Administrative Law

Case Analysis

BBA. LLB.
Semester IV

Submitted by: Dhorannagari Likhitha Naidu

Registration No. 200401427032

Submitted to: Prof. A. Vada Shree

Submitted on: 15/03/2022

Alliance School of Law

Alliance University,
Bangalore.
Kerala State Electricity Board v. Indian Aluminium co. AIR 1976

Details of the Case:

Kerala State Electricity Board v. Indian Aluminium co. AIR 1976 Details of the Case: In Kerala
State Electricity Board v. Indian Aluminium Company Limited, (1976) 1 SCC 466: AIR 1976
SC 1031 a Constitution Bench of the Supreme Court was examining the validity of the Kerala
Essential Articles Control (Temporary Powers) Act, 1961 and an order made thereunder called
the Kerala State Electricity Supply (Kerala State Electricity Board and Licensees Areas)
Surcharge Order, 1968. in this case, one of the questions that arose for the choice was the effect
of assent given by the President to a later amendment made to the Kerala Act in 1967.

• AIR 1976 SC 1031,

• (1976) 1 SCC 466
• Kerala Essential Articles Control (Temporary Powers) Act, 1961
 Facts of the Case:

In exercise of powers conferred by s.2(a) of the Kerala Act, the government declared 'electricity'
as a necessary article in 1965. In 1968, the government passed an Order called the Kerala State
Electricity Supply (Kerala State Electricity Board and Licensees Areas) Surcharge Order, 1968,
under s.3 of the Kerala Act, by which, the State Electricity Board was required to collect the
surcharge from non-licensee consumers of electricity although the Board may have entered into
long term contracts with them about the speed at which electricity was to be supplied to them.

The respondents, who were bulk consumers of electricity, questioned before the court the
validity of the order. The order having been struck down by the tribunal, in appeal to the current
Court, the respondents supported the judgment of the court on the grounds:

(i) The Kerala Act is repugnant to the Electricity Act, 1910 and so the Electricity (Supply) Act,
1948 (both of which are Central Acts) and, specifically the latter, which falls within Entries 43
and 44 of List I; which the State Act trenches upon the sector occupied by the 1948-Act which
falls partly under Entry 43 of List I and partly under Entry 38 of List III. On behalf of the
appellants, it had been contended that the Kerala Act falls under Entries 26 and 27 of List II, and
in any event, the Presidential assent to the Kerala Act has cured the repugnancy.
 The decision of the court:
__________________________________________________________________

Issues:

• Whether the Kerala state electricity supply (Kerala state electricity board and licenses Areas)
surcharge order 1968 is Valid?
• Is Kerala essential articles control (temporary powers) Act, 1961 valid?
• Whether the declaration of electricity as an essential article under the Act, whether the Act
impinges upon various matters either in List I or List III of the seventh schedule is valid.

______________________________________________________________________________
• List I or List III of the seventh schedule
• Kerala essential articles control (temporary powers) Act, 1961
• Entry 43 of List I
• Entries 26 and 27 of List I
 Issue I: Whether the Kerala state electricity supply (Kerala state electricity board and
licenses Areas) surcharge order 1968 is Valid?

That order was passed within the exercise of the powers conferred by Section 3 of the Kerala
Essential Articles Control (Temporary Powers) Act, 1961. It obliges the Board to gather
surcharges from non-licensee consumers of electricity although the Board may have entered into
long-term contracts with them about the speed at which electricity is to be supplied to them.

"Section 3 enables the govt., if of opinion that it's necessary or expedient so to try to for
maintaining or increasing the supplies of any essential article or for securing their equitable
distribution and availability at fair prices, to form notified orders providing for:

“(a) regulating by licenses, permits or otherwise the assembly or manufacture of any essential
article;
(b) controlling the value at which any essential article is also bought or sold;
(c) regulating by licenses, permits, or otherwise the storage, distribution, transport, disposal,
acquisition, use, or consumption of any essential article;
(d) prohibiting the withholding from sale of any essential article ordinarily kept for sale;
(e) requiring a person holding available any essential article to sell the entire or a specified part
of the stock to the govt. or a political candidate or agent of the govt or such other person or class
of persons and in such circumstances, as could also be per the order;
(f) regulating or prohibiting any class of business or financial transactions regarding any
essential article, which, within the opinion of the authority making the order, are, or if
unregulated is probably going to be detrimental to the general public interest;
(g) collecting any information or statistics to control or prohibit any of the aforesaid matters;
(h) requiring persons engaged within the production, supply or distribution of, or trade or
commerce in any essential article to keep up and produce for inspection such books, accounts,
and records regarding their business and to furnish such information relating thereto as could
also be per the order;
(i) regulating the processing of any essential article;
(j) exercising over the full or any a part of an existing undertaking, such functions of control and
subject to such conditions, as could also be per the order;
(k) any incidental and supplementary matters including particularly the entering and search of
premises, vehicles, vessels, and aircraft, the seizure by someone authorized to form such search
of any article in respect of which such person has reason to believe that a violation of the order
has been, is being or is near to be committed, the grant or issue of licenses, permits or other
documents, and therefore the charging of fees. Therefore ” Kerala state electricity supply
(Kerala state electricity board and licenses Areas) surcharge order 1968 is invalid.

Issue II: Whether the declaration of electricity as a necessary article under the Act, whether
the Act impinges upon various matters either in List I or List III of the seventh schedule is
valid.

Even assuming that a part of the 1948 Act is legislation concerning incorporation and regulation
of a trading corporation, falling under Entry 43 of List I of Schedule VII, the remainder of it'll
constitute Entry 38 of List III. That a part of the Act referring to the regulation of the activities
regarding production and distribution of electricity would, as we've got shown, represent the
entry “Electricity”. The Kerala Act has nothing to try to do with the incorporation and regulation
of the Electricity Board and, therefore, it can only relate to Entry 38 of List III, if at all.

Issue III: Is Kerala essential articles control (temporary powers) Act, 1961 valid?

within the judgment, the Kerala Essential Articles Control (Temporary Powers) Act, 1961 is
invalid on the bottom of excessive delegation.
 Judgment:

The court held that the Kerala essential articles control (temporary powers) Act 1961 is
invalid. On the grounds of excessive delegation and it dismissed all the appeals. The court
further said that the order made by the authorities under sections 2(a), 3(1) of the acts
couldn't be called a component of this act. However, the judge held the Act to be invalid on
other grounds, and therefore the judge further preferred to not express any concluded opinion
at this time.

Conclusion:

"The present case the incorporation of the State Electricity Boards is simply for the
rationalization of the assembly and provision of electricity, for taking measures conducive to
electrical development and for all matters incidental thereto. The incorporation of the
Electricity Boards being accompanying the rationalization of the assembly and provision of
electricity and for being conducive to electrical development, the 1948 Act in pith and
substance should be deemed to be one falling under Entry 38 of List III. Furthermore,
Electricity Boards don't seem to be trading corporations. they're public service corporations.
they have to function with no profit motive. they have to market the coordinated
development of the generation, supply, and distribution of electricity within the foremost
effective and economical manner with particular relation to such development in areas not
for the nowadays served or adequately served by any licensee (Section 18). the only
injunction is that as far as practicable they shall not persevere their operations at a loss
(Section 59). They get subventions from the State Governments (Section 63). within the
discharge of their functions, they're guided by directions on questions of policy given by
State Governments (Section 78-A). There aren't any shareholders and there is no distribution
of profits. this may be another reason why the 1948 Act cannot be said to be Entry 43 of List
I.."