REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 7780 OF 2011
[Arising out of SLP (C) No. 7443 of 2010]
PepsiCo India Holding Pvt. Ltd. .... Appellant
Versus
State of Maharashtra & Ors. .... Respondents
JUDGMENT
Dr. MUKUNDAKAM SHARMA, J.
1. Leave granted.
2. The appeal is directed against the judgment and order dated
04.11.2009 passed by the High Court of Judicature at Bombay
in Writ Petition No. 5834 of 2005. The said Writ Petition was
filed by the appellant herein questioning the levy of increased
Page 1 of 36
water charges on ground that it cannot be given retrospective
effect by the respondent herein.
3. The facts leading to the filing of the present appeal are that
the appellant - PepsiCo India Holdings Pvt. Ltd. is incorporated
in India under the Companies Act, 1956 for manufacturing and
distributing carbonated soft drinks, bottled drinking water and
other food products. Appellant stated that it is one of the
leading manufacturers of Carbonated Soft Drinks and bottled
drinking water in the entire State of Maharashtra and a
significant portion of the entire national demand for the
appellant's product is met from the production made within the
State of Maharashtra itself.
4. The State of Maharashtra, represented by Secretary, Deptt.
of Industries, Mantralaya is respondent no. 1, the Maharashtra
Industrial Development Corporation ["MIDC"] is respondent no.
2 which is responsible for infrastructure required for any industry,
i.e. land, water and electricity. All the Industrial Estates of State
Government in Maharashtra come under the purview of
respondent no. 2. MIDC at Roha Div. Alibag is respondent no. 3
and is the branch of respondent no. 2 and shares the same
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objective. Department of Irrigation is respondent no. 4 and is
responsible for the supply of water to all industrial estates under
respondent no. 2 in Maharashtra.
5. The appellant stated that respondent no. 2, acting through
respondent no. 3 invited business undertakings to set up
industrial units in the industrial areas to add impetus to industrial
development in the State of Maharashtra. Accordingly, the
appellant decided to set up its manufacturing plant in the State of
Maharashtra at Paithan, Distt. Aurangabad and Roha, Dist.
Raigad. In this case, however, we are concerned with the
manufacturing plant of the appellant located at Roha.
6. The primary business of the appellant is to manufacture
non-alcoholic beverages in its plant and for the manufacturing of
the same, water is used as one of the raw materials.
7. The plant from where the appellant operates its unit at
Roha, Maharashtra was earlier owned by another company by the
name Voltas India Limited. The said company had entered into a
Water Supply Agreement with respondent no. 3 for its facilities
at Dhatav, Roha under the Water Supply Regulation Act, 1973.
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8. There are regulations in respect of supply of water, namely,
`Maharashtra Industrial Development Corporation Water Supply
Regulations'. Regulation 2(2) defines "Consumer", which means
any person or persons who has applied for supply of water from
any works of the Corporation and to whom MIDC has agreed to
supply water or any person or persons otherwise liable for
payment of water charges to the Corporation. Clause 27 of the
Water Supply Agreement provides that the Respondents shall fix
charges for water from time to time and increase or decrease the
water charges in its discretion after giving notice of one month to
the consumer. Clause 36 of the Water Supply Agreement
provides for penalty in case of failure on part of the consumer to
pay the water bill. Clause 27 of the Water Supply Regulations,
1973 are as under:
"Clause 27: Water Rate: The charges for
water shall be fixed by the Corporation from
time to time. The Corporation shall increase or
decrease the water charges in its discretion
after giving notice of one month to the
consumer. The rates of water charges so fixed
or altered shall be conclusive and be binding on
the consumers."
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Regulation 28 provides for recovery of arrears on account of
water charges or any other expenses incurred by the Corporation
in connection with water supply to the consumer, which shall be
recoverable as arrears of land revenue. The Corporation also has
the right to disconnect the water supply in the event of
contingencies provided under the regulations.
Regulation 35 is in respect of Water Rate, which reads as under:
"Regulation 35: Water Rate: The consumer
shall pay the charges for water supply which
shall be fixed by the Corporation from time to
time. The Corporation shall increase the water
charges in its discretion after giving notice of
one month to the consumer. The rates so fixed
or altered by the Corporation shall be final and
binding on the consumer."
Regulation 36 provides for recovery of arrears as land revenue.
Clause 42 of the agreement provides for a forum of Chief
Engineer, MIDC, for resolution of the disputes arising out of
interpretation or otherwise of the regulations and that the
decision of the dispute resolution authority shall be final and
binding on the consumer. Regulation 51 provides that for
disputes arising out of the interpretation or otherwise of the
provisions of the Agreement, the decision of the Chief Engineer,
MIDC shall be final and binding on the consumer.
