in the day to contend that the procedure adopted by the Commission was not in accordance with law. The procedure followed by the Commission has not been prohibited under the Act. On the contrary, the Commission has been entrusted with the power of a Civil Court under the Code of Civil Procedure, 1908 in respect of the matter enumerated in Sub-section(5) of Section 14, viz., summoning and enforcing the attendance of any witness and examining him on oath; the discovery and production of any document or other material object produc ible as evidence; the reception of evidence on affidavits and the issuing of commission for examination of witness. The aforesaid pro visions in unambiguous term spell out the power of the Commission to take the proceedings in the manner in which it has conducted the proceedings. Apart from the aforesaid fact, as we have already mentioned here inabove, it was not possible for the Commission to decide the matter only on the basis of inventories prepaitd by the claimant company at the time of handing over of the project. The inventories prepared as per the direction of the Apex Court dated 18-8-2002, could not have been of any help to assess the damages, if any, caused to the property of the State handed over to the claimant company on the appointed day, i.e. 30-11-1996. u/s 10 of the Act, 1996 the State is entitled to claim loss, damage and deterioration of the assets of the State on the date the project is vested in the State by virtue of the Act, 1996. When the inventories were prepared nearly four years have already expired from the date of vesting of the project and thus it was virtu ally impossible for the Commission to make assessment of the loss of properties of the State on the basis of the inventories. Thus, we have no manner of doubt that the proce dure adopted by the Commission in deter mining the counter claim made by the State is in conformity with the Act and with the con sent of the parties. State cannot be permitted to retract from its consent and challenge the procedure adopted by the Commission at the stage of appeal, when we do not find any in herent jurisdictional fault, in the procedure adopted by the Commission for settlement of the claim made by the State against the claimant company.
86.The learned Counsel for the Appellant Mr Mishra has then submitted that the approach of the Commission while rejecting the claim made by the State, on the basis that the State has failed to prove, the negligence on the part of the Company to cause loss, damage and deterioration to the assets, taken over by the Company with the project, during the period the project was in their possession, is contrary to provision of Section 10 of the Act. The loss, damage, deterioration caused to the assets need not be by negligence of the Company, it can be a loss caused, otherwise than the negligence. The Commission has committed an error in reading the phrase �otherwise� �ejusdem generis� with �negligence� while interpreting Section 10 of the Act.
87. The Commission has held that u/s 10 of the Act the State Government is entitled to get value of the loss, damage and deterioration of the assets of the Appellant, if such loss, damage and deterioration have been caused by the Claimant Company by its negligence and the word preceding �or otherwise� being juxtaposition. More so, the word �negligence� indicates that the action or inaction of the Claimant Company to make it liable for payment for the damages should be of the nature of the negligence. The word �or otherwise� takes its colour from the phrase �negligence� applying the principles of ejusdern generis.
Ejusdem generis rule is not a rule of law but is merely a rule of construction to aid the Courts to find out the true intention of the legislature. If a given provision is plain and unambiguous ar the legislative intent is clear; there is no occasion to call into aid that rule. Haisbury Laws of England ( Edn) Vol. 36 p.397 paragraph 599 explains the rule thus:
As a rule, where in a statute there are general words following particular and specific words, the general words must be confined to things of the same kind as those specified, although this, as a rule of construction, must be applied with caution, and subject to the primary rule that statutes are to be construed in accordance with the intention ofParliament. For the ejusdem generis rule to apply, the specific words must constitute a category, c lass or genus; if they do constitute such a category, class or genus, then only things which belong to that category, class or genus fall within the general words.
It is observed in Craies on Statute Law (6th Edn) p.l8l that:
The ejusdem generis rule is one to be applied with caution and not pushed too far, as in the case of many decisions, which treat it as automatically applicable, and not as being what it is, a mere presumption, in the absence of other indications of the intention of the legislature.The modern tendency of the law, it was said is �to attenuate the application of the rule of ejusdem generis�. To invoke the application of the ejusdem generis rule there must be a distinct genus or category. The specific word must apply not to different objects of a widely differing character but to something which can be called a class or kind of objects.
