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REGISTERED No. D. 221

The Gazette of India

EXTRAORDINARY

PART II—Section 2

PUBLISHED BY AUTHORITY

No. 55 ] NEW DELHI, MONDAY, NOVEMBER 29, 1965/A GRAHAYANA 8 .,1887

Separate paging is given to this Part in order that it may be filed

as a separate compilation.

LOK SABHA

The following Bills were introduced in Lok Sabha on the 29th November, 1965:—

BILL NO, 83 OF 1965 A Bill to authorise payment and appropriation of certain further sums from and out of the Consolidated Fund of the State of Kerala for the services of the financial year 1965-66.

BE it enacted by Parliament in the Sixteenth Year of the Republic of India as follows: —

Short title,

1. This Act may be called the Kerala Appropriation (No. 5) Act, 1965.

5 2. From and out of the Consolidated Fund of the State of Kerala there may be paid and applied sums not exceeding those specified in column 3 of the Schedule amounting in the aggregate to the sum of six lakhs, sixty-six thousand and four hundred rupees towards de- fraying the several charges which will come in course of payment l0 during the financial year 1965-66, in respect of the services specified in column 2 of the Schedule.

Issue of

Rs.

6,66,400

from and

out of th*

Consoli-

dated

Fund of

the State

of Kerala

for the

financial

year

1965-66.

("45)

Appropria-

tions.

3. The sums authorised to be paid and applied from and out of the Consolidated Fund of the State of Kerala by this Act shall b" appropriated for the services and purposes expressed in the Sche- dule in relation to the said year.

THE SCHEDULE

(See sectiona 2 and 3)

I

3

S u ms n ot exceeding

J No. of • Vote

Service* a nd purpose*

/ Charged

Total

V o t ed by P a r l i a m e nt

[0

on the Consolidated Fund

Ri.

Rs.

Rs.

Police

100

1 00

X I II

Public H e a l th . . ..

25,200

XX

33,300

Agriculture . . . ..

3.3O0

X X II

A n i m al H u s b a n d ry

[5 X XV

54.ooo

54.0O0

Industries . . . ..

X X V II

4,4"J$oo

i.oojooo

3,48,900

Miscellaneous . . ..

2,700

XL

3,700

Capital Outlay on Industrial a nd E c o-

XLV

2,100

n o m ic D e v e l o p m e nt

3,100

Capital Outlay on Public W o r ks

1,30,200

10 X L V II

1,30,200

T O T AL

^6,66,400

3.84,300

3,93,100

STATEMENT ©F OBJECTS AND REASONS

This Bill is introduced in pursuance of articles 204(1) and 205 of the Constitution and the Proclamation issued under article 356 of the Constitution in respect of the State of Kerala on the 24th March, 1965, to provide, for the appropriation out of the Consolidated Fund of the State of Kerala of the moneys required to meet the supple- mentary expenditure charged on the Consolidated Fund of the State of Kerala and the grants made by the Lok Sabha for expenditure of the Government of Kerala for the financial year 1965-66.

B. R. BHAGAT.

PRESIDENT'S RECOMMENDATION UNDER ARTICLE 207 OF THE CONSTITUTION OF INDIA

[Copy of letter No. F.5(10)-B/65, dated the 12th November, 1965 from Shri Bali Ram Bhagat, Minister of Planning to the Secre- tary, Lok Sflbha],

By virtue of the Proclamation dated the 24th March, 1965, issued under Article 356 of the Constitution, the President having been informed of the subject matter of the proposed Bill to authorise pay- ment and appropriation of certain further sums from and out of the Consolidated Fund of the State of Kerala for the services of the year ending on the 31st day of March, 1966, recommends the introduction of the Kerala Appropriation (No. 5) Bill, 1965, in the Lok Sabha and also recommends to the Sabha the consideration of the Bill under Article 207(1) and (3) of the Constitution read with Article 205 thereof,

BILL N O. 82 OF 1965

A Bill further to amend the Electricity (Supply) Act, 1948.

BE it enacted by Parliament in the Sixteenth Year of the Republic

of India as follows:^

1. (1) This Act may be called the Electricity (Supply) Amend-

ment Act, 1965.

Short title and com-- mence- ment.

5 (2) Sections 20, 21 and 22 shall be deemed to have come into force on the 1st day of April, 1965 and save as otherwise provided in this Act, the remaining provisions shall come into force at once.

