Rattan India Power Limited, ... vs State Of Maharashtra, Thr. Water ...
2023 Latest Caselaw 1428 Bom

        IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                  NAGPUR BENCH, NAGPUR

               WRIT PETITION NO.8486 OF 2019

Petitioner              RattanIndia Power Limited,
                   :    A Company established under Companies
                        Act, 1956 having its registered office at
                        5thFloor, Tower-B, Worldmark 1 and its
                        power plant situated at
                        Plot No.D2 &D2(Part), Additional
                        Industrial Area, Nandgaon Peth, M.I.D.C.,
                        Amravati, 444901, through its Authorized
                        Signatory.
                         - Versus -
Respondents        : 1.            State of Maharashtra,
                        Through Water Resources Department,
                        Mantralaya, Mumbai- 32, Through its
                        Secretary.
                     2.            The Chief Engineer,
                        Water Resources Department, Amravati.
                      3.           The Superintending Engineer,
                           Upper Wardha Project Circle, Amravati.
                      4. The Executive Engineer,
                         Upper Wardha Irrigation Division,
                         Amravati.
                      5.           Vidarbha Irrigation
                         Development Corporation,
                         Sinchan Bhavan, Nagpur,
                         through its Executive Director.


Shri M.G. Bhangde, Senior Advocate with Shri Shyam Dewani,
Advocate for the Petitioner.
Shri D.P. Thakare, Additional Government Pleader, for Respondent
No.1.
Shri M.V. Samarth, Senior Advocate with Shri H.D. Marathe,
Advocate for Respondent Nos.2 to 5.


CORAM             :          A. S. CHANDURKAR AND M.W.
                             CHANDWANI, JJ.

RESERVED ON   :              15 NOVEMBER, 2022.
PRONOUNCED ON :              10 FEBRUARY, 2023

                               1 of 18
 J U D G M E N T : (Per M.W. Chandwani, J.)

The petition challenges the demand letters/notices

dated 26/10/2017, 26/10/2018, 16/10/2019, 23/10/2020,

13/10/2021 and 17/10/2022, whereby respondent No.4

demanded the amount towards Commitment Charges from the

year 2017 to 2022 from the petitioner. The petitioner also

seeks implementation of the letter dated 20.07.2020 sent by

respondent No. 4.

2. The petitioner is a company and has set up Thermal

Power Plants at Amravati in the State of Maharashtra.

respondent No.1, the State of Maharashtra maintains and

supply water for irrigation and non-irrigation purpose.

Respondent No.5 acts as a link between the industry and

respondent No.1. Respondent Nos. 2, 3 and 4 through whom

respondent Nos.1 and 5 work in water irrigation affairs. For

running the Thermal Power Plants, water is the basic

requirement, therefore, on 22/05/2012 an agreement was

executed between the petitioner and respondent No.4 for

allocation of water for a maximum quantity of 87.60 Million

Cubic Meters ( for short 'MCM' ) per year. The said agreement

was for a period of six years i.e. up to 21/05/2018. As per the

conditions of the said agreement, every year the petitioner has

2 of 18 to inform in advance requirement for annual water

requirement to respondent No.4. Accordingly, every year

supplementary agreement is being executed for the said

annual water demand.

3. As per agreement the petitioner had to pay Rs.

232.18 crores one time charges in installments towards

Irrigation Restoration Charges @ Rs.1,00,000/- per hector for

deprivation of water/irrigation for 23218 hectors of land

affected due to reservation of the water of 87.6 MCM for the

petitioner. Vide order dated 05/05/2016 in Writ Petition no.

4968/2015 filed by the petition, this court reduced the said

rate from Rs.1,00,000/- per hector to Rs.50000/- per hector.

Against which the respondents preferred Special Leave

Petition before the Supreme Court.

4. Respondent No.4 started charging the Commitment

Charges @ 5% for the reduction of annual demand of water in

reserved quota of 87.6 MCM, which was under challenge in

Writ Petition no. 1372/2016. This court, vide order dated

14/07/2017 has held that the agreement dated 22/05/2012

does not provide for payment of Commitment Charges and

quashed demand of Commitment Charges. Grievance of the

petitioner is that despite the order of this court, respondent

No.4 is still charging the Commitment Charges on the

3 of 18 reduction in annual demand of water for the year 2017-18 and

for subsequent years till 2022-23 by calculating the difference

between annual water demand and reserved quota of 87.60

MCM. The petitioner had no option, but to pay the amount

under protest.

5. Another grievance of the petitioner is that due to

adoption of modern techniques for water conservation and

implemented Zero Effluent Discharge System, the petitioner

reassessed its requirement of water to 60.00 MCM. By letter

dated 13/10/2017, the petitioner showed it's wish to

surrender 27.60 MCM from the total allocation of 87.60 MCM

of reserved water quota and requested for refund of the

proportionate amount of Rs.36.57 crores paid by it 87.6 MCM

towards Irrigation Restoration Charges, but no decision had

been taken by the respondents.

6. Meanwhile, the original agreement was to expire on

21/05/2018. The petitioner requested to respondent No.1 to

renew the agreement with reduced quantity of 60.00 MCQ of

water as reserved quota. Respondent No.4 by its letter dated

14/01/2018 informed that the proposal for reducing the

quantity to 27.60 MCQ of water is pending with the

Government and the action on the same will be taken

according to the decision in the matter by the Government,

4 of 18 and till then, the original agreement which was for reserved

quota 87.60 MCM of water will have to be renewed. The

petitioner was left with no other option and was compelled to

enter into fresh/renewal of main agreement on 22/05/2018

under protest for entire allocated quota of 87.60 MCM of

water.