According to Sutherland Statutory Construction (3rd Edn) Vol.11. p.395, for the application of the doctrine of ejusdem generis, the following conditions must exist.
(i) The statute contains an enumeration by specific words;
(ii) The members of the enumeration constitute a class;
(iii)The class is not exhausted by the enumeration;
(iv)A general term follows the enumeration; and
(v) There is not clearly manifested an intent that the general term be given a broader meaning than the doctrine requires.
88. In the matter of
The rule of ejusdem generis is intended to be applied where general words have been used following particular and specific words of the same nature on the established rule of construction that the legislature presumed to use the general words in a restricted sense; that is to say, as belonging to the same genus as the particular and specific words. Such a restricted meaning has to be given to words of general in only where the context of the whole scheme of legislation requires it. But where the context and the object and mischief of the enactment do not require such restricted meaning to be attached to words of general import, it becomes the duty of the courts to give those words their plain and ordinary meaning.
89. In the matter of
When in a statute particular classes are mentioned by name and then are followed by general words, the general words are sometimes construed ejusdem generis, i.e. limited to the same category or genus comprehended by the particular words. But it is not necessary that this rule must always apply. The nature of the special words and the general words must be considered before the rule is applied. In Allen v. Emerson (1944)1 KB 862, Asquith, J., gave interesting examples of particular words followed by general words where the principle of ejusdem generis might or might not apply. We think that the following illustrations will clear any difficulty. In the expression �books, pamphlets, newspapers and other documents" private letters may not be held included if �other document interpreted ejusdem generis with what goes before. But in a provision which reads �newspapers or other documents likely to convey secrets to the enemy�, the words �other document� would include document of any kind and would not take their colour from �news papers�. It follows, therefore, that interpretation ejusdem generis or noscitur a sociis need not always be made when words showing particular classes are followed by general words. Before the general words can be so interpreted there must be a genus constituted or a category disclosed with reference to which the general words can and are intended to be restricted.
90. In
91. In
In our opinion, the High Courts fell into an error in applying the principle of ejusdem generis when interpreting the expression �other authorities� in Article 12 of the Constitution, as they overlooked the basic principle of interpretation that, to invoke the application of ejusdem generis rule, there must be a distinct genus or category running through the bodies already named, Craies on Statute Law summarises the principle as follows:
The ejusdem generis rule is one to be applied with caution and not pushed too far To invoke the application of the ejusdem generis rule there must be a distinct genus or category. The specific words must apply not to different objects of a widely differing character but to something which can be called a class or kind ofobjects. Where this is lacking, the rule cannot apply, but the mention of a single species does not constitute a genus
Maxwell in his book on Interpretation of Statutes� explained the principles by saying:
But the general word which follows particular and specific words of the same nature as itself takes its meaning from them, and is presumed to be restricted to the same genus as those words Unless there is a genus or category, there is no room for the application of the ejusdem generis doctrine.
In United Towns Electric Co v. Attorney General for Newfoundland 1939-I All ER 423, the Privy Council held that, in their opinion, there is no room for the application of the principle of ejusde generis in the absence of any mention of a genus, since the mention of a single species � for example, water rate does not constitute a genus. In Article 12 of the Constitution, the bodies specifically named are the Executive Governments of the Union and the State, the Legislatures of the Union and the States, and local authorities. We are not unable to find any common genus running through these named bodies, nor can these bodies be placed in one single category on any rational basis. The doctrine of ejusdem generis could not, therefore, be applied to the interpretation of the expression �other authorities� in this article.
From the aforesaid authorities it is abundantly clear that for applying the rule of ejusdem generis the general word must follow a distinct genus or category as indicated by the Legislator. The specific words must apply not to different objects of a widely differing character but to something, which can be called a class or kind of objects. Where there is a lacking the rule cannot apply. There is no room for the application of the principle of ejusdem generis in the absence of any mention of a genus, since the mention of a single species does not constitute a genus. In our considered opinion, applying the aforesaid principle laid down by the Apex Court in various decisions, the Commission has committed an error in reading the word �or otherwise� to take a shade or a colour from the word �negligence� and, therefore, the State has not only to establish that loss, damage or deterioration of the assets was caused by the Claimant Company, but also that the act complained of should be a negligent act.