54 of 1948.

2. In section 5 of the Electricity (Supply) Act, 1948 (hereinafter referred to as the principal Act), in sub-section (6), the words, "or

Amend-*- merit of section 5.

i° within the twelve months last preceding was," shall be omitted.

.1. In section 7 of the principal Act, for clause (b), the following clause shall be substituted, namely: —

Amend- ment of section 7,

"(b) references in this Act to—

(i) the State,

(ii) the State Electricity Consultative Council, and 5

(Hi) the State Legislature,

shall, unless the context otherwise requires, be construed us ref- erences respectively to—

(A) both States,

(B) where more than one State Electricity Consultative I⁰ Council has been constituted under section 16, to all such Councils, and

(C) the Legislatures of both States;".

4 In section 16 of the principal Act,—

(i) in sub-section (2), for the word "seven", th" word X5 Amend. mttatot svettm 11

"elfht" shall be substituted;

(ii) for sub-section (6), the following sub-section shall be substituted, namely: —

"(6) The Board shall place before the State Electricity Consultative Council the annual financial statement and 20 supplementary statement, if any, and shall take into consi- deration any comments made on such statement in the said Council before submitting the same to the State Government under section 61.".

5. In section 19 of the principal Act, in sub-section (4), after the ²5 word "determined", the words "by arbitration" shall be inserted.

Amend-

ment of

section 16.

6. For section 29 of the principal Act, the following section shall be substituted, namely: —

Amend-

ment of

MCtlon 29.

"29. (I) A .scheme prepared for any area under seition 28 Publica- tion and sanc- tioning of sche- mes.

may, subject to the provisions of this section, be sanctioned by 30 the Board either generally or in respect of any part of the area and where a scheme has been sanctioned in respect of part of the area, it may subsequently be sanctioned in respect of other parts of that arta.

(2) Every scheme sanctioned under this section shall be published in the Official Gazette and in such local newspapers as the Board may consider necessary:

5

Provided that it shall not be necessary to so publish any scheme which is estimated to result in a capital expenditure not exceeding twenty-five lakhs of rupees,

(3) Before sanctioning any scheme which is estimated to result in a capital expenditure exceeding one crore of rupees, the following procedure shall be adopted, namely: —

10

(i) The Board shall send a copy of the scheme to the State Government and to the Authority and cause such scheme to be published in the Official Gazette and in such local newspapers as the Board may consider necessary; and the Board shall give public notice of the date, not being less than two months after the date of the notice, by which li- censees and other persons interested may make representa- tions thereon and when publishing such a scheme the Board shall show estimates of the capital expenditure involved and of the initial and ultimate revenues anticipated from the sale of energy, meter rentals and other services.

25

(ii) The Board, after considering any such representa- tions and after making such inquiries, if any, as it thinks fit, may sanction the scheme either without modification or sub- ject to such modifications as it thinks fit, and either gene- rally or in respect of any par£ of the area specified in tht published scheme:

30

Provided that no such scheme shall be sanctioned by the Board without prior consultation with the Authority and until any recommendations which the Authority may, in ac- cordance with the provisions of this Act, make upon such consultation have received due consideration by the Board:

35

Provided further that where the recommendations of the Authority in regard to any scheme are not accepted by the Board, the Board shall not sanction the scheme without the previous censent of the State Government,

40

(4) In respect of any scheme to which the provisions of sub-section (3) apply, the Board shall, within one month after being requested by the Authority so to do, supply the Authority with all such information incidental or supplementary to the scheme as may be specified in the request.".

7. 'In section 30 of the principal Act, for the word, brackets and Amend- ment of section 30.

figura "sub-section (2)", the words, brackets and figures "clause (ii) of sub-section (3)" shall be substituted.

8. In section 31 of the principal Act,-—

Amend- ment of Bection 31

(i) for the word, brackets and figure "sub-section (2)", the 5

words, brackets and figures "clause (ii) of sub-section (3)" shall be substituted;

(it) in the proviso for the word, brackets and figure "sub- section (3)", the word, brackets and figure "sub-section - (4)" shall be substituted.

*°

9. In section 32 of the principal Act, aiter the words "sanctioned

and'¹, the Words "where so required" shall be inserted.

Amend- ment of section 32.

10. In section 40 of the principal Act, after the words "agreement

be determined", the words "by arbitration" shall be inserted.