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9. Appellant purchased its plant at 100/1, A-Road, MIDC,
Dhatav, Roha, Distt. Raigad from Voltas Limited, the original
owners of the property. Voltas issued its no objection to transfer
water connection in the name of the appellant. Since then, the
respondent no. 3 has been issuing all the water bills in the name
of the appellant.
10. Respondent no. 4 while acting upon a recommendation of
the Finance Commission issued Government Resolution No. WSR
1001/(5/2001)/IM (P) dated September 12, 2001 increasing the
water cess. The revision was made after drawing a classification
differentiating three categories of consumers of water, namely:-
"Category 1 - Water used for purpose of
drinking - present rates of water cess doubled.
Category 2 - Water for industrial use - present
rates of water increased three times.
Category 3 - Industries where water is being
used as a raw material as drinking water, for
such industries (that is, cold drinks, mineral
water etc.) - present rates of water increase
ten times".
For category 3 this is what was provided:-
xxxxxxxxxxxxxxxxxxxx
Page 6 of 36
xxxxxxxxxxxxxxxxxxxx
A5 "Drinking water industries where water is
being used as raw material means cold drinks,
breweries, mineral water and similarly based
industries."
Above increase in rates was made effective from 1st September,
2001 as per clause A4.
11. The old rate of water was Rs. 3.65 per cubic meter which
was increased to Rs. 36.50 pcm from September 1, 2001 for
industries where water is being used as a raw material as
drinking water. It was also specified that the revised rates would
increase by 15% in the month of July of every following year.
12. Consequently, the appellant was placed in the third category
i.e. industry using water as raw material. On that basis, the
appellant was directed to pay water cess, on increased rates.
Subsequently, some industrial associations/organisations/
industrialists made representations to the State Government
requesting it not to increase the water cess.
13. On October 24, 2001 the respondent no. 4 issued another
Govt. Resolution Errata No. WSR 10001/ (5/2001)/IM (P). The
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corrigendum changed the increased water cess from the new
rates of Rs. 36.50 pcm to Rs. 40 pcm and made the same
effective from September 1, 2001 with a clarification that while
deciding/fixing water rates vide Government Resolution No. WSR
1001/(5/2001)/IM (P) dated September 12, 2001, some
deficiencies were left out and the same are being removed by
Errata dt. 24.10.2001 with the following resolution:
"A(3) In the industries where water is being
used as raw material as drinking water, for such
industries (i.e. Cold Drinks, Mineral Water etc.)
present rates, (which have been made effective
from 01/07/2000) are being made 10 times.
A (4) Above increase in rates shall be effective
from 1st September, 2001"
14. On 31.10.2001, respondent no. 2 issued a Circular No.
G/30/2001 deciding to increase its water charges levied on the
consumers and thereby implementing the revised rates of water
charges from November 1, 2001 onwards. Relevant portion of
the Circular is reproduced hereunder:
"Pursuant to the policy decision taken during
246th meeting of Board of Directors of MIDC
held on 3.10.1997 and as approved by the Sub-
Committee of the Corporation appointed for
that purpose, the Corporation has issued
revised rates of water supply from 1.4.2001
vide the Circular under reference No. 1.
Page 8 of 36
Thereafter the Irrigation Department of
Government of Maharashtra have issued
revised rates of water supply for drinking and
for industrial use vide the aforesaid reference
No.2. The prevailing charges for drinking water
have been doubled (from 1.7.2000) and water
charges for industrial use have been increased
three times (from 1.7.2000). It has been
mentioned that the said increase in rate is
effective from the date 1st September, 2001.
Due to this increase in water charges, the
amount to be paid by the Corporation to the
Irrigation Department would be increased and
therefore, it is inevitable for the Corporation to
increase its water charges. Pursuant thereto the
Corporation has decided to implement the
revised rates of water charges from the date
1.11.2001.
Revised rates to be implemented from
1.11.2001 have been mentioned in the
accompanying schedule No A-1 to A-5.
While determining the revised rate of water
supply the prevailing water charges for
domestic use have been increased by Rs.0.25
per c.m. while for industrial usage it has been
increased by Rs. 6.50 p.c.m. and accordingly
the revised rates have been made applicable to
all the concerned consumers from the date
1.11.2001.
As stated above, all the Executive Engineers are
requested to issue a separate circular regarding
increase of water charges and to supply it
immediately to all the consumers as per the
accompanying form.
