whether the order of the learned Single Judge directing the appellant-Board to pay Dearness Allowance at the rate of 49% w.e.f. 01.01.2002 to the members of respondent(s)-union on par with the Central Government employees is correct ? =the Dearness Allowance would be paid to the employees of the Board as granted by the State Government to its employees. It is pertinent to note that the representation of respondent-CITU dated 12.07.2002 was rejected by the Board vide order dated 13.09.2002 which refers to BP(FB) No.58 dated 18.07.1998 to the effect that the revised Dearness Allowance would be sanctioned to the employees of the Board as granted by the State Government to their employees at the same rate and from the same date. The learned Single Judge and the Division Bench did not keep in view the terms of the Settlement and the Board Proceeding BP(FB) No. 58 dated 18.07.1998 which stipulates that Dearness Allowance would be revised on par with the State Government employees and that it has been consistently followed by the appellant-Board. The High Court erred not keeping in view the extremely difficult financial position of the State Government and the Board and also the additional financial burden which would be imposed upon the appellant-Board if the demands of the respondent(s)-union are acceded to. The High Court, in our view, was clearly in error in allowing the writ petition and the impugned judgment cannot be sustained and liable to be set aside

Hon'ble Mrs. Justice R. Banumathi
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 1653 OF 2019
(Arising out of SLP(C) No.25005 of 2015)
TAMIL NADU ELECTRICITY BOARD …Appellant
REP. BY ITS CHAIRMAN
VERSUS
TNEB-THOZHILALAR AYKKIYA …Respondent
SANGAM BY ITS GENERAL SECRETARY
WITH
CIVIL APPEAL NO. 1654 OF 2019
(Arising out of SLP(C) NO.14627 OF 2016)
J U D G M E N T
R. BANUMATHI, J.
Leave granted.
2. These appeals arise out of the judgment dated 27.03.2015 in
W.A. No.497 of 2015 and judgment dated 21.08.2015 in W.A.
No.1166 of 2015 in and by which the High Court affirmed the order
of the learned Single Judge directing the appellant-Board to pay
Dearness Allowance at the rate of 49% w.e.f. 01.01.2002 to the
members of respondent(s)-union on par with the Central
Government employees.
1
3. These appeals relate to the claim of employees of the
appellant-Board for the payment of difference of Dearness
Allowance (DA) for a period of nine months as under:-
- 4% of DA (difference of 49% - 45%) from 01.01.2002 to
30.06.2002
- 7% of DA (difference of 52% - 45%) from 01.07.2002 to
30.09.2002
4. Brief facts giving rise to these appeals are as under:-
A Memorandum of Settlement dated 08.07.1998 was
recorded under Section 18(1) of the Industrial Disputes Act, 1947
between the appellant-Tamil Nadu Electricity Board (Board) and its
workmen represented by unions for settlement of pay related
issues. The Settlement covered about eighty thousand employees
of the Board in Class III and IV service and it was for a period of
four years from 01.12.1996 to 30.11.2000. The terms of
settlement also dealt with the payment of Dearness Allowance.
As per Clause 5 of the terms of settlement agreement, it was
agreed that the Dearness Allowance rates will be revised twice in a
year i.e. on 1st January and on 1st July taking into account the
variations in the previous twelve months average of the All India
Consumer Price Index numbers, adopting the same formula as
followed by the State Government. In pursuance of the said
settlement, order dated 18.07.1998 was issued by the appellantBoard in Board Proceedings BP (FB) No.58 wherein, it was inter alia
provided that the revised Dearness Allowance would be sanctioned
2
to the employees of the Board as granted by the State
Government to their employees at the same rate and from the
same date. The Board by its various proceedings has been
adopting the revised rate of Dearness Allowance payable to State
Government employees at the same rate and from the same date.
5. The Government of India, Ministry of Finance, Expenditure
Department vide Office Memorandum dated 20.03.2002 enhanced
the Dearness Allowance payable to Central Government
employees from the existing rate of 45% to 49% w.e.f. 01.01.2002.
The State Government faced acute financial crisis during the
period 2001-2002 due to which, Government of Tamil Nadu was
paying Dearness Allowance at the rate of 45% on that date to its
employees. The appellant-Board also followed the same rate of DA
at 45%. On 07.05.2002 and 12.07.2002, the respondent-CITU
submitted representations to the Board. After giving personal
hearing to the representatives of the respondent, the Chairman of
the Board rejected the representation on 13.09.2002 stating that
as per the settlement dated 08.07.1998, Dearness Allowance
would be sanctioned to the employees of the Board as granted by
the State Government to their employees at the same rate and
from the same date.
6. The Government of Tamil Nadu subsequently vide G.O.Ms.
No.346 dated 21.10.2002 issued an order revising the Dearness
Allowance from existing rate of 45% to 49% w.e.f. 01.10.2002 in
3
view of its difficult financial position. The appellant-Board also
adopted G.O. Ms. No.346 dated 21.10.2002 and issued orders in
BP(FB) No.58 dated 29.10.2002 revising the Dearness Allowance to
49% from 01.10.2002 to its employees on par with the State
Government employees.
7. The Central Government revised the rates of payment of
Dearness Allowance to Central Government employees from the
existing rate of 49% to 52% w.e.f. 01.07.2002. The Government of
Tamil Nadu vide G.O. No.215 dated 27.06.2003 revised the rate of
Dearness Allowance to its employees w.e.f. 01.07.2003 from the
existing rate of 49% to 52%. The appellant-Board adopting the
G.O. No.215 dated 27.06.2003 revised the Dearness Allowance to
its employees to 52% from 01.07.2003 on par with the State
Government employees.
8. Respondent-Union filed the writ petition in WP No.9525 of
2003 before the High Court of Madras seeking direction to pay
Dearness Allowance at the rate of 49% of the basic pay w.e.f.
01.01.2002 to 30.06.2002 and at the rate of 52% of the basic pay
w.e.f. 01.07.2002 respectively. Similarly, another respondent
union-CITU filed the writ petition in WP No.36197 of 2002 with the
same prayer. By order dated 14.09.2012, the learned Single Judge
allowed the Writ Petition No.36197 of 2002 observing that the
question involved was already concluded in W.P. No.10474 of 1999
and held that it is not open to the Board to postpone the arrears of
4
Dearness Allowance and credit the same to the General Provident
Fund account of the employee without the consent of the
employees.
9. By order dated 22.03.2013, Writ Petition No.9525 of 2003
was also allowed in terms of the order passed in Writ Petition
No.36197 of 2002 by holding that the Board cannot postpone the
arrears of Dearness Allowance and credit the same to the General
Provident Fund of the employee without the consent of the
employees. The appeal preferred by the appellant-Board also
came to be dismissed with the direction that the appellant-Board
was liable to pay Dearness Allowance at the revised rate w.e.f.
01.01.2002 to 30.09.2002.
10. Mr. Ramamoorthy, learned senior Counsel for the appellantBoard has submitted that as per the settlement dated 08.07.1998,
the Dearness Allowance rates will be revised twice in a year i.e. on
1
st January and on 1st July taking into account the variations in the
previous twelve months average of the All India Consumer Price
Index numbers adopting the same formula as followed by the State
Government. It was submitted that the above settlement has been
followed in Board Proceedings BP (FB) No.58 dated 18.07.1998
which stipulates that the revised Dearness Allowance will be
sanctioned as granted by the State Government to its employees
and respondent(s) cannot seek for revision of Dearness Allowance
contrary to what was granted by the State Government to its
5
employees. It was submitted that the High Court did not keep in
view the well settled principle that the obligation to pay enhanced
Dearness Allowance depends upon the employer’s financial
position and other factors. It was contended that the High Court
erred in holding that the issue is covered by judgment in W.P.
No.10474 of 1999 which relates to entirely a different issue i.e.
payment of arrears of Dearness Allowance in cash instead of
crediting the arrears of Dearness Allowance into the General
Provident Fund account of the employees concerned. Learned
senior counsel urged that at the relevant time and also presently,
appellant-Board is facing extremely difficult financial position and
the payment of revised Dearness Allowance for the disputed period
to more than eighty thousand of its employees would have a huge
financial implication on the Board.
11. Per contra, Mr. Chandrasekhar, learned counsel for the
respondent has submitted that the employees of TNEB are not
government servants and there is no parity in their service
conditions and status and hence, comparison of the Board
employees with the employees of the State Government will be
inapposite. Learned counsel inter-alia submitted that employees of
TNEB are governed by the labour laws like Industrial Disputes Act,
Payment of Wages Act, Payment of Bonus Act, etc. and when the
settlement dated 08.07.1998 stipulates that the revision in
Dearness Allowance depends upon the All India Consumer Price
6
Index number, the Board by its Board Proceedings BP (FB) No.58
dated 18.07.1998 ought not to have unilaterally changed the terms
of the settlement restricting the payment of Dearness Allowance to
the Board employees on par with the employees of the State
Government. It was further submitted that restricting the payment
of revised Dearness Allowance only from 01.10.2002 instead of
giving effect from 01.01.2002 is contrary to the agreed terms in
the settlement dated 08.07.1998.
12. We have carefully considered the submissions and perused
the impugned judgment and materials on record. The following
points arise for consideration:-
(i) Pursuant to the Memorandum of Settlement dated
08.07.1998 recorded under Section 18(1) of the Industrial
Disputes Act, 1947 and BP (FB) No.58 dated 18.07.1998,
when the Board has been adopting the formula of the
State Government in revising the rate of Dearness
Allowance on par with the State Government employees,
whether the High Court was right in directing the
appellant-Board to pay the revised DA at the rate of 49%
from 01.01.2002 and 52% from 01.07.2002?
(ii) When the settlement dated 08.07.1998 between the
appellant and the unions has been followed by the Board
stipulating that the revision of Dearness Allowance would
be on par with the rate sanctioned by the State
Government to its employees, in deviation therefrom,
whether the respondents are right in insisting upon
revision of Dearness Allowance at the abovesaid rates?
7
13. In the settlement dated 08.07.1998 recorded under Section
18(1) of the Industrial Disputes Act, 1947 between the appellantBoard and the respondent-CITU, Clause 5 of the settlement deals
with Dearness Allowance which reads as under:-
“5. Dearness Allowance
 The revised rates of Dearness Allowance for various pay
ranges will be as indicated in Annexure III. The Dearness
Allowance rates will be revised twice in a year on 1st
January and 1st July taking into account the variations in the
previous twelve months average of the All India Consumer
Price Index numbers, adopting the same formula as
followed by the State Government.”