92. We may now look into the findings of fact arrived at by the Commission to find, whether the claims of the State Government under the different Heads, has been rejected by the Commission on the ground that the State Government has failed to prove the negligence on the part of the company, having arrived at a finding that the company has caused loss, damage and deterioration of the assets of the State during the period the project was in their possession. The question now for deteimination is whether the findings of the Commission rejecting the claim of the State are based on the facts of the State�s inability to prove the negligence on the part of the Claimant Company? The State to get the award in its favour u/s 10 of the Act would be required to establish that loss, damage and deterioration have been caused to the assets of the State. If the State establishes this fact then the question would arise whether the rejection of the claim of the State by the Commission was on the basis of the State�s failure to prove the negligent act or inaction on the part of the Company to disturb the findings arrived at by the Commission. In that light, we shall now consider the findings arrived at by the Commission on various heads underwhich compensation was claimed by the State and being urged before us in the present appeal.
93. While considering the claim made by the State Government on Om Metals & Minerals Ltd, Hydel Construction Ltd and Frontier Construction Company the Commission has held that failure to fulfil the conditions of the agreement can only be a breach of con tract and the remedy, if any, for such breach maybe else where and definitely not under the Act. While holding so the Commission has said that breach of contract cannot be said to be for �negligence� within the meaning, as earlier stated by the Commission. Besides this, damage, deterioration and loss referred to in Section 10 of the Act is only in respect of the assets taken over by the State Government with the project and that failure to pay the compensation on the basis of the Deed of Assignment cannot be said to be a loss, damage or deterioration of the assets. At best it can be said to be failure to fulfil the obligations. The Commission further held that no proof was furnished regarding the rate of interest nor there was any evidence what was the prevailing rate of interest of the Bank during the relevant time. The rate of interest having not been proved, the counter claim is liable to be rejected. Thus the Commission�s decision in rejecting the claim is not based on the fact that although the loss, damage or deterioration have been caused to the asset of the State Government by the claimant company but as the State has failed to prove the negligence on the part of the claimant company, the State is not entitled for the interest. The claim has been rejected on the basis that it does not fall within the purview of Section 10 of the Act, 1996. The claim of interest, which was required to be paid, cannot be a loss, damage or deterioration of the assets of the State during the period the project was in possession of the company.
Thus, the claim has not been rejected on the ground that the Commission has found that the company has not acted negligently in non payment of the liability
94. While considering the claim of loss to the gate components the Commission has recorded the findings that the respondents could not point out that the loss, if any, took place due to negligence on the part of the claim ants. The Commission further recorded the finding that the State could not dispute the claimant�s averments that these components were lost after the project was taken over by the Respondents 1996 and on the date when the inventories were prepared in 2000. The price of these gate components was not proved. On perusal of the inventory Ext.20(24), at the time of taking over the gate components reveals that the godown in which these components were kept had been taken over by the CRPF and the gate components had been scattered in various places in the store yard. There is no finding recorded by the Commission that the loss to the gate com ponents was caused by the company, but for the absence of proof of negligence the State is not entitled for compensation. Thus the find ing of the Commission that the State has failed to prove the negligence on the part of the claimant company does not affect the ultimate finding of the Commission that the loss has not been proved.