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Water consumed by the consumers from the
date 1.11.2001 should be charged at the
revised rates."
15. On 06.12.2001, respondent no. 2 issued a Circular No. G-
32/2001 informing the industrial organisations that the proposed
increase in rates is due to the increase in water charges effected
by respondent no. 4 and till the time respondent no. 4 does not
withdraw the increase in water charges, the respondent no. 2
cannot reduce the water rates. It was further stated that
representations received have been forwarded to the Government
and therefore during the pendency of the said representations,
the industrialists can pay the water bills at previous rates. On
13.08.2002, respondent no. 2 issued another Circular informing
the pendency of representations before the Government, in which
it was also stated that industrialists are allowed to pay the bills at
the old rates and the same should be accepted and the balance
amount should be shown as arrears.
16. On 28.11.2002, respondent no. 4 issued a fresh Govt.
Resolution No. SANKIRN 2002/(148/2002)/IM (P), whereby the
water cess for different categories was amended as follows:-
Page 10 of 36
"Category 1 - Water used for purpose of
drinking - present rates of water cess doubled.
Category 2 - Water for industrial use - present
rates of water increased doubled.
Category 3 - Industries where water is being
used as a raw material as drinking water, for
such industries (that is, cold drinks, mineral
water etc.) - present rates of water increase
ten times."
17. By the above amendment, the only change was made in
category 2 and no change was made for the use of water by the
Industry where water is being used as a raw material.
18. On 27.05.2003, a Circular No. G/06/2003 was issued by
Chief Engineer (Head Office) MIDC, Mumbai 93 stating about the
water tariff increase and thereby confirming the rates set out vide
Govt. Resolution dated 28.11.2002. The said Circular provided for
the amended policy of water supply of industrial and residential
use, which was required to take effect from June 1, 2003. On the
same day respondent no. 2 issued another Circular No. G/7/2003
wherein the rate of water supply of the consumers under the
industrial area using water as raw material was fixed at same as
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of the rates in industrial area. Relevant portion of the Circular is
reproduced hereunder:
"1. As per the Circular dated 24.10.2001 of the
Irrigation Department, water rate is increased
for industrial use - water rate 200 percent for
residential use - water rate 100 percent for use
water as raw material - water rate at 1000
percent. For recovering the increasing rate in
water charges, by amending the rate of water
supply of Corporation, were made applicable by
Circular No. G/30 dated 31.10.2001 and the
rate for use water as raw material, the rates
were made applicable as per Circular No. G/17
dated 30.7.2002, with effect from 01.11.2001.
The Corporation had raised the
issue/representation against this price revision
with the State Government. The said
case/representation seeking reduction in water
rate was under consideration of Government.
Therefore, approval was given to accept the
bills of water supply at old rate from the
Industrialists under the industrial area as per
Circular No. G/31 dt. 6.12.2001 and Circular
No. G/18 dt. 13.8.2002 of this Office.
Similarly, it was informed by Circular No. G/433
dt. 26.11.2001 not to increase rate of water
supply at the placed where water charges are
not payable to the Irrigation Department for
industrial area.
2. Now as per the circular dated 28.11.2002
of the Irrigation Department, the water rate for
industrial use has been decreased from 200
percent to 100 percent. The increase in
residential use and use water as raw materials
is confirmed. The amended rates are made
applicable from 1.9.2001. As per circular dt.
28.11.2002, the Irrigation Department has
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increased 15 percent increase from 1.7.2002
and 15 percent increase from 1.7.2003.
5. The rate of water supply of the consumers
under the Industrial area using water as raw
material will be the same as of the rates in
Industrial area. However, the rate of water of
such consumers outside industrial area be
charged by including difference of rates of
water tax.
6. The representations seeking reductions of
water charges are under the consideration of
Government. Therefore, though the bills are
sent to the consumers at increased rate, the
concession was given to pay the same at the
earlier rate (of prior to 01.11.2001). For this
reason, the arrears to that extent and late
charges thereon have been shown in the bills of
consumers, however, the rates during the
period from 01.11.2001 to 31.05.2003 and the
bills may not be revised presently. The decision
in that regard will be issued separately. All
consumers will be bound to pay the bills of
water at the rate of water supply in this circular
is made applicable from 01.06.2003."
In this view of the matter, no final decision was taken for the bills
relating to the period from 01.11.2001 to 31.05.2003. The
Maharashtra Industrial Development Corporation an undertaking
of the Maharashtra Government issued a Policy of water supply
and made it effective from 1st June, 2003.