On 18.07.1998, orders were issued by the Board in Board
Proceedings BP (FB) No.58 in accordance with the terms of the
provisions of the settlement dated 08.07.1998 stating that the
revised Dearness Allowance would be sanctioned to the employees
of the Board as granted by the State Government to their
employees at the same rate and from the same date. The relevant
portion of the order in BP (FB) No.58 which deals with Dearness
Allowance reads as under:-
“III Dearness Allowance
(a) The existing pay structure has been revised at All India
Consumer Price Index of 1510 points and the revised dearness
allowance will be sanctioned to the employees of the Board as
granted by the State Government to their employees at the
same rates and from the same date.”
14. Pursuant to the settlement and Board Proceedings
BP(FB)No.58 dated 18.07.1998, the Board passed various
orders/proceedings adopting the revised Dearness Allowance rates
8
as per the State Government orders revising Dearness Allowance
to the State Government employees. We may refer to few earlier
Government orders followed by the Board orders adopting the
same rate of revised Dearness Allowance rates with effect from the
same date:-
(i) On 12.05.2001, Proceedings (Per) BP (FB) No.24 was
issued by the Board whereby the Board adopted the
revised DA rates as per GO No.188 dated 26.04.2001 i.e.
43% w.e.f. 01.01.2001.
(ii) On 31.12.2001, by G.O. No.525, the Tamil Nadu
Government had revised the rate of DA to 45% to the
State Government employees from 01.07.2001. Adopting
the revised Dearness Allowance rates as per G.O No.525
dated 31.12.2001, Board vide its proceedings BP (FB)
No.3 dated 17.01.2002 adopted the revised Dearness
Allowance rates i.e. 45% w.e.f. 01.07.2001.
It is clear from the above that the Board has been sanctioning the
revised rates of Dearness Allowance at the same rate and from the
same date as has been sanctioned by the State Government to its
employees.
15. On 20.03.2002, the Government of India enhanced the
Dearness Allowance for the Central Government employees from
45% to 49% w.e.f. 01.01.2002. Due to extremely difficult financial
position which the State Government was facing, the State
Government was paying the Dearness Allowance at the rate of
45% on the said date without enhancing it to 49%. Accordingly,
the appellant-Board also followed the same rate i.e. 45% as paid
by the State Government on the said date. As pointed out earlier,
9
Chairman of the Board rejected the respondent-CITU’s
representation on 13.09.2002 stating that as per the settlement
dated 08.07.1998 followed by Board Proceedings BP (FB) No.58
dated 18.07.1998, Dearness Allowance would be sanctioned to the
employees of the Board as granted by the State Government to
their employees at the same rate and from the same date. While
rejecting CITU’s representation, it was made clear that the State
Government had not issued any order revising Dearness Allowance
at the rate of 49% w.e.f. 01.01.2002 on par with the Central
Government employees.
16. On 21.10.2002, the Government of TN issued G.O. Ms.No.346
revising the Dearness Allowance from 45% to 49% w.e.f.
01.10.2002 in view of extremely difficult financial position faced by
the State Government. Para 3 of the said G.O. reads as under:-
“3. In view of the extremely difficult financial position faced by
the Government, the Government after having discussions with
the Tamil Nadu Government Officer’s Union, Tamil Nadu Arasu
Aluvalarkazhagam (C&D Group) and Tamil Nadu Secretariat
Association, has decided to sanction one additional instalment of
Dearness Allowances at 4% to the employees of the State with
effect from 01.10.2002. Accordingly, the Government now
sanction the revised rate of Dearness Allowance to the State
Government employees as indicated below:-
Date from which payable Revised rate of DA
(per month)
1
st October 2002 49 per cent of pay
Following the State Government’s G.O. Ms.No.346, appellant-Board
vide orders in BP (FB) No.58 dated 29.10.2002 revised the
10
Dearness Allowance to its employees from 45% to 49% w.e.f.
01.10.2002 and thus followed the terms of the settlement dated
08.07.1998 followed by the Board Proceedings BP (FB) No.58 dated
18.07.1998.
17. Likewise, when Government of India revised the rate of
Dearness Allowance from 49% to 52% w.e.f. 01.07.2002, the State
Government as well as the Board have been paying Dearness
Allowance at the rate of 49% only. On 27.06.2003, the State
Government issued G.O. No.215 revising the Dearness Allowance
from 49% to 52% w.e.f. 01.07.2003. Accordingly, on 09.07.2003,
Board issued orders revising the Dearness Allowance from 49% to
52% from 01.07.2003 adopting the G.O. No.215 dated 27.06.2003.
18. Comparative table of the Dearness Allowance paid to the
employees of the Central Government, State Government and the
Board in the relevant period are as under:-
From Percentage of
Dearness
Allowance
allowed by the
Central
Government
Percentage of
Dearness
Allowance
allowed by the
State
Government
Percentage
of Dearness
Allowance
allowed by
the appellant
Board
01.01.2002 49% 45% 45%
01.07.2002 52% 45% 45%
01.10.2002 52% 49% 49%
01.01.2003 55% 49% 49%
01.07.2003 59% 52% 52%
11
19. As discussed earlier, payment of Dearness Allowance is
governed by the Wage Settlement dated 08.07.1998 and the
Board Proceedings BP (FB) No.58 dated 18.07.1998. The increases
in Dearness Allowance which fell due w.e.f. 01.07.1998,
01.01.1999, 01.07.1999, 01.01.2000, 01.07.2000, 01.01.2001 and
01.07.2001 were all paid as per the above agreed term only. As
per settlement dated 08.07.1998, the Dearness Allowance rates
will be revised twice in a year i.e. on 1st January and on 1st July
taking into account the variations in the previous twelve months
average of the All India Consumer Price Index numbers adopting
the same formula as followed by the State Government. The
Board Proceeding BP(FB) No.58 dated 18.07.1998 stipulated
that the revised Dearness Allowance would be sanctioned to the
employees of the Board as granted by the State Government to
their employees at the same rate and from the same date. It is
pertinent to note that in the subsequent wage settlement entered
into between the appellant-Board and the respondent-union on
15.10.2005 (w.e.f. 01.12.2002) stipulates the existing practice of
sanction of Dearness Allowance to the employees of the Board as
granted by the State Government to their employees at the same
rate and from the same date. The subsequent settlement also
reiterates that all along the revision of Dearness Allowance to the
employees of the Board was on par with the employees of the
State Government. The respondent(s) union having agreed that
12
the revised Dearness Allowance will be sanctioned as granted by
the State Government to their employees, the appellant-Board has
been consistently adopting the revised rates of Dearness
Allowance following various State Government orders. Having
agreed for the grant of revised Dearness Allowance on par with the
State Government employees, the respondent(s) union cannot
seek for revision in Dearness Allowance at a higher rate than what
was granted by the State Government to its employees.
20. The appellant-Board has been adopting the formula of the
State Government in revising the rate of Dearness Allowance,
which was settled under Section 18(1) of the Indian Disputes Act,
1947 and the settlement between the appellant-Board and the
respondent union. The appellant-Board is not bound to adopt the
revised rate of Central Government, when the settlement
prescribes the formula to be adopted from the rates of the State
Government.
21. The High Court, in our view, did not keep in view the well
settled principles that the revision of wage or Dearness Allowance
would depend upon the ability and the financial position of the
employer. In G.O. Ms. No.346 in and by which the Government of
TN revised the Dearness Allowance from 45% to 49% (w.e.f.
01.10.2002), it was made clear that the Government of TN was
facing extremely difficult financial position and therefore, decided
to sanction additional four per cent (45% to 49%) of Dearness
13
Allowance to the employees of the State Government w.e.f.
01.10.2002. Having regard to the difficult finance situation which
the State and the Board were facing and having regard to the
terms of the settlement, respondent(s) union cannot seek for
sanction of enhanced rate of Dearness Allowance on par with the
Central Government employees.
22. Each State Government following their own rate of Dearness
Allowance payable to their employees may be adopting the
revised Dearness Allowance of the Central Government. There is
no rule or obligation on the State Government to always adopt the
Dearness Allowance as revised by the Central Government. It is
absolutely not necessary for the State Government to adopt the
Dearness Allowance rates fixed by the Central Government. It
should be looked from the financial position of the State
Government to adopt its own rates/revised rates of Dearness
Allowance. The Board, being the State Government undertaking,
the money has to come from the State Government. Keeping in
view the extremely difficult financial position of the State
Government, Board’s order revising the Dearness Allowance rate
from 45% to 49% only from 01.10.2002 cannot be said to be
arbitrary or in violation of the terms of the settlement.
23. The main source of finance of the Electricity Board is the
State Government; the Board is run by the State Government.
Unless the funds are provided by the State Government, the
14
Electricity Board would not have sufficient funds of its own to pay
the wages and the revised Dearness Allowance to its employees.
Considering the financial difficulties which the State Government
was facing, the revision of the Dearness Allowance from the above
said dates at above said rate cannot be said to be arbitrary or
without any reason.
24. While considering the grievance of wage structure or
Dearness Allowance, the importance of considering the financial
implications while providing benefits to employees has been noted
by the Supreme Court in number of judgments. The Supreme Court
in Workmen of Gujarat Electricity Board, Baroda v. Gujarat
Electricity Board, Baroda (1969) 1 SCC 266 while dismissing the
appeal preferred by the workmen, has confirmed the view taken by
the Tribunal which rejected the demand of the employees of the
Board for Dearness Allowance that it should be fixed with the scale
prescribed for the Ahmedabad Mill Owners’ Association on the
ground that the Board does not have the capacity to meet the
additional expenditure that would have to be incurred if such
demands are acceded to.
25. The Supreme Court in Bengal Chemical & Pharmaceutical
Works Ltd. v. Its Workmen [1969] 2 SCR 113 after referring to
Kamani Metals & Alloys Ltd. v. Their Workmen [1967] 2 SCR
463 has laid down that one-hundred per cent neutralisation is not
advisable as it will lead to inflation and therefore, dearness
15
allowance is often a little less than one-hundred per cent
neutralisation. Explaining the purpose of Dearness Allowance and
that it should depend upon the ability of the employer to bear such
burden, the Supreme Court held as under:-
“1. Full neutralization is not normally given, except to the very
lowest class of employees.
