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