95. The findings recorded by the Commission for the claim under the Head �Damage to Cement� wherein the State has claimed that 15298 bags of cement were handed over to the claimant by the State. However, 14,414 bags were returned back in unserviceable con dition by the Company. The value of the Cement was assessed as Rs. 17,26,401.00 and the cost of transportation was assessed as Rs.7,77,403.00. Thus the total claim was made for Rs.25.04 lakhs. The Commission has considered the evidence of RW 5 Jayantha Kumar Sharma who did not say anything regarding the loss of cement. RW 13 Shri. Lala RK Dey has stated that he was not present at the time of handing over and taking over. Therefore, he could not testify as to the quality of cement at the time it was given to the claimant company. He has also admitted that the life of cement has a definite period. Ext 20(51), the inventory, shows that at the time of handing over cement bags stored in godown No.3 and 4 were old stocks. Both godowns were not air/water tight. Several glass panes of the godown were found broken since a longtime. The Board did not take any care to put those glasses to prevent moisture containing winds from outside and that cement was stored for more than 10 (ten) months. The Commission has referred to the evidence of RW 13 Shri. Lala RK Day admitting that the claimant company did not use the cement handed over to it by the Respondent No.2. CW 1 Shri. PD Handique also stated in his evidence that the cement supplied by the Respondent No.2, the Board, was not used by the claimant company. On the aforesaid, the Commission has drawn an inference that the cement handed over to the Company was not usable. The Commission has found further support in drawing this inference on the basis of the document Ext 21(164) wherein the Respondent did not rebut the averments to the effect that the ce ment was un-usable. The Commission relied on the IS Code Ext-21(163) wherein it has been stated that normally strength of cement remains good up to three months from the date ofmanufacture if it is stored in a proper godown. The condition of cement is reflected in inventory sheet Ext-20(51) wherein it is stated that the cement bags stored in godown No.3 and 4 were of old stock. On assessing of the evidence the Commission has reached to the conclusion that the cement stock handed over to the Company was unworthy of use. On this finding the Commission has refused the claim of the State. From these findings it does not appear to us that although the Commission has found that the damage to the cement has been caused during the period the same was in possession of the Company, but since the damage was not cause on account of the negligence of the Company the State is not entitled to receive the amount for the loss of cement, on the contrary the finding is that there was no loss caused to the cement at the time when the project was carried out by the Company.
96. Another Head of the claim is the loss, damage and deterioration to the buildings at KLHEP. Under this Head the State claimed Rs.91.37 lakhs for damage to the permanent building and Rs.23.56 lakhs for damage to temporary buildings. It is alleged by the State that as per the list of inventory prepared while handing over and taking over of both types of buildings, it was found that the buildings, both permanent and temporary and structures were not maintained properly. As such there had been an extensive loss, damage and deterioration. The claim was countered by the claimant company alleging that the permanent buildings had been handed over in most poor state and they had carried out extensive repairs of these buildings. Proper security arrangement had been made and, therefore, there was no possibility of theft during their time. The project was taken over from the company in the year 1996 and the inventories were completed in the year 2000 and during this period when the project was in the custody of the State and the Board the parts shown as missing in the claim petition might have been destroyed or stolen. It is further alleged that from the inventory sheets there was no loss or damage reported from the Power House Colony. The reason according to the Company was that this colony had not been abandoned after the project was taken over by the State and people were living in it. As for the temporary structures, from the inventory sheets it would be evident that these houses were in a very poor state when they were taken over by the Company and they had made repairs. The loss, if any, caused to the temporary building is due to the abandonment of the building between 1996 and 1999, when the project was in the hands of the State and not with the claimant. The Commission has considered the evidence of RW 3 Shri Abul Hussain who has stated that the missing items mentioned in Ext-R- 1 actually came to his notice in the year 1999. Prior to that, whether those were there after the sealing of the project on 30-11-96, he cannot say. Thereafter, the Commission has recorded that no argument was advanced in this regard, the learned counsel for the counter claimant Mr Barkataky in his argument did not press this point and that he had no argument to offer. The Commission has gone through the evi dence of the witnesses. The witnesses on behalf of the counter claimant did not give details of the loss and ultimately the Commission has rejected it, although there is a mention that the counter claim does not show a single work or any such damage caused, due to negligence of the claimant company. As regards the deterioration of temporary build ings the Commission has referred to RW 6 Shri Prasantha Borthakur who has stated that there can be natural wear and tear between the period 1996 and 1999 when the inven tory was prepared. He could not say whether any maintenance was carried out during the period 1996-99. The Commission also says that this witness did not make any positive averments that the damage caused was due to the negligence of the Company. Then, after considering the evidence of this witness and on the basis of material placed on record, the Commission found that there was no damage to the temporary structures during the period the buildings were in possession of the Company. The Commission has held that to prove damage to temporary buildings, no proper assessment