Amend- ment "f section 40.

11. For section 49 of the principal Act, the following section shall *5

3,

(3) Nothing in the foregoing provisions of this section shall derogate from the power of the Board, if it considers it neces- sary or expedient to fix different tariffs for the supply of elec- tricity to any person not being a licensee, having regard to the 5 geographical position of any area, the nature of the supply and purpose for which supply is required and any other relevant factors.

(4) In fixing the tariff and terms and conditions for the sup- ply of electricity, the Board shall not show undue preference to jo any person.".

12. After section 60 of the principal Act, the following section shall be inserted, namely: —

[nser- tion of new sec- tion 60A.

Period of limitation extended in certain cases.

9 of 1908.

"60A. Where the right to recover any amount due to the State Government for or in connection with the consumption of 15 electricity is vested in the Board and the period of limitation to enforce such right has expired before the constitution of the Board, or within three years of its constitution, then, notwith- standing anything contained in the Indian Limitation Act, 1908 or any other law for the time being in force relating to limita- 20 tion of action, the Board may institute a suit for the recovery of such amount,—

(i) where it has been constituted before the commence- ment of the Electricity (Supply) Amendment Act, 1965, within three years of such commencement; and

25 (it) where It has been constituted after such commence- ment, within three years of its constitution.".

Amend- ment of section 62.

13. In section 62 of the principal Act, in sub-section (1), for the words "twenty-five thousand" and "one lakh", the words "seventy- five thousand" and "three lakhs" shall respectively be substituted.

30 14. In section 67 of the principal Act,—

(i) in clause (viii), for the word "eight", the word "fifteen"

Amend- ment of section 87.

shall be substituted;

(it) for clause (x), the following clause shall be substituted,

namely: —

,, "(x) the balance to be appropriated to a fund to be called the Development Fund to be utilised for—

(a) purposes beneficial, in the opinion of the Board, to electrical development in the State;

(b) repayment of loans advanced to the Board under section 64 and required to be repaid:

Provided that where no such loan is outstanding, one-half of the balance aforesaid shall be credited to the Consolidated Fund of the State.". 5

15. For section 68 of the principal Act, the following section shall be substituted, namely: —

Substi- tution of new section for sec- tion 68.

Depre- ciation reserve.

"68. The Board shall create a depreciation reserve and, as far as compliance with the provisions of section 67 makes it practicable, shall, at the end of every year, credit to such reserve 10 from its revenue an amount calculated in accordance with the straight line method of depreciation, that is to say, such an amount as is arrived at by dividing ninety per cent, of the ori- ginal cost of the assets by the prescribed period in respect of such assets:

15

Provided that the contribution in respect of any asset to the depreciation reserve under this section shall cease at the end of the prescribed period as denned in the Sixth Schedule or when the asset ceases to be used by the Board, whichever is earlier:

Provided further that if in any year it is not practicable 20 fully to comply with the provisions of this section, the amount by which the sums actually credited falls short of the amount required under this section in respect of that year, shall be car- ried forward and together with simple interest thereon at the Reserve Bank rate ruling at the beginning of that year, shall ²5 be credited to the said reserve as soon as it is found possible In accordance with section 67, so to do:

Provided further that the accumulations in the depreciation reserve may be invested in the business of the Board, or utilised for repayment of principal not guaranteed under section 66 or 30 for repayment of sums paid by the State Government under guarantees under that section.".

16. In section 75 of the principal Act,—

(i) sub-section (1) shall be omitted;

(ii) sub-section (JA) shall be re-numbered as sub-sec- 35 Amend- ment of section TO.

tion (1) thereof and in sub-section (1) as so re-numbered,—

(a) the words, brackets and figure "Without prejudice to the provisions of sub-section (1)," shall be omitted,

(b) after the words "to the State Government", the

words "before such date and" shall be inserted.

17. In section 76 of the principal Act, sub-section (1) shall be

omitted.

Amend- ment of section 70.

5 18. In section 82 of the principal Act, for the words "any person", the words "any member, officer or servant of the Board" shall be substituted.

Amend- ment of section 82.

19. In the Fourth Schedule to the principal Act, in paragraph II, in the second proviso, after the word "determined", the words "by

¹⁰ arbitration" shall be inserted.

Amend- ment of Fourth Sche- dule.