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19. On 11.06.2003, the respondent no. 2 issued Circular No.
G/08/2003 revising rates of water supply for the period from
November 1, 2001 till May 31, 2003. It was specified that for
the period November 1, 2001 to November 30, 2002, the
different amount as per the revised rates should be shown as
arrears in the water bills. It was mentioned that if an
undertaking is given by the consumer to pay the arrears, then
the arrears would not be shown. Further, for the period from
December 1, 2002 to May 31, 2003, the arrears calculated as per
the revised rates were to be retrospectively recovered from the
consumer in three equal monthly instalments.
20. On 18.05.2005, respondent no. 2 vide its Circular No.
G/01/2005 revised the rates in respect of water supply to the
customers in industrial area using water as raw material.
Respondent no. 2 specifically observed that Circulars dated
27.05.2003 and 11.06.2003 provided for amended policy, which
implemented equal rates for all types of industries. By Circulars
dated 27.05.2003 and 11.06.2003 equal rates were fixed for the
water supply to all industries including the industries using water
Page 14 of 36
as raw material in industrial area. Relevant part of the Circular is
reproduced hereunder: -
"B. In accordance with Government Resolution
dated 28.11.2002 of the Irrigation Department,
the rates of using residential water use and
industrial water use under the Industrial area
and outside the area by Circular No. G/7/2003
and by Circular No. G-8 dated 11.6.2003, the
orders are issued regarding as to how the said
rates should be implemented.
C. By these circulars, equal rates are fixed for
the water supply to all industries including the
industries using water as raw material in
industrial area. However, while implementing
this policy it is found that in some industrial
area, the use of water by industries which are
using water as raw material, is in huge extent.
Since the rates of water use as raw material,
are more than five time of the water tax rate of
general industrial use, the financial burden of
amount of difference is falling on Corporation.
With a view not to put financial burden of such
type on Corporation, the decision of amending
the rates of water supply of the customers
using water as raw material under the Industrial
area, has been taken. The rates of water supply
of such customers be amended as follows: -
1) Revised rates: -
By extending the rates by Rs. 34.60 per c.m. of
water supply of respective industrial area issued
by issued under Circular No. G/7 dated
27/05/2003, the rates of water supply be
amended from 1/11/2001.
2) Recovery of Bills of water supply: -
Page 15 of 36
i) For
the period from 01/11/2001 to
30/11/2002 - The water-tax be levied at
revised rates for the aforesaid period. The
amount of difference drawn by amended
rates of water be shown as arrears. On the
amount comes due to difference in rate of
water during this period, late fee may not
be charged. The amount of arrears may
not be shown in the monthly bill of water
and for recovery of this amount,
undertaking be taken from the customers
on court-stamp paper of Rs. 20/-. In
respect of the said arrears, separate
orders will be issued as per the decision of
Irrigation Department.
ii) For
the period from 01/12/2002 to
30/04/2005 - For the aforesaid period, the
amount of difference of amended bill be
recovered in six equal instalments. First
instalment be recovered with the bill of
May, 2005 and last instalment be
recovered with the bill of October, 2005.
On the arrears of amount of its difference,
no late fees be charged till 30.11.2005.
iii) Recovery
of bills of water supply from
1/5/2005 - The recovery of further bills
from 1/5/2005 be made regularly by
amended rates of water supply as above."
21. On 06.06.2005, the Deputy Engineer of respondent no. 2
issued a letter to the appellant regarding revision of water rates
for the consumers within the Industrial Area using water as raw
material. By the said letter respondent no. 2 informed the
appellant that respondent no. 4 had increased the rate of royalty
Page 16 of 36
by five times w.e.f. 01.09.2001 for consumers within the
Industrial Area using water as raw material and appellant was
further informed that its rate has been revised to Rs. 48.10 pcm
w.e.f. 01.09.2001. The Deputy Engineer proposed recovery of
water charges in the following manner:
1) The water bills at revised rate will be paid regularly by
the appellant from 01/05/2005 onwards. Accordingly, May
2005 bill is prepared & issued at the rate of Rs. 48.10 pcm.
2) The water bills for the period 01/11/2001 to
30/11/2005 revised as per revised rate. Differential amount
given in separate page in tabular form amount to Rs.
69,97,385/-. However, the recovery of the differential
payment will be kept in abeyance till the issue of royalty
payment for this period is resolved by the Irrigation
Department. For arrears of this period appellant will have to
give an undertaking on the stamp paper of Rs. 20/-
regarding payment of water charges to this office.