was made. The Commission found from the rejoinder filed by the Respondent that it is manifest that they did not carry out any maintenance work on the houses or structures during the period 1996-2000. The reason given for this was that they were under the impression that they had no right to maintain their own assets till such time the in ventory was taken. Non-maintenance of the project for 4(four) long years reveals negligence on the part of the Respondents rather than of the claimants. Natural wear and tear of neglected Assam Type houses during this period cannot be ruled out. The fact that dam age would have occurred to these houses during this period, was admitted by RW 6. On appreciation of entire materials the claim was rejected. Although there is a reference by the Commission in its order to the effect that the State has not proved negligence on the part of the Company, but over all reading of the entire order under this Head gives a clear-cut impression that the finding of the Commission is not based on the fact that the State is not entitled for the claim of darn ages to the temporary or permanent structure be cause the State has failed to prove negligence on the part of the Company. The claim has been rejected on the ground that after the project was handed over to the State Government, for long 4 (four) years, it was abandoned and was not looked after. Thus, the deterioration or the damage to the property cannot be ruled out, during the period the project was in possession of the State and that the State has failed to prove the damage caused to the property when the permanent and temporary structures were in possession of the claimant company.
97. Compensation has also been claimed for negligence on the part of the Company for delay in taking over of the project after signing of the MoU and Deed of Assignment. As per the State the claimant company did not take over the project immediately after the signing of the MoU and Deed of Assignment. After much persuasion the project was taken over by the claimant company on April 1994, after a lapse of 1 (one) year and hence the Respondent No.2 had to maintain substantial number of employees and officers for maintenance of the project, entailing huge costs and the same was assessed at Rs. 1,32,44,567.00. In reply, the Company submitted that they were ready to perform the contractual obligations and take over the project immediately after signing of the MoU but they could not do so because of the breaches of contract on the part of the re spondent. They relied upon Clause-9 of Deed of Assignment and alleged that until all the formalities therein were satisfied they were under no obligation to take over the project. It is further alleged that while taking over the project they faced obstruction and threats from local political parties. The Commission after noting the pleadings and certain documents discussed the evidence led by the parties, and reached to the conclusion that in fact, it was the State who has caused delay in giving over the project and the Commission did not find any negligence on the part of the Company. The Commission has also held that u/s 10 the State would be entitled for loss, damage or deterioration of the assets, taken over by the Company, during the period the assets were in the possession of the Company and the State Government shall be entitled to get the value of such loss, damage and deterioration. Section 10 clearly indicates that the loss must be caused during the period the project was in possession of the Company. Section 10 does not contemplate anything prior to the date of taking possession or after the appointed day, i.e. 30-11-1996 and, therefore, the claim made by the State cannot come within the provision of Section 10 of the Act. The claim of the State was rejected on the findings that it is the State who was responsible in delaying of handing over of the project. The finding has nothing to do with the negligence of the Company besides this the finding of the Commission is that, the claim as it is made, does not fall within the purview of Section 10 of the Act 1996.
98. Another claim, which is pressed before us, is in regard to loss incurred by the respondent No.2, the Board, in maintaining idle staff for preparation of the inventory as per Section 17 of the Act. The claim was made bythe State for Rs.52.80 lacks. As per the State it was the responsibility of the Company to prepare the inventory for all the assets while handing over the project to the Respondent No.2, the Board, u/s 17(1) of the Act. However, after much persuasion the process started on 27th January 1999 and as such the Board had to maintain substantial number of employees at the project site in idle condition awaiting preparation of the inventory and, therefore, the payment made to the staff has to be made good by the Company. As per the Company, the vires of the Ordinance and the Act has been quashed by the learned Single Judge of the High Court by its order dated 19-7-97. The Division Bench of the High Court upheld the validity of the Act by its order dated 28-5-98. Thereafter the Company had approached the Apex Court and under the directions of the Apex Court the staff was deputed for preparation of the inventory. Late preparation of the inventories are not deliberate but because by the legal tangle. Further, the employees who were stationed at the side of the Board for carrying out the construction activities were engaged in preparation of the inventories and thus it cannot be said that loss is being accrued to the State because of the engagement of the employees for carrying out the job of preparation of inventories. After considemtion of the materials placed on record and on consideration of Section 17(1) of the Act and also on consideration of the pending legal proceedings the Commission has reached to the conclusion that delay in preparation of the in ventory cannot be attributed to the Company. The Commission was of the opinion that negligence on the part of the Company had not been proved. Besides the finding of the Commission we are of the view that the nature of the claim made for the amount spent for preparation of the inventories would be after the project was handed over to the State and could not be the subject matter of determination by the Commission u/s 10 of the Act.