20. In the Fifth Schedule to the principal Act, for paragraph III,

the following paragraph shall be substituted, namely: —

"III. For the purposes of clause (e) of paragraph I,—

Amend- ment of Fifth Sche- dule.

(i) "depreciated cost of the lines" means original cost 15 thereof as determined in accordance with the provisions of sub-paragraph (6) of paragraph XVII of the Sixth Schedule less the amount written off or set aside on account of depre- ciation on fixed assets and the amount written off in respect of Intangible assets thereof in the books of the undertaking

²⁰ before or after the commencement of this Act;

(i?) the rate of interest shall be,—

(a) where the licensee owning the lines is a local authority, the average rate payable on the money raised by that authority for the purpose of constructing the

25 lines;

(b) in any other case, the Reserve Bank rate ruling at the beginning of the year referred to in paragraph I plus two per centum".

21. In the Sixth Schedule to the principal Act,—

3° (i) in paragraph I,—

(a) for the word "rates" wherever it occurs, the word

Amend- ment of Sixth Sche- dule.

"charges" shall be substituted;

(b) in the second proviso for the word "fifteen", the

word "twenty" shall be substituted:

(c) the following proviso shall be added at the end, namely: —

"Provided also that nothing in this Schedule shall be deemed to prevent a licensee from levying, with the previous approval of the State Government, minimum 5 charges for supply of electricity for any purpose.";

(ii) after paragraph I, the following paragraph shall be inserted, namely: —

"IA. The notice referred to in the third proviso to para- graph I shall be accompanied by such financial and technical I⁰ data In support of the proposed enhancement of charges as the State Government may, by general or special order, specify-";

(Hi) in paragraph II, to sub-paragraph (3), the following proviso shall be added, namely:—

*5

"Provided that where the undertaking is purchased by the Board or the State Government, the amount of the Reserve may be deducted from the price payable to the licensee.";

(iv) In paragraph IV, for sub-paragraph (2), the following ²⁰ sub-paragraph shall be substituted, namely: —

2 of 1882.

"(2) The sums appropriated to the Contingencies Re- serve shall be invested in securities authorised under the Indian Trusts Act, 1882 and such investment shall be made within a period of six months of the close of the year of 25 account in which such appropriation is made,";

(v) in paragraph V, for sub-paragraph (2), the following sub-paragraph shall be substituted, namely: —

"(2) On the purchase of the undertaking, the Contin- gencies Reserve, after deduction of the amounts drawn under 30 sub-paragraph (1), shall be handed over to the purchaser and maintained as such Contingencies Reserve:

Provided that where the undertaking is purchased by the Board or the State Government, the amount of the Reserve computed as above, after allowing for the compen- 35 sation, if any, due to the employees of the outgoing licensee under any law for the time being in force, may be deducted from the price payable to the licensee.";

(vi) in paragraph VA, to sub-paragraph (4), the following proviso shall be added, namely:—

40

"Provided that where the undertaking is purchased

by the Board or the State Government, the amount of tho Reserve may be deducted from the price payable to th" licensee.";

(vii) in paragraph VII, in sub-paragraph (2),—

5

(a) after the words "fixed asset" the words "including expenses incurred on the dismantling thereof" shall be inserted; ,

(b) in the proviso, after the words "cost of the asset", the words "and the dismantling expenses" shall be inserted;

10

(viii) in paragraph XV, in sub-paragraph (1), after the words "which exceeds", the words, "in any year of account," shall be inserted;

(ix) in paragraph XVII—

(1) in sub-paragraph (1),—

'5

(a) in clause (b), the words "including expenses on account of new capital issue" shall be inserted at the end;

(b) in clause (e) —

({) in sub-clause (ii),—

20

(a) for the words "cash and bank balances", the words and brackets "cash and bank balances (whether credit or debit)" shall be substituted;

25

(b) for the words, brackets and figures "clauses (i), (iv) and (x)", the words, brackets, figures and letter "sub-clauses (i), (iv), (iv-a) and (x)" shall be substituted;

(ii) after sub-clause (ii) (which provides for de- duction of certain amounts), the following sub-clause shall be inserted, namely: —

30

"(H-a) the amount of any loans borrowed from organisations or institutions approved by the State Government;";

(iiti) for sub-clause (Hi) (which provides for de- duction of certain amounts), the following sub-clause shall be substituted, namely: —