2. The purpose of dearness allowance being to neutralise a
portion of the increase in the cost of living, it should ordinarily
be on a sliding scale and provide for an increase on the rise in
the cost of living and a decrease on a fall in the cost of living.
3. The basis of fixation of wages and dearness allowance is
industry-cum-region.
4. Employees getting the same wages should get the same
dearness allowance, irrespective of whether they are working as
clerks or members of subordinate staff or factory workmen.
5. The additional financial burden which a revision of the wage
structure or dearness allowance would impose upon an
employer, and his ability to bear such burden, are very material
and relevant factors to be taken into account …………
[underlining added]”
26. In T.N. Electricity Board v. R. Veerasamy and Ors.
(1999) 3 SCC 414 which has been relied upon by the respondent,
in which TNEB itself was the appellant, the Supreme Court while
dealing with the prospective application of a pension scheme
observed that financial constraint is a valid ground for introducing
a cut-off date and took note of the financial burden that the Board
will have to borne if the scheme would be made effective
retrospectively.
27. In State of Punjab and Others v. Amar Nath Goyal and
Others (2005) 6 SCC 754, the Supreme Court negatived the
contention of the employees that the decision of the Central
16
Government/State Governments to limit the benefit only to certain
employees after calculating the financial implications thereon, was
irrational or arbitrary and held as under:-
“28. ………the final recommendations of the Pay Commission
were not ipso facto binding on the Government, as the
Government had to accept and implement the recommendations
of the Pay Commission consistent with its financial position. This
is precisely what the Government did. Such an action on the part
of the Government can neither be characterised as irrational,
nor as arbitrary so as to infringe Article 14 of the Constitution.”
28. It is within the power of the Board to set a cut-off date for
payment of revised Dearness Allowance keeping in view its
financial constraints. Moreover, the settlement agreement and the
decisions taken by the Board in the Board Proceedings are to be
harmoniously construed. Having regard to the financial difficulties
which the State Government was facing, appellant-Board being a
State Government undertaking, decided to adopt the State
Government’s revised Dearness Allowance at the same rate and
from the same date. In view of extremely difficult financial
situation, not only the State Government employees but all the
employees of various other corporations were granted revised
Dearness Allowance at the rate of 49% only w.e.f. 01.10.2002 and
52% w.e.f. 01.07.2003. The respondent(s) union cannot insist for
revision of Dearness Allowance at a higher rate than what was
being paid to the State Government employees.
29. Mr. C.K. Chandrasekhar, learned counsel for respondent(s)
submitted that as per Clause 5 of the settlement dated
17
08.07.1998, Dearness Allowance rates will be revised twice in a
year taking into account the variations in the previous twelve
months average of the All India Consumer Price Index numbers
adopting the same formula as followed by the State Government
and based on the same, the employees were periodically given
revision of Dearness Allowance in every six months without any
deviation on par with Central Government Dearness Allowance by
applying the State Government formula. It was submitted that B.P.
(FB) No.58 dated 18.07.1998 issued by the Board to pay Dearness
Allowance only on par with the State Government and based on
the same revising the Dearness Allowance from 45% to 49% from
01.10.2002 instead of giving effect from 01.01.2002 was contrary
to the settlement dated 08.07.1998. It was submitted that in
BP(FB) No.58 dated 18.07.1998, the Board has unilaterally altered
the terms of the settlement and even though All India Consumer
Price Index was revised and Dearness Allowance increased from
45% to 49% with effect from 01.01.2002, the Board’s unilateral
action is contrary to the terms of the settlement. It was urged that
instead of following the formula for Dearness Allowance based on
All India Consumer Price Index, the Board’s action in restricting the
payment from 01.10.2002 following State Government order in
G.O. No.346 Finance Department dated 21.10.2002 is contrary to
the binding settlement dated 08.07.1998. As per Clause 3 of the
Board Proceeding BP(FB) No.58 dated 18.07.1998, Dearness
18
Allowance will be sanctioned to the employees of the Board as
granted by the State Government to their employees at the same
rate and from the same date. Based on the same, the employees
were periodically given revision of DA in every six months without
any deviation by applying the State Government formula, at the
same time, it was on par with the Central Government dearness
allowance.
30. There is no merit in the contention that by BP (FB) No.58
dated 18.07.1998, the Board has unilaterally altered the terms of
settlement between the parties. On perusal of Board’s proceeding
BP (FB) No.58 dated 18.07.1998, it is seen that Clause 2 of the
Board proceedings inter alia provides for various other terms like
work norms, retrenchment etc. It is not the case of the
respondent(s) union that those terms of the settlement were not
acted upon. The respondent(s) union are not right in taking one
clause from the Board proceeding dated 18.07.1998 and
contending that in so far as payment of Dearness Allowance is
concerned, the Settlement dated 08.07.1998 has been unilaterally
altered. It is pertinent to note that the respondent(s) have not
challenged that portion of the Board’s proceeding BP(FB) No.58
dated 18.07.1998; the respondent(s) cannot approbate and
reprobate the Board Proceedings dated 18.07.1998. Therefore, the
contention that revision of Dearness Allowance as granted by the
19
State Government to their employees is the unilateral alteration of
the terms of settlement lacks merit.
31. Contention of the respondent(s) is that the employees of the
appellant-Board are not State Government employees and they
cannot be treated on par with the State Government employees. It
is not the contention of the appellant-Board that the employees of
the Board are to be treated on par with the State Government
employees nor the same is the issue for consideration before us. It
is not disputed that Board is run by the State Government and
unless the funds are provided by the State Government, the
Electricity Board would not have adequate funds of its own to pay
the wages. In that factual scenario, the decision of the Board to
adopt the rate of Dearness Allowance as granted by the State
Government cannot be said to be arbitrary.
32. The learned Single Judge as well as the Division Bench
proceeded under the erroneous footing that the issue has been
covered by the orders of the High Court issued in the two batches
of W.P. Nos.8574-8578 of 1992 and W.Ps. No.10474 of 1999 etc.
The orders in those batch of writ petitions were only against
crediting of the arrears of Dearness Allowance sanctioned. After
referring to the earlier judgment in W.P. Nos.8574-8578 of 1992
dated 16.10.1992 and W.Ps. No.10474 of 1999 dated 11.08.1999,
the High Court held that “there is no stipulation in the settlement
that the arrears of Dearness Allowance for the past period would
20
be credited to the General Provident Fund account of the individual
employee and in the absence of any stipulation in the settlement,
it is not open to the Board to credit arrears of Dearness Allowance
for the earlier period to the credit of General Provident Fund
account of the respective employee unless individual employee
gives the written consent”. The orders of the High Court in those
earlier writ petitions were only against crediting of the arrears of
the Dearness Allowance in the respective provident fund account
of the employees, wherein, the court directed the Board to pay
arrears in cash and restrained the Board from deducting any
arrears of the Dearness Allowance and crediting the same into the
General Provident Fund account of the workmen.
33. Of course, in the earlier batch of writ petitions i.e. Writ
Petition Nos.8574-8578, the High Court inter-alia held that the
Board cannot unilaterally transgress from the terms of the
settlement and observed as under:-
“The settlement, as long as it is in force, will govern both the
parties. One of the parties cannot unilaterally transgress the
terms of the agreement or ignore the same. Caluse-4 referred to
above does not enable the respondent to make the payment in
the mode adopted by the Government. Clause-4 only directs
that the formula which is followed by the Government should be
adopted by the Board and that is only for the purpose of
calculating the dearness allowance on the basis of the Price
Index and nothing more than that. Hence, the contention that
the respondent is bound to adopt the method followed by the
Government for payment is without any substance.”
34. The learned Single Judge as well as the Division Bench did
not keep in view that in the present dispute, settlement dated
08.07.1998 was followed by BP(FB) No.58 dated 18.07.1998 which
21
clearly stipulates that the Dearness Allowance would be paid to
the employees of the Board as granted by the State Government
to its employees. It is pertinent to note that the representation of
respondent-CITU dated 12.07.2002 was rejected by the Board vide
order dated 13.09.2002 which refers to BP(FB) No.58 dated
18.07.1998 to the effect that the revised Dearness Allowance
would be sanctioned to the employees of the Board as granted by
the State Government to their employees at the same rate and
from the same date. The learned Single Judge and the Division
Bench erred in not considering the matter in the proper
perspective and erred in holding that the issue has been covered
by the earlier judgment in Writ Petition No.10474 of 1999 dated
11.08.1999.
35. The learned Single Judge and the Division Bench did not keep
in view the terms of the Settlement and the Board Proceeding
BP(FB) No. 58 dated 18.07.1998 which stipulates that Dearness
Allowance would be revised on par with the State Government
employees and that it has been consistently followed by the
appellant-Board. The High Court erred not keeping in view the
extremely difficult financial position of the State Government and
the Board and also the additional financial burden which would be
imposed upon the appellant-Board if the demands of the
respondent(s)-union are acceded to. The High Court, in our view,
22
was clearly in error in allowing the writ petition and the impugned
judgment cannot be sustained and liable to be set aside.
36. In the result, the impugned judgments of the High Court in
W.A. No.497 of 2015 and W.A. No.1166 of 2015 dated 27.03.2015
and 21.08.2015 respectively are set aside and these appeals are
allowed. No costs.
………....……………………….J.
 [R. BANUMATHI]
 …...………………………..J.
[INDIRA BANERJEE]
New Delhi;
February 13, 2019
23

Whether the levy of sewerage cess levied on the appellant by the respondent-Board is in accordance with Section 55 of the Hyderabad Metropolitan Water Supply and Sewerage Act, 1989 (HMWS&S Act) and Clause 16 of the agreement entered into between the appellant and the Board. =The payment of sewerage surcharges and the other charges by JETL cannot take away the statutory liability of sewerage cess levied on the occupier of the premises who consumes water and lets out the sewage into the Board sewer system. The payment of sewerage surcharge and other charges by JETL to the respondent-Board will not amount to double levy and the High Court rightly dismissed the writ petitions and also the review petitions filed by the appellant. The impugned order does not suffer from any infirmity warranting interference.