99. From the aforesaid, we find that over all, the Commission has rejected the claim of the State on appreciation of the facts placed on record and on its findings that the State has failed to prove its case, where under they claimed compensation for the loss, damage or deterioration. We do not find that the Commission�s findings, rejecting the claim of the State Government, is based on the findings that on account of failure to prove negligence on the part of the Company the State is not entitled toe claim damages, although otherwise the damage to the property during the period the project was in possession of the Company was proved. Therefore, although the Commission has made reference in its order to the fact that the State has also to prove the negligence on the part of the Company the award of the Commission is not being affected by such reference.
100. The project known as �Karbi Langpi(Lower Barapani)Hydro-Electric Project� was entrusted to the Board with the responsibility of setting up and commission ing of the said project. The Board commenced the work and created the infrastructure for undertaking the main project work. The Board has also completed part of the construction work ofthe main powerproject but because of certain difficulties the project was aban doned and the work of the project came to standstill. Later on a MoU dated March 23, 1996 was drawn with the consent of the three parties, State of Assam, the Board and M/S Subhash Project and Marketing Ltd for completion of the project. The infrastructure with the half completed main project constructed work was handed over to the Company (which is a creation of Memorandum of Understanding), arrived between the three parties. At the time of handing over of the project the infrastructure created by the Board/State and the half constructed project work of the Dam, all the equipments, plants, machineries, tools, articles and the goods forming part of the project along with structure and the buildings constructed have been handed over to the Company. Thereafter, the Company took upon itself of the completion of the project and has worked on the project, created further super structure and maintained, improved and created the infrastructure handed over to the Company, utilized plants, machineries, tools, articles and properties. But as the State was not satisfied with the work of the Company and it was thought that the progress is not made with the speed expected from the Company the Ordinance and thereafter the Act, 1996 came into force whereunder on the appointed day undertaking of the company and the right, title and interest of the Company in relation to its undertaking stood transferred and vested in the State Government. Having regard to this background and setting in which the words �loss�, �damage� and �deterioration� occurs in Section 10 of the Act it seems to us that the intention of the legislature is to use the words in its ordinary parlance and in restricted sense and thus has included, in its ambit the actual and physical act of the loss, damage and deterioration to the moveable and Immovable properties of the State or Board, which have been handed over to the Company at the time of commencement of the project. The loss, damage and deterioration must be read as ejusdem generis, so as to indicate the actual and physical loss of the assets of the State. The word �damage� in the ordinary parlance would mean the loss of what is desirable; the injuly; impairing value or usefulness of the moveable or Immovable property which is referable to the property. The word �deterioration� would be of a thing whether it be in quality or in value implies in ordinary parlance change for the worse in the thing itself. The deterioration would be physical and actual deterioration of the property. The word �loss� has also to be read in the same context. Thus, in our view, the loss, damage or deterioration referred in Section 10 of the Act has a reference to the assets, that is the property, moveable or immovable, of the State or the Board.