3) For making differential payment of water bills as per
revised rates for the period from 01/12/2002 to 30/04/2005
Page 17 of 36
amounting to Rs. 1,57,62,618/- appellant will be allowed six
monthly equal instalment of Rs. 26,27,103/- each.
The appellant was directed to pay the instalments failing which
the amount would be charged along with interest to be calculated
after six months.
22. On 24.06.2005, respondent no. 3 issued another letter to
the appellant reiterating the observations made by the Deputy
Engineer, MIDC, and reminding the appellant about the increased
water rates for consumers using water as a raw material with
effect from 01.11.2001. Through this letter appellant was
directed to submit bank guarantee of Rs. 69,97,385/- towards
differential amount due to revision of water rates and to pay Rs.
1,57,62,618/- being differential amount from December 1, 2002
to April 30, 2004 in six equal installments of Rs. 26,27,103/- each
from May 2005 to October, 2005.
23. Thereafter, M/s. Waluj Industrial Association Paithan,
Aurangabad, who was facing the similar situation as the appellant
herein, filed Writ Petition No. 4263 of 2005 before the High Court
of Judicature at Bombay, Aurangabad Bench, challenging the
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circulars and notices issued by respondents. In the said case
similar agreement and the same regulation were applicable to the
writ petitioner as the present appellant. Relevant part of the
Judgment delivered by the High Court and having relevance to
the present case is reproduced hereunder:
13. In view of the clauses referred to above,
contained in Water Supply Regulations and
Water Supply Agreement, conclusion can be
drawn that the Corporation is within its right to
revise water rates. It is a common grievance
made by the petitioners, firstly that prescribing
exorbitant water rates is unreasonable for
which there is no basis. It is also contended
that levy of water charges with retrospective
effect is not permissible.
14. Respondents have placed on record
Government Resolution dated 24.10.2001
whereby it has been directed by the State
Government that royalty for lifting water by
MIDC from the Irrigation Department shall be at
the rates prescribed in the said Resolution. The
aforesaid Resolution prescribed different rates
in respect of use of water for normal industrial
use as well as for user of water for
manufacturing activity where water is used as a
raw material. The Corporation issued notices to
different industrial establishments in respect of
revision of water rates and made demand in
respect of payment of water charges at revised
rates. Although petitioners have made a
grievance that levy of water charges is with
retrospective effect and respective industrial
establishments were not informed about the
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revision of water charges on previous
occasions, however, Respondent-Corporation
has contended in its affidavit-in-reply that in
fact different industrial establishments,
operating within the area of Industrial
Development Corporation, have been
specifically informed in respect of revision of
water rates and their liability to pay water
charges at revised rates.
15. During the course of hearing, learned
Counsel for Respondent-Corporation has made
available record in respect of communications
made by petitioners in Writ Petition No.
4263/2005 i.e. Waluj Industries Association. On
perusal of an application tendered by Waluj
Industries Association on 23.11.2001, it
appears that said communication is in response
to a Circular dated 05.11.2001 relating to
revision of water rates issued by MIDC. It is
urged in the application that the whole industry
is passing through a phase of recession and
cannot bear the hectic increase. The Association
has protested against the hike in water charges
and requested the Corporation to take up the
issue with Irrigation Ministry. A further
application appears to have been tendered by
the Chamber of Marathwada Industries and
Agriculture on 16th August 2003 in respect of
revision of water rates and communications
made by the Corporation in that behalf to
respective industrial units. Similar
communications find place in the record dated
14th July 2003 by Industries Association of
Young Entrepreneurs, Aurangabad and dated
24th July 2003 by the Chamber of Marathwada
Industries and Agriculture. Many industrial units
operating within the industrial area have
tendered undertakings in the prescribed form in
compliance with the directives issued by MIDC.
Page 20 of 36
It is, therefore, unacceptable that petitioners
were not aware of the decision rendered in
respect of revision of water rates by the
Corporation and were also not communicated
about such decision. Respondent-Corporation
has also stated on oath that each industrial
establishment has been communicated in the
year 2001 and thereafter every time in respect
of revision of water rates by the Corporation.
16. The argument advanced by petitioners
regarding impermissibility of revision of water
rates by the Corporation with retrospective
effect is not acceptable. On perusal of the
decisions rendered by the State Government in
respect of levy of royalty for supply of water to
MIDC at higher rates, contained in various
Government Resolutions, it is difficult to accept
the argument advanced by the petitioners that
there is no nexus for upward revision of water
charges by the MIDC. Petitioners have
contended that no distinction can be made in
respect of levy of water charges on account of
user of water for normal industrial use or for
use as a raw material for finished products. The
distinction made for charging different rates in
respect of user of water for normal industrial
use as well as in respect of user as a raw
material for manufacturing activity is based on
intelligible differentia and is based on sound
reasoning."