Hon'ble Mrs. Justice R. Banumathi
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS.4616-4617 OF 2009
VASANT CHEMICALS LIMITED ….Appellant
VERSUS
THE MANAGING DIRECTOR, HYDERABAD
METROPOLITIAN WATER SUPPLY AND
SEWERAGE BOARD AND OTHERS …Respondents
With
CIVIL APPEAL NOS.4618-4619 OF 2009
VASANT CHEMICALS LIMITED ….Appellant
VERSUS
M. D., HYDERABAD METRO W.S. &
S. BOARD & OTHERS …Respondents
J U D G M E N T
R. BANUMATHI, J.
These appeals arise out of the judgment dated 29.10.2003
passed in the Writ Petition Nos.4917 and 5044 of 2000 and order
dated 29.12.2003 passed in review petition by the High Court of
Andhra Pradesh at Hyderabad dismissing the writ petitions as well
as the review petitions holding that the levy of sewerage cess
levied on the appellant by the respondent-Board is in accordance
with Section 55 of the Hyderabad Metropolitan Water Supply and
1
Sewerage Act, 1989 (HMWS&S Act) and Clause 16 of the
agreement entered into between the appellant and the Board.
2. The facts giving rise to these appeals are that the appellantM/s Vasant Chemicals Limited which is an amalgamation of three
companies is engaged in the manufacture and export of dye
intermediates and other organic chemicals in their units at
Jeedimetla Industrial Estate, Ranga Reddy District, Hyderabad. The
effluents of the appellant industry and other industries were not of
acceptable standards to be let into the sewer line of the Board and
required treatment and therefore, the industrial units in Jeedimetla
Estate decided to establish the Common Effluent Treatment Plant
(CETP). Hence, under the joint efforts of all the chemical units and
other industries including the appellant, a company was formed
namely M/s Jeedimetla Effluents Treatment Limited (JETL) in the
year 1987 to get the effluents treated at their own cost to bring
the quality of the effluents to an acceptable level. The appellant
and the other industrial units made investment by way of shares in
the said company towards its capital. According to the appellant,
it has invested to the extent of more than 29% of the shares in
JETL towards its equity.
3. After treating the effluents to sewer standards as prescribed
under the Water (Prevention and Control of Pollution) Act, 1974
(Water Act, 1974) and the Environment (Protection) Act, 1986
(Environment Act, 1986) between 1988 and 1995, JETL was
2
discharging the treated waste water/effluents into the open
drains/nalas in Jeedimetla Area. After discussion with Hyderabad
Metropolitan Water Supply and Sewerage Board (HMWS&SB-the
Board) and the Government of Andhra Pradesh and APPCB, a
dedicated pipeline was laid from the premises of JETL to connect to
the sewerage system of HMWS&SB which is located at a distance
of about 10.38 kilometers at Balanagar at an estimated cost of
Rs.346 lakhs. For the said dedicated pipeline, JETL paid an amount
of Rs.75,00,000/- as its contribution and the balance amount was
contributed by the Board and the Government of Andhra Pradesh.
The pipeline became operational on 31.01.1998. As per the
direction of APPCB, the industries in IDA Jeedimetla are discharging
their industrial effluents to JETL, which in turn partially treat
effluents and let into the dedicated pipeline connecting JETL and
sewer line at Board’s sewer at Kukatpalli, Balanagar and then
carried to Sewerage Treatment Plant (STP) at Amberpet.
4. The appellant has obtained bulk water supply connection
from the respondent-HMWS&S Board and the Board accorded
sanction for supply of 36,200 gallons water per day @ Rs.12 per
kilo litre to the appellant-Industry. An agreement was entered into
by the appellant with the respondent-Board on 27.04.1995
stipulating the terms and conditions of supply of water and the
payments required to be made in terms thereto. The agreement
provides that HMWS&SB will supply water to the appellant industry
3
and water charges will be levied for the supply of water as per the
agreement. Clause 16 of the agreement inter alia provided for
payment of sewerage cess and that the appellant is liable to pay a
sewerage cess in accordance with Section 55 of the HMWS&S Act.
Clause 17 of the agreement obligates the appellant to avail the
sewer facility provided by the HMWS&SB if the premises of the
appellant is located at a distance of less than thirty-five meters
from the sewer line of the HMWS&SB.
5. The appellant made representations between 1998 and
February, 2000 stating that levy of sewerage cess was illegal and
contrary to the provisions of HMWS&S Act as the appellant is not
discharging its effluents into the sewerage system of the Board.
According to the appellant, the Board insisted upon payment of
the arrears and sought payment of the sewerage cess for the
period January, 1998 to March, 2000 and sought certain amount
towards water cess from 1st January, 1998 to February, 2000 vide
two notices dated 25.01.2000. Aggrieved thereby, the appellant
filed writ petitions in WP(C) No.4917/2000 and WP(C)
No.5044/2000 challenging the notices levying of water cess and
sewerage cess respectively. The writ petitions were dismissed by
the High Court by the common judgment dated 29.10.2003
upholding the levy of sewerage cess by holding that such levy is in
terms of Section 55 of HMWS&S Act. The High Court held that
though the appellant’s premises is not directly connected to the
4
sewer line of the Board, the industrial effluents of the appellant are
being carried to JETL and after partial treatment at JETL, the same
is let into the sewerage system of the Board. It was further
observed that as per Section 55 of the HMWS&S Act, the occupier
of the premises from where the sewerage or effluents are let into
the sewer facility provided by the Board by any means, has to pay
the sewerage cess irrespective of the fact that whether or not the
area is served by sewerage system of the Board. The High Court
pointed out that this statutory liability is incorporated in Clause 16
of the agreement as per which the appellant has to pay sewerage
cess along with water cess @ 20% of the water charges. The High
Court dismissed the writ petitions vide judgement dated
29.10.2003 holding that the demand notices are not arbitrary and
that do not suffer from any legal infirmities.
6. The appellant filed review petitions being Review MP
No.33154/2003 in WP(C) No.4917/2000 and Review MP
No.33158/2003 in WP(C) No.5044/2000 before the High Court
which came to be dismissed vide order dated 29.12.2003 on the
ground that the judgment dated 29.10.2003 does not suffer from
any error apparent on the face of the record.
7. Mr. V. Giri, learned senior counsel for the appellant submitted
that since the premises of the appellant industry is situated in the
area not served by the sewage system of the Board and in terms of
proviso to Section 55 of the HMWS&S Act, no sewerage cess is
5
leviable. It was contended that since the appellant is covered
under proviso to Section 55 of the HMWS&S Act, the statutory
liability cannot be imposed on the appellant on the basis of Clause
16 of the agreement. Without prejudice to the above contentions,
it was urged that under the agreement dated 31.08.2000 between
the JETL and the Board, various charges are levied on JETL which
are in effect sewerage cess and therefore, there cannot be double
levy for the same service/same taxable event which is
impermissible under the law. It was contended that the various
documents produced and the contentions raised by the parties in
the review petitions were not considered by the High Court and the
High Court erred in dismissing the review petitions.
8. Reiterating the above submissions, on behalf of JETL, Mr.
Guru Krishna Kumar, learned senior counsel submitted that under
the agreement dated 31.08.2000, five different kinds of charges
are levied on JETL by the Board namely:- (i) capital contribution
(clause 4); (ii) sewerage connection charges (clause 4); (iii)
charges towards maintenance of sewer line (clause 28); (iv)
sewerage maintenance and sewerage treatment charges (clause
28); and (v) sewerage surcharge for effluents above a certain level
(clause 29) and those charges though not christened as sewerage
cess, they are in effect sewerage cess in terms of Section 55 of
HMWS&S Act. It was further contended that various charges levied
on JETL by virtue of the agreement dated 31.08.2000 correspond to
6
the sewerage cess under Section 55 of HMWS&S Act and levy of
sewerage cess on the appellant for the same act of discharging of
the same sewage, would therefore amount to a double levy on the
industrial units.
9. On behalf of the respondent Board, learned senior counsel
Mr. Gourab Banerji submitted that the appellant industry, obtaining
bulk water supply from the Board and discharging sewage into the
sewer line of the Board, is liable to pay sewerage cess under
Section 55 of the HMWS&S Act. It was submitted that since after
partial treatment at JETL, the effluents are let into the sewer line of
the Board through which the effluents are carried to Sewerage
Treatment Plant (STP) at Amberpet for further treatment, the
appellant is connected to the sewerage system of the Board and is
liable to pay sewerage cess under Section 55 of the HMWS&S Act.
It was contended that Clause 16 of the agreement incorporates the
levy under Section 55 of the HMWS&S Act and the Rules and
Regulations thereunder and as per the terms of the agreement
also, the appellants are liable to pay sewerage cess. Insofar as the
plea of double taxation, it was submitted that the JETL was not a
party to the writ petitions filed by the appellant and the
subsequent writ petition in WP(C) No.17381/2004 filed by the JETL
inter alia challenging the sewerage surcharge under various
agreements was already dismissed for default by the High Court.
7
10. We have carefully considered the submissions and perused
the impugned judgment and materials on record. The following
points arise for determination in these appeals:-
(i) Whether the appellant is right in contending that
the appellant unit is not connected to the
sewerage system of the Board and so the levy of
sewerage cess on the appellant under Section 55
of HMWS&S Act is not sustainable?
(ii) Whether the appellant is right in contending that
since the appellant’s unit is not served by a
sewerage system of the Board, as per proviso to
Section 55 of HMWS&S Act, no sewerage cess can
be levied?
(iii) Whether the charges collected from JETL under the
agreement dated 31.08.2000 is in effect, sewerage
cess in terms of Section 55 of HMWS&S Act,
thereby amounting to double levy of sewerage
cess/charge for the same service/same taxable
amount?
Appellant’s statutory liability to pay sewerage cess and
Re: contention: Appellant is covered by the proviso to
Section 55 of the Act
11. Section 55 of the HMWS&S Act contemplates levy of
sewerage cess on the occupier of the premises from where the
sewage or industrial effluents, as the case may be, are let into the
sewer facility provided by the Board by any means whatsoever
irrespective of fact whether or not the area is served by sewerage
system of the Board. Section 55 of HMWS&S Act reads as under:-
“55. Charges towards the use of sewerage cess---
8
Every occupier of both domestic and non-domestic
premises shall pay to the Board at the rate not exceeding
thirty five percent of the bill charging for the water
consumed or at such rate as may be prescribed by rules, to
defray the capital cost of sewerage and sewage treatment
works undertaken by the Board and the operation and
maintenance of the sewerage system from time to time:
Provided that no such charges shall be levied in any
premises situated in the areas which are not served by the
sewerage system of the Board.”