101. On plain reading of Section 10 it appears that when due to the negligence or otherwise the company causes loss, damage and deterioration to the assets taken over by the Company with the project during the period the project was in its possession, the State Government shall be entitled to get compensation for the loss, damage and deterioration. Therefore, the loss, damage and deterioration should be caused by the Company by its negligence or otherwise, to the assets of the State Government, which have been handed over to the Company at the time the Company took over the project and till the period the assets were in possession of the Company. Section 10 limits as well as confers the responsibility on the Company to pay for the loss, damage and deterioration to the assets of the State Government, during the period of the project when it has been handed over to the company and till the appointed day i.e. 30-11-96 when the project was taken over by the State on Ordinance being came into force and later on under the Act 1996. The loss, damage and deterioration caused by the company to the assets need not be by its negligence but it may be otherwise which has nothing to do with the negligence of the company. For entitlement of the value from the claimant company u/s 10 the State is required to prove �(i) that the loss, damage or deterioration is caused to the assets of the State or the Board which were handed over to the Company; (ii) loss, damage or deterioration was caused during the period the assets were handed over till the appointed day� and (iii) the loss, damage or deterioration is caused to the assets by negligence or otherwise by the Company.
102. In the light of the interpretation given by us to Section 10 of the Act, 1996 the State�s claim for the interest paid to MIs Om Metals & Minerals Ltd. Mis Hydel Construction Ltd and M/s Frontier Construction Company would be outside the scope and purview of the jurisdiction of the Commission. Similarly the claim made by the State for negligence on the part of the Company for not timely taking over of the project which resulted in the State�s requirement to maintain a substantial number of employees and officers for maintenance of the project before the actual handing over of the project, would not fall within the purview of Section 10 First, be cause, it is not a claim for loss, damage or deterioration to the property, moveable or immovable, of the State, Secondly, the claim is for the period before the project was actually taken over by the Company that is a period falling outside the purview of Section 10 of the Act. Claim of the Board to maintain idle staff for preparation of the inventories as per Section 17(1) of the Act suffers with the similar infirmities. This claim is also for maintenance of substantial number of employees and office at the project site in idle condition awaiting the preparation of the inventory after the project has been taken over by virtue of the Act on 30-11-1996. First, the claim is not in regard to the assets, that is, the properties, moveable or immovable, of the State or the Board handed over to the Company at the time the project was given nor it is for the period the project was in charge of by the Company. The claim is for the period subse quent to the project is handed over and thus would not be within the competence of the Commission to be adjudicated or decided exercising the powers u/s 10 of the Act. Secondly, the claim has no nexus to the loss, damage and deterioration to the property of the State or the Board.
103. For the reasons aforementioned, the award of the Commission granting compensation to the Company for the expenses incurred prior to 10.1.1994, as indicated here inabove, is set aside. The Commission could not have awarded the amount of Rs. 46,25,302.70, as the Commission, in our considered view, did not have the jurisdiction under the Act to award the said amount being the expenses incurred by the Company prior to handing over of the project to the Company under the Act. Similarly, the Commission did not have the jurisdiction under the Act to adjudicate upon and allow the claim of the third party M/s Superec India, therefore, the amount of Rs.1,92,403.09 would be deducted from the total amount awarded by the Commission. Likewise, the directions given by the Commission for payment of pre suit interest i.e. the expenses incurred increating infrastructure prior to appointed day, though may be admissible under the law, but having beyond the jurisdiction of the Com mission, the directions could not have been given by the Commission. Accordingly,the order for giving pre suit interest prior to the appointed day @ 12% per annum and the direction given to the Bank or Financial Institution to calculate the interest and that the assessment so made by the Bank or Financial Institution shall be final and binding on both the parties, are set aside.
104. In the result, the Company is entitled to an amount of Rs. 30,38,71,474.04 (Say Rs.30,38,71 ,474/-)(Rupees thirty crores thirty eight lakhs seventy one thousand four hundred seventy four), which shall carry interest @ 12% per annum from the appointed day i.e. 30.11.96, till the payment is made. It may be mentioned that during the pendency of the proceedings, an amount of Rs.6,00,00,000.00 (Rupees six crores) has been deposited by the State for payment to the Company. This amount shall be adjusted towards the claim amount awarded by us and the calculation of interest on the total amount the calculation of interest on the total amount payable shall be made accordingly. The amount of compensation is directed to be paid by the State within the period as provided in the Act.
105. The appeal and the writ petition shall stand disposed of as indicated hereinabove. There shall be no order as to costs.