35

"(iii) the amounts deposited with the licen-

see by consumers by way of security;";

(iv) in sub-clause (iv) (which provides for deduction of certain amounts), the words "at the

beginning of the year of account" shall be Inserted at the end;

(v) for sub-clause (v) (which provides for deduction of certain amounts), the following sub- clause shall be substituted, namely:— 5

" (v) the amount standing to the credit of the Development Reserve at the close of the year of account;";

(2) in sub-paragraph (2), in clause (b) ,—

(a) after sub-clause (iu), the following sub-clause 1° shall be inserted, namely: —

" (iv-a) interest on loans borrowed from organi- sations or institutions approved by the State Gov- ernment;"; (b) for sub-clause (xii), the following sub-clauses X5 shall be substituted, namely: —

"(xii) contributions to Provident Fund, staff pension and gratuity computed in accordance with schemes approved by the State Government;

(xii-a) expenses on apprentice and other train- ²O ing schemes;";¹

(3) in sub-paragraph (9),—

(a) after clause (c), the following clause shall be inserted, namely: —

"(e-2) an amount equal to one-half of one per 25 centum, on the amounts borrowed from organisations or institutions approved by the State Government;";

(b) after clause (d) the following clause shall be inserted, namely: —

" (e) such other amount as may be allowed by 30 the Central Government, having regard to the pre- vailing tax structure in the country.";

(4) for sub-paragraph (10), the following sub-para- graph shall be substituted, namely: —

"(10) "standard rate" in respect of any year of 35 account means—

(a) in relation to that part of the capital base for that year of account which is equivalent to the capital base as on the 31st day of March, 1965, seven per centum per annum; 40

(b) in relation to the remaining part of the capital base lor that year, the Reserve Bank rate ruimg at the beginning of that year, plus two per centum: (

5 Provided that the Central Government may, by notification in the Official Gazette, and with effect trom such date as may be specified therein, increase or dec- rease the standard rate specified in clause (b), if, after consultation with the Authority, that Government consi- 10 ders it necessary so to do to ensure that any rise or fall in the Reserve Bank rate does not affect the reasonable re- turn m any subsequent year of account in relation to that part ot the capital base which is equivalent to the capital base as computed on the last date ot the previous

!5 year of account.".

22. In the Eighth Schedule to the principal Act, in paragraph II,—

(1) for the words, brackets, letter and figure "For the pur- ;

poses of clause (e) of paragraph I of the rate of interest shall , be—", the following shall be substituted, namely:— ,

Amend- ment of Eighth Sche- dule.

20 "For the purposes of clause (e) of paragraph I—

(i) "depreciated cost of the station" means original cost thereof as determined in accordance with the pro- visions of sub-paragraph (6) of paragraph XVII ot the Sixth Schedule less the amount written off or set aside on account of depreciation on fixed assets and the amount written off in respect of intangible assets thereof in the books of the undertaking before or after the commence- ment of this Act;

{ii) the rate of interest shall be,—".

30 23. In the Ninth Schedule to the principal Act, in paragraph III, for the letter and words "L = the average load factor of the station;", the letter and words "It =• the percentage average load factor of the station;" shall be substituted.

Amend- ment of Ninth Sche- dule.

54 of 1MB.

24. (I) Notwithstanding any judgement, decree or order of any 3, court, all rates fixed under section 49 of the Electricity (Supply) Act, 1948, for the sale of electricity to any person other than a licen- see before the commencement of this Act shall be deemed to have been validly fixed as if the provisions of the said section, as amend- ed by this Act, had been in force at all material times when such rates were fixed and accordingly,—

Valida- tion of imposition and col- lection of charg- es for the sup- ply of 40

(a) no suit or other proceeding shall be maintained or

continued In any court for the refund of any amount collected from any person on the basis of such rates;

5 (b) no court shall enforce a decree ox order directing the refund of any amount collected from such person on the basis of such rates;

electri- city un- der sec- tion 49 of the Electricity (Sup- ply) Act, 1948.

(c) any amount due from any person on the basis of such rates before the commencement of this Act but not recovered before such commencement may be recovered In the manner provided under the Electricity (Supply) Act, 1948.

54 of 1948.

IO (2) For the removal of doubts it is hereby declared that nothing contained in sub-section (1) shall be construed as preventing any person from claiming refund of any amount paid by him in excess of the amount due from him under the said Act, as amended by this Act, and the rules or regulations made thereunder.