12. Admittedly, the appellant industry has obtained sanction for
bulk water supply connection from the Board for the supply of
36,200 gallons of water per day @ Rs.12/- per kilo litre for the
manufacture of dye and other chemicals. In terms of the sanction
of water supply to the appellant, an agreement was entered into
with the respondent-Board on 27.04.1995 stipulating the
conditions and the payments required to be made in terms thereto.
The agreement provides for payment of sewerage cess in
accordance with Section 55 of the HMWS&S Act. Clause 16 of the
agreement mandates the Board to collect sewerage cess from the
appellant-industry in terms of Section 55 of the HMWS&S Act.
Clause 17 of the agreement makes it obligatory on the part of the
appellant to avail the facility of the Board if it is located within
thirty-five meters from the Board’s sewerage system. Clauses 16
and 17 read as under:-
“Clause 16. In accordance with the provisions of Section
55 of the HMWSSA Act, 1989, the consumer shall pay
9
sewerage cess along with water charges at the rate of 20%
of the water charges or such other rates as may be
prescribed and determined by the Board from time to time.
Clause 17. It shall be obligatory on the part of the
consumer to avail the sewers facility provided by the Board
if the premises of the consumers are located at a distance
less than 35 metres away from the Board sewer line to any
point of the boundary of the consumer premises.”
13. Appellant industry and other industrial units are producing
chemicals, bulk pharmaceuticals and dye intermediates causing
heavy pollution. In order to comply with the provisions of Water
Act, 1974, the industrial effluents discharged by the appellant
industry and others are to be treated otherwise the industrial units
will be violating various laws governing the treatment and disposal
of sewage including protection of environment. The issue
pertaining to pollution, discharge of effluents in the State of Andhra
Pradesh including the industrial region of Jeedimetla was the
subject matter of a proceeding before this Hon’ble Court being Writ
Petition (C) No.1056 of 1990, in the matter of Indian Council for
Enviro/legal Action and Others. In the said proceedings, a joint
action plan was proposed by the CPCB, New Delhi and APPCB and a
common effluent treatment plant was ordered to be set up. As the
industries were sending their untreated effluents into the sewer,
directions were given that the A.P. Pollution Control Board would
not accept the effluents unless these conform to the standards
prescribed by the Board vide Indian Council for Enviro Legal
10
Action and others v. Union of India and others, (1998) 9 SCC
580. Similar problem arose in the case of World Saviors v. Union
of India and others (1998) 9 SCC 247. In order to comply with
the provisions of the Water Act, 1974 and the Environment Act,
1986 and in order to carry the industrial sewage to the Board’s
sewer trunk, a dedicated pipeline to the extent of 10.38 kilo meters
from JETL to Kukatpally and Sanathnagar Main Line was laid. The
cost of laying the pipeline is stated to be Rs.346 lakhs out of which
contribution of the JETL was Rs.75 lakhs and the balance amount
was contributed by the Board and the Government of Andhra
Pradesh. This dedicated pipeline became operational from
31.01.1998. The pipeline from JETL to Balanagar is a dedicated
pipeline used exclusively by the JETL. As per the agreement
entered into with the Board, the management of the JETL pays the
amount to the Board towards surcharge for discharging partially
treated effluents from JETL into Board sewer and also for
maintenance of the sewerage system. After the industrial effluents
are partly treated at JETL, the industrial effluents are let into the
dedicated pipeline belonging to the Board system at Balanagar and
from there, the sewage is let into 1000 mm diameter sewage trunk
main belonging to the Board through which the effluents are
carried to Sewerage Treatment Plant (STP) at Amberpet.
14. “A ‘trunk sewer’ is one which bears the same relation to an
entire sewer system that the trunk of a tree bears to its branches,
11
or the main stream of a river bears to its tributaries. It is
sometimes called a ‘trunk line sewer,’ an ‘intercepting sewer,’ or a
‘trunk line intercepting sewer”. “Ref: Environmental & Pollution
 laws in India by Justice T. S. Doabia (2
nd
 Edition-2010) published by
LexisNexis Butterworths Wadhwa, Volume 1 at page no.1054.”
Graphic description of the sewerage connection is as under:-
STP,
Amberpet
 18.90 kms


Hyderabad Metropolitan
Water Supply &
Sewerage Board,
Kukatpalli/Balanagar


 1.2 kms…. No pipeline
15. As per Section 55 of the HMWS&S Act, the following essential
ingredients are to be satisfied for levy of sewerage cess:-
1. There has to be an occupier domestic or non-domestic
premise;
2. There should be consumption of water by such
occupier;
3. The rate to be charged would be up to 35% of bill for
water consumed or at such rate as may be prescribed
by rules; and
4. The amount collected is towards:- (a) defraying capital
cost of sewerage and sewerage treatment works
12
1000 mm
sewage
Trunk Disposal of Treated Wastewater
Through Dedicated Pipeline/Pipeline
laid by the Board part contribution by
JETL
Water Supply
10.38 kms
Jeedimetla Effluent
Treatment Limited (JETL)
Vasant Chemicals
Private Limited Industrial Wastewater & Domestic
Sewage taken by tankers
for Treatment & Disposal
undertaken by the Board; and (b) for operation and
maintenance of sewerage system from time to time.
16. The appellant being an occupier of a “non-domestic premise”
having bulk water supply connection from the Board and “a
consumer of water” and eventually discharging sewage effluents
into the sewer line of the Board, the essential ingredients of
Section 55 are thus satisfied. The levy of sewage cess by the
respondent is a statutory levy which the appellant is liable to pay
under Section 55 of HMWS&S Act. Clause 16 of the agreement
provides for payment of sewerage cess in terms of Section 55 of
the Act which inter alia stipulates that the appellant is required to
pay sewerage cess in accordance with Section 55 of the Act. The
sewerage cess of 35% levied by the Board for carrying the sewage
of the acceptable quality through its transmission system is thus
both statutory and in terms of the agreement between the
appellant and JETL.
17. Contention of the appellant is that it is not liable to pay
sewerage cess to the Board as it is not letting out the sewage
effluents to the sewage system of the Board but is carrying the
effluents in the tanker, lorries and letting it out in the effluent
treatment of JETL and thus is not connected with the sewage line
of the Board. Mr. V. Giri, learned senior counsel for the appellant
contended that the appellant industry is not connected with
sewerage system of the Board and therefore, levy of sewerage
13
cess under Section 55 of the HMWS&S Act is not sustainable.
Drawing our attention to the finding of the High Court “that there
is no sewerage line of HMWS&SB connecting the appellant’s
premises to the sewerage system of HMWS&SB…..”, the learned
senior counsel for the appellant submitted that since there is no
sewer or drainage line connecting the appellant industry, proviso
to Section 55 of the HMWS&S Act applies and no sewerage cess is
leviable. It was further submitted that even assuming that the
dedicated pipeline from JETL for carrying its treated effluents to the
sewerage system of the Board at Balanagar is a “sewerage system
of the Board” which is more than two kilo meters from the
premises of the appellant industry, JETL is separately paying the
surcharge and the appellant is not connected with the sewerage
system and therefore, there cannot be levy of sewerage cess on
the appellant under Section 55 of the HMWS&S Act.
18. As pointed out earlier, admittedly, the appellant has obtained
bulk water supply connection from the Board for supply of 36,200
gallons of water per day @ Rs.12/- per kilo litre. It is also admitted
that the appellant is discharging its industrial effluents into the
Board sewer line. The appellant being an occupier of the premises
who is consuming water and discharging sewage into the sewerage
system of the Board, in terms of Section 55 of the HMWS&S Act, is
liable to pay sewerage cess. Though the pipeline from JETL to
Kukutpally/Balanagar is stated to be the dedicated pipeline, as
14
pointed out earlier, this was laid at the cost of Rs.346 lakhs, out of
which, JETL has paid only Rs.75 lakhs. The rest of the cost was
borne by the Board and the Government of Andhra Pradesh. It is
pertinent to note that Clause 4 of the agreement dated 31.01.1998
between JETL and the Board categorically stipulates that the
dedicated pipeline from JETL to Kukutpally/Balanagar belongs to
the Board.
19. As per Section 54 of the Act, sewage which is likely to
damage or interfere with the free maintenance of the sewerage
system of the Board cannot be passed into the Board sewer and
sewage treatment works. In terms of Section 54 of HMWS&S Act,
Clause 19 is also incorporated in the agreement dated 27.04.1995
between the appellant industry and HMWS&SB. As per Clause 19
of the agreement, no effluents shall be discharged into the Board’s
sewerage system unless such effluents are treated in accordance
with the provisions of the Water Act, 1974. Clause 19 reads as
under:-
“19. No effluent shall be discharged into the Board sewer
unless such effluent is treated in accordance with the
provisions of Water (Prevention and Control of Pollution) Act,
1974 relating to discharge and disposal of industrial effluents
and other objectionable effluents. Further, the treatment
shall also conform to the IS specification laid down from time
to time for disposal of effluent into the domestic sewer of the
Board.”
15
Admittedly, JETL is neither a consumer of bulk water supply nor
generating any sewage/industrial effluents of its own. The
effluents of the appellant industry are not of acceptable standards
for transmission system of the Board. Before the effluents of the
appellant industry are to be let into the sewer line of the Board, the
appellant industry has to get the effluents treated at its own cost
to bring the quality of the effluents to an acceptable level. After
getting partial treatment from JETL, the effluents are let into the
said dedicated pipeline which belongs to the Board at
Kukutpally/Balanagar and then they are let into 1000 mm diameter
sewage trunk belonging to the Board through which the effluents
are carried to Sewerage Treatment Plant (STP) at Amberpet
measuring a distance of 18.90 kilo meters. The length of the
pipeline from JETL to Amberpet is 29.28 kilo meters. Though the
appellant’s unit is not directly connected with the Board sewer line,
the industrial effluents of the appellant unit partially treated at JETL
are ultimately let into the Board sewer line which is finally carried
to STP at Amberpet. In the light of this admitted factual position,
the appellant is liable to pay sewerage cess under Section 55 of
the Act. Proviso to Section 55 of the Act contemplates that the
sewerage cess shall not be levied on the occupier of the premises
if such premises is stated to be in an area which is not served by
the sewerage system of the Board. The proviso implies that the
occupier of such premises cannot use the Board sewer by any
16
means whatsoever. Therefore, the contention of the appellant that
it is not liable to pay sewerage cess to the Board as it is not
directly letting out sewage effluents into the sewage line of the
Board and that it is carrying its effluents in the tanker, lorries and
letting out in the effluent treatment plant of JETL and thus not
connected with the sewage system of the Board, in our view, is
wholly untenable. Since the sewage of the appellant is ultimately
let into the sewer line of the Board, the appellant cannot contend
that it is not covered under Section 55 of the Act and that it is
covered under proviso to Section 55 of the Act.