Consequently, High Court declined to quash the notices and
disposed of the petition with following directions: -
"(i) Respondent - Maharashtra Industrial
Development Corporation shall be at liberty to levy
water charges at revised rates. However, so far as
portion of water supplied, which is being used for
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manufacture of liquor, beverages, etc., wherein
water is used as a raw material, Respondent-
Corporation would be within their right to recover
water charges at higher rates, whereas the portion of
water utilized for the purposes other than the
manufacturing activity as raw materials,
Respondent-Corporation shall have to recover water
charges at normal rates.
(ii) Respondent-Corporation may tender revised bills
taking into consideration the distinction made above.
(iii)Respective petitioners may make suitable
representations to the Respondents in respect of
revision of water rates effective from 2002 onwards
and on receipt of the representations, Respondents
shall take appropriate decision on considering
grievances raised by respective petitioners."
24. Appellant in the year 2005 filed a writ petition before the
High Court of Bombay which was registered as WP No. 5834 of
2005 challenging the Govt. Resolutions passed by Respondent no.
4 dated 12.09.2001, 24.10.2001 and 28.11.2002 along with
letters issued by Respondent Nos. 2 & 3 dated 6.6.2005 and
24.6.2005 and prayed for quashing the same by issuance of writ
of certiorari or such other writ and to direct the respondents to
refrain from severing any water connections with respect to
industrial units of the appellant. The High Court vide its order
dated 6.9.2005 stayed the operation of the notices dated
6.6.2005 and 24.6.2005 and allowed the appellant to continue to
Page 22 of 36
pay the bills at the pre-revised/earlier rates and charges.
Consequently, however, vide order dated 4.09.2009 High Court
dismissed the Writ Petition of the appellant in terms of the
decision of the coordinate bench of the said High Court in Writ
Petition No. 4263/2005. The High Court held in the following
manner: -
"(i) It will be open to the petitioners to submit documentary
evidence before the respondents showing the water which
they were using as a raw-material and the water which they
were using for allied activities. The respondents thereafter to
complete the entire exercise within 16 weeks from today.
(ii) On the petitioners providing such information supported
by documentary evidence, the respondents to charge the
petitioners in terms of the directions issued by this court in
writ petition no. 4263 of 2005.
(iii) Considering direction no. 3 in paragraph 19 of the
Judgment in Waluj Industries Association, it will be open to
the petitioners to make suitable representation in respect of
revision of water rates effected from 2002 onwards and on
receipt of the representation, the respondents shall take
appropriate decision after considering the grievances raised
by the respective petitioners."
25. Against the said decision of the High Court, appellant has
filed the present appeal, on which, we heard the learned counsel
appearing for the parties. Counsel appearing for the parties have
Page 23 of 36
taken us meticulously through the entire relevant materials on
record.
26. Learned counsel appearing for the appellant contended that
the High Court erred in ignoring that inter se classification of
industrial users on the basis of their usage without any
reasonable differentia is discriminatory and that respondents are
not allowed to categorize industrial users into consumers of
"water as raw materials" and consumers for other purposes
without any reasonable classification. It was submitted by him
that the notification dated 18.05.2005 being prospective in
operation and that there being no specific stipulation that it would
be retrospective in operation, the respondent could not demand
tax at the revised rate from a retrospective date. It was also
submitted by him that in view of clause 27 of the agreement
there could not have been any demand from a retrospective date.
Counsel also relied upon clause 5 of Circular dt. 27.5.2003 and
submitted that the rate of water supply to the consumers under
the industrial area using water as raw material should be the
same as that of the rates in industrial area.
Page 24 of 36
27. Counsel appearing for the respondents, however, not only
refuted the contentions put forth by the counsel appearing for the
appellant but also submitted that the demand for payment of
water tax with arrear, payable by the appellant is just and
proper, as there was a continuing liability to pay at increased rate
from the year 2001 itself on the part of the appellant but not paid
pursuant to the representations filed by him. He also submitted
that the irrigation department vide its circular dated 25th October,
2001 initially increased the rate of royalty by 10 times and the
same was not altered even upon representations submitted by
the aggrieved persons including the appellant and therefore the
demand made, which is a subject matter of the appeal, cannot be
said to be a retrospective demand made by the respondent. It
was also submitted that industries using water as raw material
stands clearly on an independent footing than the other industries
not using water as raw material and, therefore, there is an
intelligible criteria in making a clear distinction between two
categories of industries.