STATEMENT OF OBJECTS AND REASONS

The object of this Bill is to remove certain anomalies and difficulties which have come to notice in the working of the Electri- city (Supply) Act, 1948. Certain changes are being made in order to facilitate raising of capital required for development. Few amendments are also proposed to tighten the control over the financial operations of private licensees-

2. The changes that are proposed to be made in the Sixth Schedule to the Act in regard to the measures for regulating the financial operations of licensees are as follows;—

(0 In the scheme of the said Schedule at present there is a distinction between the loans obtained bv the licensees from Electricity Boards and from other sources. It is proposed to dis- pense with this distinction by applying the same conditions as are applicable to the borrowings from the Board, to loans borrow- ed from organisations approved by the State Governments.

(it) It ia being clarified that the intangible assets will include expenses on account of new capital issue.

(Hi) It is provided In the Act that a licensee shall not be deemed to have failed to adjust his rates if the clear profit In any year of account has not exceeded the amount of reasonable return by 15 per cent, of the amount of reasonable return. This cushion of 15 per cent, has been found to be inadequate and is therefore proposed to be raised to 20 per cent, without giving the licensee any additional benefit.

(iv) It is proposed to provide that the licensees while fbdng the charges for supply of electricity will be competent to levy minimum charges. This is considered necessary, particularly in the case of industrial consumers, to ensure that the con- sumer pays at least such monthly charges as would cover the cost on account of arrangements made by the licensee to give the supply.

(v) It is now provided that on the purchase of an under- taking of the licensee by the Board or State Government, com- pensation due to the employees of the licensee under any Act, may be paid out of the Contingencies Reserve.

(ui) At present, clear profit of a licensee has been linked with the Reserve Bank rate ruling at the beginning of the year of account through the mechanism of standard rate and reason- able return. Any increase in the Bank rate has a direct effect on the reasonable return which the licensees can earn. If the Bank rate increases, it is justifiable to allow the licensees to earn reasonable return based on increased Bank rate on new investments. But it is not desirable to allow them to earn unduly large return due to the rise in the Bank rate on past investments at the cost of the consumers. It is therefore pro- posed to amend the Act to ensure that return on any block of capital invested in any year of account is limited to the rate of 2 per cent, above the Bank rate prevailing at the beginning of that year of account.

(uii) With a view to tightening control over the financial operations of the private licensees, it is being provided that where an undertaking is purchased by the Board or the State Government, the amount standing to the credit of the Tariffs and Dividends Control, the Contingencies, and the Development Reserves shall be deducted from the price payable to the licensee. It is also being provided that the annual contributions to the Contingencies Reserve shall be invested in securities within a period of six months of the close of the relevant year. Licensees are at present permitted to set apart from revenue, contributions to the provident fund, staff pension, gratuity and apprentice and other training schemes. It is proposed to provide that contri- butions to the provident fund, staff pension and gratuity will be made in accordance with any scheme approved by the State Government.

(viii) It is proposed to empower the Central Government to allow, in computing the reasonable return, such amount as may be considered necessary having regard to the prevailing i taxation policy.

It is proposed to bring into force the new provisions relating to the financial operations of the licensees retrospectively with effect from the 1st April, 1965.

3. Under the existing provisions of the Act, members of Parlia- ment or of the State Legislatures and members of local authorities have to wait for a period of 12 months after they cease to be such members before becoming eligible for appointment as members of the State Electricity Boards. Some of the State Governments have, In view of this provision, been complaining about the difficulty in

finding suitable personnel for manning the Boards on full-time basis. With a view, therefore, to enlarging the field of choice of membership for the Boards, it is proposed to amend the Act to permit appoint- ment of members of Parliament, etc., as members of the Board imme- diately after they cease to be such members.

4. The Bill also makes the following amendments in certain provi- sions of the Act which relate to the activities of the Electricity Boards:—

(i) In accordance with the procedure laid down in the Act in respect of sanctioning of its schemes by the State Electricity Board, all schemes are required to be published in the Official Gazette and local newspapers twice; first as draft schemes, and again as sanctioned schemes. This procedure has been found to be wasteful and unnecessary in the case of small schemes. Pro- vision has therefore been made in the Bill to provide that schemes costing up to Rs. 25 lakhs need not be published at all. It is also proposed to amend the relevant provisions of the Act to provide that the schemes costing between Rs. 25 lakha and Rs. 1 crore each may be published only once after they are sanc- tioned; the schemes costing more than Rs. 1 crore will continue to be published twice as at present.