20. Placing reliance upon Ultra Tech Cement Ltd. v. State of
Maharashtra and another, (2011) 13 SCC 497, learned senior
counsel for the appellant contended that when a particular cess is
leviable under an enactment and the said enactment exempts a
specific class of persons from paying the said cess, the State
Government cannot make the lessee liable to pay the said cess on
the ground that the agreement was entered into under a different
enactment. Placing reliance upon paras (12) and (20) of the said
judgment, it was contended that there is no sewer or drainage line
connecting the appellant’s units or any other industry in
Jeedimetla Effluent Treatment Limited to the sewerage system of
HMWS&SB and neither the appellant nor other industries discharge
their sewage into the sewer line of the Board and, therefore, the
appellant’s unit is covered under proviso to Section 55 of the
17
HMWS&S Act. The learned senior counsel further contended that
any fiscal extraction is required to be constructed strictly in
accordance with the provisions of the charging section and even if
a clause for such payment is incorporated into the agreement as
the agreement is subject to the provision of the relevant charging
section.
21. The above argument proceeds on the presumptive footing as
if the appellant’s unit is covered under proviso to Section 55 of the
HMWS&S Act. Proviso to Section 55 of HMWS&S Act states that no
charge would be levied in any premises situated outside the
sewage system/not served by the sewerage system of the Board.
It has to be seen whether the appellant is right in contending that
the appellant industry is not connected with the sewerage line of
the Board and that no sewage of the appellant is let into the
sewerage system of the Board and therefore, the appellant is
covered under proviso to Section 55 of HMWS&S Act.
22. In the process of letting out effluents, two things are involved
namely – (i) the treatment of industrial effluents to bring down the
contents of the effluents to an agreed specification on one part;
and (ii) the transmission of those partially treated industrial
effluents through the sewerage system of the Board. Parties have
entered into various agreements and there are three sets of
agreements which are as under:-
18
S. No. Parties Date of
Agreement
1. M/s. Vasant Chemicals Ltd. and
HMWS&S Board
27.04.1995
2. M/s. Vasant Chemicals Ltd. and
Jeedimetla Effluent Treatment Ltd.
(JETL)
22.01.1996
3. Jeedimetla Effluent Treatment Ltd.
(JETL) and HMWS&S Board
31.01.1998
and
31.08.2000
23. Let us now consider the effect of the agreement between the
appellant and JETL on the statutory liability of the appellant under
Section 55 of the Act. The agreement between the appellant and
JETL for partial treatment of appellant’s industrial effluents is the
internal contractual agreement between JETL and the appellant.
The appellant unit is to treat and process the industrial effluents
and bring them down to permissible standard limits in accordance
with the provisions of Water Act, 1974 and Environment Act, 1986
relating to discharge and disposal of industrial effluents and other
objectionable effluents into sewers before discharging of the
effluents into the Board sewer. The treated effluents should also
have to conform to the IS specification laid down from time to time
for disposal of effluent into the domestic sewer of the Board. To
discharge their contractual obligation in bringing the industrial
effluents to permissible standard limits, the appellant unit entered
into an agreement dated 22.01.1996 with JETL engaging it to treat
its industrial effluents in accordance with the environmental laws
in force. The appellant instead of treating the effluents at its
19
premises at its own cost engaged JETL for treating its effluents.
Thus, for its convenience, the appellant unit has entered into an
agreement with JETL for treating its effluents and the charges paid
by them to JETL are towards the treatment of effluents and bring it
to permissible standards. Therefore, the function of JETL is that of
an intermediary with whose assistance, the appellant is
discharging its statutory obligation.
24. Admittedly, the appellant’s industrial effluents are carried to
JETL in closed tankers and after partial treatment at JETL, let into
the Board’s sewer line. Admittedly, the effluents of the appellant’s
unit are not of acceptable standards for transmission through the
sewer line of the Board and therefore, the appellant’s industry and
other industries have to get the effluents treated at their own cost
to bring the quality of the effluents to an acceptable level by
treating the same to some extent. The sewerage cess of 35%
levied by the Board is for carrying the sewerage of acceptable
quality through its sewer line and further treating it at STP at
Amberpet.
25. The sewerage cess aims to recover the cost of treating the
effluents of strength stronger than domestic sewage and to make
the effluents of acceptable quality. In addition to partial treatment
at JETL, the effluents require further treatment and their
transmission to Sewer Treatment Plant (STP) at Amberpet situated
20
at 18.90 kms from Bala Nagar which requires huge finance. The
maintenance of sewer line is highly essential for proper
transmission of the effluents from JETL to Board’s sewer system at
Amperpet where the Board brings down the industrial effluents to
the tolerance limits. It requires huge amount to maintain the STP
treatment of industrial effluents. Further, it requires high demand
of energy, STP personnel to operate and maintain the system,
skilled and unskilled workers for proper maintenance of the plant.
The respondent-Board unless it collects sewerage cess and other
charges cannot meet the heavy expenditure on the operation and
maintenance of sewerage system. The liability of the appellant to
pay sewerage cess to the Board arises from the Statute and also
by way of an agreement which was agreed upon by the appellant.
There is no merit in the contention of the appellant unit that its
liability has ended upon transferring the industrial effluents to the
respondent-JETL and that it is not connected to the Board’s sewer
line. As discussed earlier, the partially treated effluents of the
appellant’s unit are ultimately let into the sewer line provided by
the Board which is being carried to Amberpet STP for further
treatment and discharge. After partial treatment at JETL, when
appellant’s effluents are let into the Board’s sewage system, the
appellant is not justified in contending that it is not connected to
the sewer line of the Board and hence, covered under the proviso
to Section 55 of the Act.
21
26. It is well-settled that the normal function of a proviso is to
except something out of the enactment. While considering the
interpretation of the proviso, in Romesh Kumar Sharma v.
Union of India and others, (2006) 6 SCC 510, this Court held as
under:-
“12. “10. The normal function of a proviso is to except
something out of the enactment or to qualify something
enacted therein which but for the proviso would be within
the purview of the enactment. As was stated in Mullins v.
Treasurer of Surrey (1880) 5 QBD 170 (referred to in Shah
Bhojraj Kuverji Oil Mills and Ginning Factory v. Subbash
Chandra Yograj Sinha AIR 1961 SC 1596 and Calcutta
Tramways Co. Ltd. v. Corpn. of Calcutta AIR 1965 SC 1728,
when one finds a proviso to a section the natural
presumption is that, but for the proviso, the enacting part
of the section would have included the subject-matter of
the proviso. The proper function of a proviso is to except
and to deal with a case which would otherwise fall within
the general language of the main enactment and its effect
is confined to that case. It is a qualification of the
preceding enactment which is expressed in terms too
general to be quite accurate. As a general rule, a proviso is
added to an enactment to qualify or create an exception to
what is in the enactment and ordinarily, a proviso is not
interpreted as stating a general rule. ‘If the language of the
enacting part of the statute does not contain the provisions
which are said to occur in it you cannot derive these
provisions by implication from a proviso. …’ said Lord
Watson in West Derby Union v. Metropolitan Life Assurance
Society 1897 AC 647. Normally, a proviso does not travel
beyond the provision to which it is a proviso. It carves out
22
an exception to the main provision to which it has been
enacted as a proviso and to no other……”
27. The sewerage cess levied under Section 55 of the HMWS&S
Act is a statutory levy on the appellant as it satisfies the essential
requirements of Section 55 of the Act. The agreement/contract
between the appellant’s unit and JETL does not take away the
appellant from the network of the Board’s sewer line and its “use
and treatment of sewerage” of the Board’s sewerage system.
Where the appellant’s effluents are being eventually sent to the
Board’s sewer, the contention of the appellant that its premises
are not served with a sewer line by the Board defies logic and runs
contrary to the object of the Act. The appellant, being an occupier
of non-domestic premises, is consuming the water provided by the
Board, generating the industrial effluents and using the Board’s
sewer to release them after partial treatment. In such an admitted
position, the appellant cannot escape from the statutory levy by
taking a technical approach and interpreting the proviso as a
general rule where it is merely a qualifying one. As the appellant
eventually lets out its effluents to the Board’s sewerage system,
the appellant is not right in contending that it is covered under
proviso to Section 55 of the Act.
28. Re: Contention – Levy of double taxation:- Learned
senior counsel for the appellant contended that even assuming
that the dedicated pipeline of JETL which connects to the sewerage
23
system of the Board at Balanagar is construed to be “Sewer”, any
levy of sewerage cess is applicable only to JETL and JETL under its
agreement with HMWS&SB, is paying surcharges and sewerage
charges to HMWS&SB by collecting the said amount from the
appellants and other industries for the said taxable event. It was
submitted that under Section 55 of HMWS&S Act, the sewerage
cess is collected for the – (i) to defray capital cost of sewerage; (ii)
for sewage treatment works undertaken by the Board; and (iii) for
operation and maintenance of the sewerage system. It is
contended that under its agreement dated 31.08.2000 with the
Board, JETL is paying various charges like - (i) sewerage
connection charges; (ii) charges towards maintenance of sewer
line; (iii) sewerage maintenance and water treatment charges; and
(iv) sewerage surcharge for effluents above a certain level. It was
contended that various charges paid by JETL to the Board is in
essence “sewerage cess”, though it is collected under different
head “sewerage surcharge”.
29. Taking us through Clause 4 of the agreement with Board
dated 31.08.2000, Mr. Guru Krishna Kumar, learned senior counsel
appearing for JETL submitted that under agreement dated
31.08.2000, various charges are collected and it additionally
provides for levy of surcharge also. It is contended that even
though these charges may not be christened as a sewerage cess,
they are in effect correspond to the essentials of “sewerage cess”
24
in Section 55 and a levy of cess from the appellant for the same
act of disposal of the sewage would therefore amount to a double
levy on the industrial units. The learned senior counsel submitted
that sewerage cess cannot be exacted from the appellant because
it is already been paid by JETL. It was urged that various charges
levied on JETL are excessive arbitrary apart from the fact that
there is a double levy.