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28. In the light of the aforesaid submissions and the materials
on record, we proceed to dispose of this appeal by recording our
reasons.
29. The specific stand of the respondents in respect of their
liability to supply water in lieu of water charges emanates from
their responsibility of making water available to the residential
houses, industries, factories and entrepreneurs and also to those
industries where water is used as raw material and the
corporation does not by itself generates water and instead of it
procure water from the respondent nos. 1 [State of Maharashtra]
and 4 [Department of Irrigation] and provides the same to the
residential houses, industries, factories and entrepreneurs etc.
30. It is also a specific stand of the respondent that water is
made available by corporation to its allottees at no profit no loss
basis. The corporation obtains water from the Irrigation
Department for which it is obliged to pay royalty and the charges
as fixed by the State Government. The Corporation also has to
revise water charges to cover the expenditure of water,
particularly, taking into consideration the increase in royalty and
Page 26 of 36
water charges by the State Government as well as other factors
like increase in price of water purification, chemicals, energy
charges, laying down pipelines, overhead tanks and other factors.
31. There is no dispute with regard to the fact that the State
Government with effect from 1st September, 2001 upon
consideration of the recommendation of the Finance Commission,
Irrigation Commission and National Water Policy as well as the
deficit arising due to the then prevalent low rates of water supply
revised the water rates. Consequent upon the said revision, the
Corporation also had to revise water rates to put in parity with
the charges towards water supply by the State Government.
Consequent, there upon in the year 2001 itself the appellant was
intimated the revision of water rates by the circular issued by the
Corporation on 31.10.2001. A number of representations came
to be filed from various aggrieved persons due to which a Circular
dated 6.12.2001 was issued permitting the industries to pay at
the pre revised/earlier rates in order to reconsider old rates in
view of the fact that several representations were pending and
were being considered by the State Government. The appellant
himself submitted such a representation intimating that they are
Page 27 of 36
not paying at the increased rate in view of the pendency of the
issue before the State Government. The appellant also in the
present proceedings has admitted that they had knowledge about
the increase of water charges in the year 2001 itself.
32. Another communication dated 28.11.2002 was issued by the
State Government and in the said communication it was stated
that there is recession world over in the field of industry and
taking sympathetic view on the representation submitted by the
industrialists with the Government, a decision has been taken to
make some revisions in the rates of water cess of industrial use
of water. It was, however, made clear in the said communication
that no change has been made for the use of water by the
industry producing drinking water and cold drinks/breweries
where water is being used as raw material. The Government
resolution communicated by the said resolution stated that rates
of the industrial use are being doubled but so far industries where
water is being used as raw material, for such industries the rates
are being made 10 times.
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33. A communication, however, came to be issued on
27.05.2003 by the Maharashtra Industrial Development
Corporation referring to circular dated 24.10.2001 and
28.11.2002 issued by the Irrigation Department. By referring to
Circular dated 28.11.2002, it was stated that water rate for
industrial use has been decreased from 200 percent to 100
percent but the increase in residential use of water as raw
material is confirmed.
34. Consequent upon issuance of the Circulars by the
Government regarding increase in the rate of water charges the
matter of taking a policy decision in respect of water supply was
put up before the Board of Directors of the Maharashtra Industrial
Development Corporation, who had taken a decision that the rate
of water supply of the consumers under the industrial area using
water as raw material, will be same as of the rates in industrial
area. It was also intimated therein that the representation
seeking reduction of water charges is under the consideration of
the Government and therefore though the bills are sent to the
consumers at increased rate, a concession was given to pay the
same at the earlier rate.
Page 29 of 36
35. The Corporation issued yet another circular on 18.05.2005
and in this Circular reference was made to the Government
resolution dated 28.11.2002 stating further that pursuant to the
State Government resolution a circular dated 11.06.2003 was
issued stating therein as to how the rates fixed by the
Government resolution should be implemented. It was also
stated that by the aforesaid circular dated 11.06.2003 equal rates
are fixed for the water supply to all industries including the
industries using water as raw material in industrial area but while
implementing the said policy it was found that in some industrial
areas, the use of water by industries which are using water as
raw material is in huge extent and that as the rates of water use
as raw material are more than five time of the water tax rate of
general industrial use, the financial burden of amount of
difference is falling on the corporation. It was also intimated that
with a view not to put financial burden on the corporation,
decision of amending the rates of water supply under industrial
area has been taken. The rates of water supply of such
consumers who use water a raw material was revised by
extending the rates by Rs. 34.60 per cm of water supply of
Page 30 of 36
respective industrial area issued vide circular no. G/7 dated
27.05.12003, the rates of water supply was amended from
01.11.2001. As to how water bills relating to the period from
01.11.2001 to 30.11.2002 should be recovered was also spelt out
in the said notification.
