1.1

Tata Power and Holding Company shall participate in the manner provided in this Shareholder Agreement in the capital, business and operations of COMPANY.

1.2

Neither party hereto shall the authority or power to bind the other party hereto save and except as specified provided in this Agreement.

1.3

Tata Power acknowledges that the principal objectives of Holding Company in selling the majority equity shares in COMPANY to Tata Power are to:-

(a)

improve the quality of service to customers by improving the security and reliability of the supply system and make available electricity at a reasonable price;

(b)

improve operational efficiencies and reduce losses;

(c)

contribute to the increased economic growth in the specified Area through the provision of superior electricity distribution system,

(d)

attract private investment into the distribution business,

(e)

reduce the need for finding by the Government in the electricity sector and

(f)

create opportunities for secure and increasingly more rewarding employment for technically qualified personnel in the electricity industry on the State and provide a stable environment for employees which will offer them better opportunities for career development

(g)

carry out the business more efficiently as specified in Article iv.

1.3.1

The parties acknowledge that the Holding Company and GNCTD have proceeded with the disinvestments of 51 percent of the shares in the COMPANY to achieve the objectives mentioned in Clause 1.3 and it shall be the earnest desire of GNCTD and the Holding company to provide such reasonable assistance on a best endeavour bases (without incurring any legal obligation ) to facilitate ;the COMPANY in the operation land conduct of its business under the management and control of Tata Power.