30. As rightly contended by learned senior counsel for the
respondent-Board, the plea of double payment of sewerage cess
was never raised in the writ petition filed by the appellant; but it
was raised by way of oral submission before the High Court and
thereafter, by way of review petition. The plea of double levy was
rightly rejected by the High Court inter alia holding that “even
assuming for a moment that the petitioner-company is paying
some amounts to the JETL, it cannot be said that it is towards
sewerage cess”.
31. As pointed out by the learned senior counsel for the
respondent-Board, JETL never sought to implead itself as a party
respondent in the writ petition filed by the Board. It is also
pertinent to point out that one Mr. G.K.B. Chowdary who was then
the Managing Director of the appellant-group of companies, was
also the Managing Director of JETL. It passes one’s comprehension
as to why JETL whose Managing Director is the same as the
25
Managing Director of the appellant Group of Companies had not
taken any step to get themselves impleaded in the writ petition
before the High Court and raise the plea of double taxation.
32. In the Supreme Court, notice was ordered on 07.07.2004 and
permitted the appellant to implead JETL as party respondent. It
was thereafter, JETL filed writ petition in WP(C) No.17381/2004
(24.09.2004) inter alia for various reliefs:- (i) That clauses 28
and 29 of the agreement dated 10.06.2003 between the petitioner
company Jeedimetla Effluent Treatment Limited and HMWS&SB as
shylockin and unconscionable, usurious, exorbitant,
unconstitutional, ultra vires the powers of the HMWS&SB; and (ii)
That the action of the HMWS&SB in collecting various charges
under Clause 4 of the agreement and other charges levied upon
JETL. The said writ petition that kept pending for many years came
to be dismissed by the High Court’s order dated 21.12.2015 for
non-prosecution. JETL has also filed WP(C) No.20117/2017
challenging the enhancement of sewerage surcharge and the said
writ petition is also said to have been dismissed on 25.06.2014.
 33. Since, elaborate arguments were advanced regarding
“excessive and arbitrary levy on JETL” as well as the plea of
“double levy of sewerage cess”, we have also considered the
matter on merits. Based on three sets of agreements between the
parties, there are three kinds of payments as under:-
26
a) Payment of sewerage cess by the appellant to the Board in
terms of Section 55 of the HMWS&S Act and Clause 16 of
the agreement dated 27.04.1995;
b) Payment of treatment and processing service charges by
the appellant unit to JETL as stipulated in Clause 19 of the
agreement between the appellant and JETL dated
01.04.2000; and
c) Various charges paid by JETL to the Board pursuant to the
agreement dated 31.08.2000 and the earlier agreements.
So far as the payment by the appellant unit to the Board, it is the
statutory liability of payment of sewerage cess in terms of
Section 55 of HMWS&S Act and Clause 16 of the agreement which
obligates the appellant unit to pay the sewerage cess in terms of
Section 55 of the HMWS&S Act. The appellant having bulk water
supply connection from the Board and being “consumer of water”
and discharging sewage/effluents into the sewer line of the Board,
the payment of sewerage cess by the appellant unit is the
statutory liability under Section 55 of the HMWS&S Act and Clause
16 of the agreement.
34. Insofar as the charges paid by the appellant to JETL for the
treatment and processing of its effluents, it is purely contractual
pursuant to the agreement entered into between the appellant unit
and JETL dated 01.04.2000 and the earlier agreement dated
22.01.1996. As pointed out earlier, the appellant unit is obligated
to treat and process the industrial effluents and bring them down
to permissible standard limits in accordance with the provisions of
27
the Water Act, 1974 and Environment Act, 1986 before they are let
into the sewer line of the Board. To discharge its statutory as well
as contractual obligation, the appellant unit has entered into
agreement with JETL for the treatment and processing of
appellant’s effluents before being let into Board’s sewer line.
Payment of charges by the appellant to JETL is purely contractual
between the parties and the same cannot be considered to be in
deference to the statutory cess/statutory charge which can only be
levied by the Board. In this regard, the High Court has rightly
observed that assuming that the appellant is paying some amount
to JETL, the same cannot be termed as “sewerage cess”.
35. So far as payment of charges by JETL to the respondent
Board, the same is governed by the terms and conditions of the
agreement between JETL and the Board dated 31.08.2000. JETL’s
contention is two fold: - (i) levy of various charges under the
agreement is arbitrary and exorbitant; and (ii) double levy of
sewerage cess. The gist of the terms and conditions of the contract
dated 31.08.2000 between JETL and the Board and various charges
levied are as under:-
1. Clause 4 specifically stipulated that JETL shall be charged
towards overall proportionate sewerage maintenance and
sewerage treatment charges being incurred by the Board
from time to time on the overall sewerage system of the
Board;
28
2. In terms of Clause 4, the Board has levied sewerage
connection charges @ Rs.4/- per litre for the discharge into
the Board sewer (6 equal installments of Rs.23.34 lakhs
each by 10th of each month) – Total Rs.140.04 lakhs;
3. Clause 18 stipulates that no treated effluent shall be
discharged by JETL unless the same is treated in
accordance with the provisions of the Water and the Air
Acts and the various upper limits of the parameters of the
treated industrial effluents shall be within the permissible
standard limits prescribed; Further, Clauses 22 to 24 give
the Board the right to reject effluents of JETL if they are not
found to be consistent with the prescribed parameters;
4. In terms of Clause 28, an amount of rupees one lakh per
month is to be paid by JETL towards maintenance of the
sewer line. Additionally, JETL has to pay sewerage
maintenance and sewerage treatment charges @ Rs.6 per
thousand litres of treated effluents;
5. Further, as per Clause 29, a surcharge was also levied on
JETL for permitting industrial effluents beyond the limits
prescribed on two important parameters viz. Chemical
Oxygen Demand (COD) and Total Dissolved Solids (TDS);
Each parameter/COD and TDS will be considered
independent for levy the surcharge.
36. In terms of Rule 4 of Sewerage Rules, the Board shall charge
on the applicants seeking to discharge the trade or industrial
effluents etc. Rule 4 reads as under:-
“Sewerage and Industrial Effluents4. The Board shall charge on applicants seeking to
discharge their trade or industrial effluents, sullage drain,
sewer (other than storm sewer or combined sewer) of a
private party, State Government, Central Government, or
29
local body or local authority, into Board sewers, towards
the special treatment cost of such sewage and the charges
shall be as fixed by the Board from time to time, depending
upon the nature of such sewage and cost of treatment
involved to bring the same within tolerance limits of
effluent standards etc. The installation and maintenance
of required meters for measuring the volume of effluents
shall be insisted at the cost of the applicants, by the
board.”
Subject to the provisions of Water Act, 1974 and Environment Act,
1986 and subject to the restrictions of Section 54 of HMWS&S Act
and in terms of Rule 4 and other terms and conditions, Board has
the right to permit the ‘applicants’ seeking to discharge their trade
or industrial effluents into the Board’s sewer system and Sewerage
Treatment Plant subject to the imposition of costs. The treatment
for letting the trade or industrial effluents into the Board’s sewer
shall be subject to such terms and conditions and in such form of
agreement as may be prescribed in the regulations made by the
Board in accordance with these rules. Having entered into the
agreement with the Board on 31.08.2000 and on prior dates, JETL
cannot turn around and challenge the terms and conditions
imposed upon it by virtue of the agreement.
37. So far as the various payments made by JETL to the Board,
levy is in terms of Rule 4 of the Sewerage Rules and as per the
contract and is purely contractual between JETL and the
respondent Board for letting partially treated the industrial
30
effluents of the appellant and other units into the Board’s sewer.
Likewise, charges paid by JETL to the Board cannot be said to be in
lieu of the sewerage cess that the appellant unit is liable to pay
which is a statutory liability. It is pertinent to note that many
industries about fifty units, apart from the appellant unit, discharge
their effluents to the CETP/JETL. The agreement dated 31.08.2000
and the earlier agreements between JETL and the Board are purely
contractual consciously entered into between the parties.
38. JETL lets partially treated effluents into the Board’s sewerage
system for further treatment. As discussed earlier, for further
treatment of sewerage, the effluents are to be taken to Sewerage
Treatment Plant (STP) at Amberpet which is situated at the
distance of 08.30 kilometres from Balanagar. It requires huge
amount for transmission of the effluents to Board’s sewer system
at Amberpet where the Board brings down the industrial effluents
to tolerance limits. As pointed out earlier, the treatment of
industrial effluents requires high demand of energy, personnel to
operate the system and skilled workers for maintenance of the
plant. Unless the Board collects sewerage charge/sewerage
surcharge, the Board cannot meet the heavy expenditure on the
operation and maintenance of sewerage system. Various other
members of JETL who discharge sewage into JETL which is
ultimately let into Board sewer line, may or may not be consumers
of water supply by the Board. That apart, members of JETL may
31
have their own source of water supply or they may supplement the
supply of water from the Board through different sources either by
extraction of ground water or supply through tankers which cannot
be quantified by the Board. In pursuance of the provisions of the
HMWS&S Act and the Sewerage Rules and pursuant to the
agreement dated 31.08.2000, the charges are levied on JETL who
in turn collects the charges from its member industrial units who
discharge their effluents into JETL. Therefore, the payments made
by JETL to the Board and the charges in turn collected by JETL from
the appellant and other member units, cannot absolve the
appellant unit from its statutory liability to pay the sewerage cess.
We find no merit in the contention that there is double levy of
sewerage cess.
39. Levy of sewerage cess being a statutory levy in terms of
Section 55 of HMWS&S Act and Clause 16 of the agreement which
incorporates the statutory levy under Section 55 of HMWS&S Act,
the learned Single Judge and the Division Bench rightly recorded
concurrent findings upholding the levy. Observing that the
appellant being occupier of the premises, though not directly
connected to the sewer line of the Board, is ultimately letting into
the sewerage system of the Board after partial treatment at JETL,
the High Court was right in holding that the levy of sewerage cess
is in accordance with Section 55 of HMWS&S Act. The payment of
sewerage surcharges and the other charges by JETL cannot take
32
away the statutory liability of sewerage cess levied on the occupier
of the premises who consumes water and lets out the sewage into
the Board sewer system. The payment of sewerage surcharge and
other charges by JETL to the respondent-Board will not amount to
double levy and the High Court rightly dismissed the writ petitions
and also the review petitions filed by the appellant. The impugned
order does not suffer from any infirmity warranting interference.