36. Consequent thereto a letter was written to the appellant
herein by Deputy Engineer, Maharashtra Industrial Development
Corporation, on 06.06.2005 intimating him that he is required to
pay water bills for the period from 01.11.2001 to 30.11.2005 as
per revised rates.
37. It is, therefore, established from all the aforesaid policy
decisions of the Government for increasing the rates of water
supply charges and also from the resolution of the Corporation
taking a policy decision and also from the circulars issued for
raising the water charges to 10 times that the decision was taken
by the Corporation to increase the water charges based on the
decision of the State Government to increase such rates of water
charges. The Corporation supplies water to all needy persons be
it residential houses, industrial units or to those industries where
Page 31 of 36
water is used as raw material on "no profit no loss basis".
Consequent upon revision of the rates by the Government at
which rate the Corporation is to make payment to the
Government, the Corporation has no other alternative but to
revise the same and follow the increase rates as demanded by
the State Government itself. The State Government has increased
the water charges so far those industries where water is used as
raw material to 10 times and the said rates were circulated by the
Government to the Corporation in 2001 itself. The fact of such
increase was intimated to all the persons to whom water was
supplied by the Corporation including the appellant who was fully
aware about the aforesaid increase of water charges from 2001.
38. There cannot be any dispute to the fact that in the industries
like that of the appellant, consumption of water is much more
than all other types of industries as they use water as raw
materials. Requirement and use of water in these industries is
huge and therefore they are placed as one distinct category or
class of their own. These industries stand apart from other
industries and also differently situated from residential houses.
Page 32 of 36
Therefore, there is an intelligible differentia between these three
categories so there is no discrimination.
39. However, a demand for payment of water charges at the
aforesaid increased rates was for some time kept in abeyance in
view of the several representations pending at the level of the
Government from the aggrieved and affected persons including
that of the appellant. But since the Government did not change
its position and informed the Corporation to make payment at the
revised rate which was increased in 2001 itself, the Corporation
has no other alternative but to release the payment of water
tax/bill at the increased rate demanded by the State
Government. Although in 2003 a policy decision was taken to
charge half the rate of the increased rate i.e. five times instead of
ten times, at par with the industrial uses, but later on it was
found that half the rate is not feasible and that what is being
charged at the earlier point of time is required to be paid as
Corporation's financial loss was continuously increasing. That
policy decision of 2003 was also a stop gap arrangement which is
indicated from paragraph 6 thereof and the said decrease finally
came to be amended in the notification of 2005.
Page 33 of 36
40. The appellant is receiving the facility of water supply from
the Corporation and is obliged to pay at such rates which are
demanded by the Corporation as the same rate is being charged
by the Government. The Corporation cannot be asked to suffer a
loss for extensive user of water by the appellant using water as
raw material for its business as it is discharging its public and
welfare duty for supplying water to help and assist industries like
the appellant. The stand of the appellant that the increased rate
of water charges is being demanded from them on a retrospective
basis is erroneous and fallacious and not proper because it is
established from the record that the appellant had the knowledge
about the aforesaid increase in 2001 itself when the Government
issued the notification intimating such increase which fact is an
admitted position. Therefore, there is no violation of clause 27
nor is there any question of giving any retrospective effect to the
aforesaid increase. It was also submitted that appellant was not
paying increased water charges as the matter was pending for
final consideration in view of several pending representations. In
the pleadings before us, the said fact is clearly proved by the
statement of the appellant in the affidavit filed.
Page 34 of 36
41. We have gone through the judgment and order passed by
the High Court in the coordinate Bench which was followed by the
High Court in the present case. From the judgment it is distinctly
indicated that while rejecting the contentions of the counsel
appearing for the appellant the High Court has recorded cogent
reasons for rejecting such contentions. We find no infirmity in the
said reasons. We however make it clear that a representation of
the nature as suggested by the High Court could still be made by
the appellant on all the grounds specifically mentioned therein
and any other valid ground, which when filed would be disposed
of expeditiously.
42. Consequently, we find no merit in this appeal and the same
is dismissed with the aforesaid liberty and leaving the parties to
bear their own costs.
............................................J
[Dr.
Mukundakam Sharma]
..............................................J
[Anil R. Dave]
New Delhi,
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September 12, 2011.
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