(ii) The Electricity Boards, as soon as they were established in the various States, took over the business of generation, sup- ply and distribution of Electricity from the State Electricity Departments, along with their assets and liabilities. The period of limitation, under the Indian Limitation Act, 1908, applicable in the case of the Boards is only three years, whereas it was 60 years in the case of the State Government Electricity Depart- ments. Because of the longer period of limitation applicable in their case, the Government Electricity Departments did not find it necessary to initiate legal proceedings for recovery of certain dues from the consumers even though they had not been paid for periods longer than three years. Such cases stood time-barred as soon as the business was taken over by the Boards, and re- sulted in substantial financial loss to the Boards. In view of this difficulty, it is proposed to extend the period of limitation applicable to the State Electricity Boards under the Indian Limi- tation Act, 1908, so that the time-barred dues as explained above, can be recovered by them.

(Hi) It is proposed to provide that the revenue of the Board after meeting the operating, maintenance and management ex- penses and other liabilities regarding interest, depreciation, etc., as laid down in clauses (i) to (ix) of section 67, shall be credited to a fund to be utilised for purpose beneficial to electrical deve-

lopment in the State and for repayment of loans advanced to the Board by the State Government. It has also been provided that where the loans are not required to be repaid, contributions to the aforesaid fund will be cut down to one-half, and the remain- ing one-half shall, as at present, be credited to the Consolidated Fund of the State.

(iu) The maximum accumulation permitted in the general reserve of the Boards is 8 per centum of the cost of the fixed assets. With a view to providing larger internal finance, the aforesaid ceiling is proposed to be raised to 15 per centum.

(u) Contributions to the Depreciation Reserve of the Board are, at present, required to be made on the basis of the compound interest method which involves complicated calculations and accounting. It is proposed to replace this procedure of computing depreciation by the simpler straight line method.

(vi) It has recently been held by the Bombay High Court that section 49 of the Act does not permit the framing of a uni- form tariff with a view to helping consumers in sparse areas by substantially over-charging the consumers in compact areas. In the interest of power development in the country, the general policy is towards adoption of uniform rates throughout the State for each class of service or purpose. But at the same time there may be need for divergent rates in some areas, because of certain special circumstances. The Act is therefore proposed to be amended to meet these requirements. These amendments are proposed to be given retrospective effect in order to remove the legal lacunae, if any, in the action taken by various Boards to adopt uniform tariff in the past.

6. The Bill also provides for some consequential and minor amendments and clarifications.

NEW DELHI;

The 22nd November, 1965- K. L. RAO.

PRESIDENT'S RECOMMENDATION UNDER ARTICLE 117 OF THE CONSTITUTION OF INDIA

[Copy of D.O. No. F. 9/65-P.U. dated the 23rd November, 1965 from Dr. K. L. Rao, Minister of Irrigation & Power to the Secretary, Lok Sabha.];

The President having been informed of the subject matter of the Electricity (Supply) Amendment Bill, 1965, recommends Introduction of the Bill in the Lok Sabha under clause (1) of article 117 of the Con- stitution.

MEMORANDUM REGARDING DELEGATED LEGISLATION

Clause? 21 of the Bill which amends sub-paragraph (9) of para- graph XVII of the Sixth Schedule to the Electricity (Supply) Act, li)48 empowers the Central Government to allow, in computing the reasonable return, such amount as may be considered necessary having regard to the prevailing taxation policy. Further, the afore- said clause which amends sub-paragraph (10) of the said paragraph gives power to the Central Government to increase or decrease after consultation with the Central Electricity Authority the standard rate having regard to certain factors.

It is not possible to envisage at this stage in what manner the aforesaid powers will be exercised. The exercise of those powers will depend upon certain fluctuating circumstances.

The delegation of legislative power is thus of a normal and routine nature.

S. L. SHAKDHER,

Secretary.

PRINTED JN INDIA HY THE UKNERAL MANAGER, GOVERNMENT OF INDIA PRESS, MTNTO HOAD, NEW DELHI AND PUBLISHED BY THE MANAGER Of PUBLICATIONS, DELHI 1965.