40. In the result, these appeals are dismissed. The arrears of
sewerage cess, if any, to be paid by the appellant within a period
of eight weeks from today with 6% interest with effect from the
date cess fell due. If the arrears are not paid within the stipulated
period of eight weeks, it shall carry interest at the rate of 12%
thereafter.
..……………………….J.
 [R. BANUMATHI]
 ...………………………..J.
 [INDIRA BANERJEE]
New Delhi;
February 13, 2019
33

amendment of the plaint on 01.09.2008, that too when the suit was posted for final arguments= the suit itself is for partition and separate possession. Now, by virtue of the application for amendment of pleadings, Plaintiff Nos. 1 to 5 want to plead that the partition had already taken place in the year 1972 and they are not interested to pursue the suit. Per contra, Plaintiff No. 6/Respondent No.1 herein wants to continue the proceedings in the suit for partition on the ground that the partition had not taken place at all. = amendment of the plaint is not only belated but also not bona fide, and if allowed, would change the nature and character of the suit. If the application for amendment is allowed, the same would lead to a travesty of justice, inasmuch as the Court would be allowing Plaintiff Nos. 1 to 5 to withdraw their admission made in the plaint that the partition had not taken place earlier. Accordingly, the order of the High Court quashing the order of the Trial Court dated 14.11.2008, which had allowed the application for amendment of the plaint, is hereby confirmed

Hon'ble Mr. Justice Mohan M. Shantanagoudar 

NON­REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 1669 OF 2019
(@ S.L.P. (Civil) No. 19188 of 2010)
M. REVANNA ...APPELLANT
VERSUS
ANJANAMMA (DEAD) BY LRS. & ORS. ...RESPONDENTS
J U D G M E N T
MOHAN M. SHANTANAGOUDAR, J.
Leave granted.
2. The   order   dated  09.04.2010   passed   in   Writ   Petition   No.
2266 of 2009 (GM­CPC) by the High Court of Karnataka is called
in question in this appeal.
3. The appellant herein was Plaintiff No. 1 in the suit being
O.S   No.   2611/1993   filed   seeking   partition   and   separate
possession   of   joint   family   properties.     Plaintiff   Nos.   1   to   5,
including   the   appellant   herein,   filed   the   said   suit   seeking
partition and separate possession of joint family properties to the
extent  of   1/6th  share  to   Plaintiff  Nos.  1  to  3,  1/6th  share  to
1
Plaintiff No. 4 and 1/6th  share to Plaintiff No. 5.   Initially, only
three   defendants   were   made   parties   to   the   suit.   Immediately
upon the appearance of Defendant Nos. 1 to 3, a compromise
petition was filed on behalf of Plaintiff Nos. 1 to 5 and Defendant
Nos. 1 to 3, contending that the plaintiffs and defendants had
divided   the   joint   family   and   ancestral   properties   as   per   the
memorandum of partition dated 18.05.1972 under the Panchayat
Parikath. The compromise petition came to be filed in the Trial
Court on 22.04.1993. The Defendant Nos. 4 to 6, who also belong
to the same family as the persons mentioned above, having come
to know about the filing of the compromise petition in the suit for
partition,   and   also   having   come   to   know   that   they   were   not
parties   to   the   suit,   filed   an   application   for   impleadment   and
opposed the compromise petition, contending specifically that the
joint family properties had not been divided at any point of time
and that the family, as well as its properties, continued to be
joint.   However,   the   Trial   Court   vide   order   dated   04.06.1994
dismissed the suit as having been compromised. The said order
of the Trial Court was questioned by Defendant No. 6 before the
High Court by filing RFA No. 297/1994 and after hearing, the
High Court set aside the order dated 04.06.1994. Consequently,
2
the suit being O.S. No. 2611/1993 was restored on the file of the
Trial Court. The High Court directed the Trial Court to dispose of
the suit on merits.  After remand, the original Defendant No. 6
was   transposed   as   Plaintiff   No.   6   in   the   suit.   The   present
Respondent No. 1 is the transposed Plaintiff No. 6 in the suit.
(Respondent No. 1 expired during the pendency of the appeal
herein and her legal heirs have been brought on record).
4. After   remand,   Plaintiff   Nos.   1   to   5   did   not   adduce   any
evidence   initially.   However,   Plaintiff   No.   6/Respondent   No.   1
herein   adduced   evidence   on   02.07.2003   and   was   thoroughly
cross­examined by Plaintiff Nos.1 to 5.   Though Plaintiff No. 1
tried to give evidence as PW­2, he did not make himself available
for cross­examination from 2003 to 2007. Consequently, he was
discharged   by   the   Trial   Court.   However,   after   prolonged
adjournments,   PW­2   made   himself   available   and   was
cross­examined   on   12.02.2008.   Thereafter,   on   01.09.2008,
Plaintiff Nos. 1 to 5 made an application being I.A. No. 22 under
Order VI Rule 17 of the Code of Civil Procedure (for short, “the
CPC”) for amendment of the plaint, pleading that a prior partition
had   taken   place   as   per   the   memorandum   of   partition   dated
18.05.1972, as mentioned supra. The Respondent No. 1 herein
3
and the other two contesting defendants, i.e. Defendant Nos. 4
and 5 objected to the amendment application, contending  inter
alia that the application for amendment of the plaint is not only
highly belated but also not bona fide, and that at no point of time
was there any partition among the family members. The Trial
Court,   however,   proceeded   to   allow   the   application   for
amendment by the order dated 14.11.2008, which came to be set
aside   by   the   High   Court   by   the   impugned   order   dated
09.04.2010.  Hence, this appeal by the unsuccessful Plaintiff No.
1. It is relevant to note that Plaintiff Nos. 2 to 5 acting through
Plaintiff No. 1 have accepted the order rejecting the amendment
application.
5.   Leave to amend may be refused if it introduces a totally
different,   new   and   inconsistent   case,   or   challenges   the
fundamental character of the suit.  The proviso to Order VI Rule
17 of the CPC virtually prevents an application for amendment of
pleadings   from   being   allowed   after   the   trial   has   commenced,
unless the Court comes to the conclusion that in spite of due
diligence, the party could not have raised the matter before the
commencement of the trial. The proviso, to an extent, curtails
absolute discretion to allow amendment at any stage. Therefore,
4
the burden is on the person who seeks an amendment after
commencement of the trial to show that in spite of due diligence,
such an amendment could not have been sought earlier. There
cannot be any dispute that an amendment cannot be claimed as
a matter of right, and under all circumstances.  Though normally
amendments are allowed in the pleadings to avoid multiplicity of
litigation, the Court needs to take into consideration whether the
application for amendment is bona fide or mala fide and whether
the amendment causes such prejudice to the other side which
cannot be compensated adequately in terms of money.
6. As mentioned supra, the suit was filed in the year 1993 and
at that point of time, Defendant Nos. 4 to 6 were not made
parties to the suit. Plaintiff Nos. 1 to 5 and Defendants Nos. 1 to
3 were the only parties. They had filed a joint memorandum for
the dismissal of the suit on 22.04.1993, which was within one or
two months of the filing of the suit. The compromise petition
came   to  be   rightly   dismissed   by   the   High   Court   in   RFA   No.
297/1994. In the compromise petition, curiously, it was noted
that the joint family properties were divided by metes and bounds
in the year 1972.  If the partition had really taken place in the
year 1972 and was acted upon as per the Panchayat Parikath,
5
then Plaintiff Nos. 1 to 5 would not have filed a suit for partition
and separate possession in the year 1993.  Be that as it may, it is
clear from records that the suit was being prolonged on one
pretext or the other by the Plaintiff Nos. 1 to 5 and ultimately, the
application   for  amendment   of   the   plaint   came  to   be  filed  on
01.09.2008. By that time, the evidence of both the parties had
been recorded and the matter was listed for final hearing before
the Trial Court. If there indeed was a partition of the joint family
properties earlier, nothing prevented Plaintiff Nos. 1 to 5 from
making   the   necessary   application   for   the   amendment   of   the
plaint earlier. So also, nothing prevented them from making the
necessary averment in the plaint itself, inasmuch as the suit was
filed in the year 1993. Even according to Plaintiff Nos. 1 to 5,
they came to know about the compromise in the year 1993 itself.
Thus, there is no explanation by them as to why they did not file
the application for amendment till the year 2008, given that the
suit had been filed in 1993.  Though, even when Plaintiff Nos. 1
to 5 came to know about the partition deed dated 18.05.1972
(Panchayat   Parikath)   on   22.04.1993,   they   kept   quiet   without
filing   an   application   for   amendment   of   the   plaint   within   a
reasonable   time.     On   the   contrary,   they   proceeded   to   cross
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examine PW­1 thoroughly and took more than five years’ time to
get the examination of PW­2 completed, and only thereafter filed
an application seeking amendment of the plaint on 01.09.2008,
that   too   when   the   suit   was   posted   for   final   arguments.   As
mentioned  supra, the  suit  itself  is  for partition  and  separate
possession. Now, by virtue of the application for amendment of
pleadings, Plaintiff Nos. 1 to 5 want to plead that the partition
had   already   taken   place   in   the   year   1972   and   they   are   not
interested   to   pursue   the   suit.     Per   contra,   Plaintiff   No.
6/Respondent No.1 herein wants to continue the proceedings in
the suit for partition on the ground that the partition had not
taken place at all.
7. Having regard to the totality of the facts and circumstances
of the case, we are of the considered opinion that the application
for amendment of the plaint is not only belated but also not
bona fide, and if allowed, would change the nature and character
of the suit.     If the application for amendment is allowed, the
same would lead to a travesty of justice, inasmuch as the Court
would   be   allowing   Plaintiff   Nos.   1   to   5   to   withdraw   their
admission made in the plaint that the partition had not taken
place earlier. Hence, to grant permission for amendment of the
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plaint at this stage would cause serious prejudice to Plaintiff No.
6/Respondent No. 1 herein.
8. Accordingly, the order of the High Court quashing the order
of   the   Trial   Court   dated   14.11.2008,   which   had   allowed   the
application for amendment of the plaint, is hereby confirmed.
The appeal fails and is hereby dismissed.
        …..
……………………………..J.
[ N.V. Ramana]
        …..……………………………..J.
    [Mohan M. Shantanagoudar] 
New Delhi;
February 14, 2019.
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