7. During the pendency of the present petition,

respondent No.1 the State Government, pursuant to the

direction given by this Court on 05/06/2020, decided the

application of the petitioner. Respondent No.1 accepted the

request of surrender of water of 27.6 MCM from reserved

quota of 87.6 MCM on paying balanced amount of Irrigation

Restoration Charges due towards the petitioner. This was

informed to the petitioner by letter dated 29/07/2020 of

respondent No.4. According to the petitioner, it had already

paid Irrigation Restoration Charges @ 50000/- per hector as

per judgment in the Writ Petition No. 4968/2015.

8. In above set of facts, the petitioner has filed this writ

petition seeking quashing of the demands letters issued

towrads Commitment Charges from 2017-18 to 2022-23 and

refund of the amount paid towards Commitment Charges for

these years. The petitioner also seek direction of the

implementation of acceptance of surrender of water quota of

5 of 18 water of 27.6 MCM with effect from 13.10.2017 i. e. date of

application/letter of the petitioner without payment of

remaining Irrigation Restoration Charges. The direction is

sought to refund the Irrigation Restoration Charges of

Rs.36.57 crores in the wake of acceptance of surrender of

quantity of 27.6 MCM by respondent No.1.

9. Respondent Nos.2 to 5 filed affidavit in reply, inter

alia, contending that the petitioner has not come with clean

hand and suppressed material facts of earlier lis between the

respondents and the petitioner-power company, which was

earlier known as "Sofia". The petitioner has not exhausted the

alternate remedy. It is contended that surrender of partially

reserved water quantity cannot be done with retrospective

effect, therefore, there is no question of refund of amount

already recovered from the petitioner that too which was

expressly agreed. The Commitment Charges leveled do not

have any relevance with surrender of reserved water quota.

There is a lis about Irrigation Restoration Charges, which is

pending in Special Leave Petition No.28161/2016. In Writ

Petition No.1372/2016, the Court has already considered the

issue of Commitment Charges. After the judgment in said writ

petition, revised agreement was executed on 18/05/2018,

which also provides levy of the Commitment Charges. The

terms of the agreement are binding upon both the parties.

6 of 18

10. It is also contended in the reply that the purpose and

intention behind the agreement was to reserve 87.60 MCM

quantity of water for the petitioner. There was public agitation

opposing the reservation of so much water in favour of the

petitioner. It was then assured to the agriculturists that their

demand of water will be fulfilled. For meeting the demand of

the agriculturists, the respondents arranged water for

agriculturists by incurring huge expenses. The judgment in

P.I.L. Nos.19 and 20 of 2011 speaks about how the demand of

irrigation by farmers would be met. Now the petitioner is

stopped from changing it's stand on the reservation of water.

The expenditure incurred due to reservation of water in favour

of the Petitioner, therefore Irrigation Restoration Charges

were levied, now, it cannot be refunded. Respondent Nos. 2 to 5

sought rejection of the petition.

11. Respondent No.1 has also filed its reply. It has also

contended that the terms and financial liabilities of the

petitioner are governed by an agreement which is signed by

both the parties and any change in the agreement cannot be

unilaterally dictated by the petitioner. The petitioner cannot

compel the Government that the Government should accept

the surrender of reserved quota of water by 27.60 MCM.

Effect cannot be given retrospectively as the same is governed

7 of 18 by the agreement between the parties which is duly signed by

them. Hence, it is prayed for rejection of the petition.

12. We have given our anxious consideration to the

submissions made by learned Senior Counsel appearing for the

respective parties.

13. Indisputably, under the original agreement, the

respondents have to keep the water reserved for the petitioner

up to maximum limit of 87.6 MCM. For keeping this much of

quantity the petitioner had to pay one time Irrigation

Restoration Charges to the respondents. Apart from this, the

petitioner has to inform respondent No. 4 in advance for

demand of annual water not more than 87.6 MCM, to be used

by the petitioner for the next year. Respondent No. 4 started

charging Commitment Charge @ 5% on the difference between

resreved water quantity of 87.6 MCM and quantity of annual

water demand. This Court by it's judgment and order, dated

14/07/2017 Writ Petition No.1372/2016, quashed and set

aside the demand notices of 5% Commitment Charges issued by

respondent No.4 by holding that there is no such condition

either in agreement dated 16/05/2012 or in the Act and Rules

and Regulations to which the agreement was subjected to. The

special leave petition filed by the respondents against the

judgment and order dated 14/07/2017 in Writ Petition

8 of 18 No.1372/2016 has been dismissed, therefore the order in Writ

Petition No.1372/2016, quashing the Commitment Charges

levied by the respondents during subsistance of earlier

agreement became final.

14. Notably, after expiry period of agreement dated

22/10/2012, which was for six year, another agreement came

to be executed on 18/05/2018. Perusal of the new agreement

dated 18/05/2018 shows that there is covenant in clause 11(i)

(ii)and (iii) regarding paying of Commitment Charges annually

by the company on drawing of less water than allocated. The

said clauses of agreement are reproduced as under:

"(i) As stated above, the Government has sanctioned and allocated 87,600 million liters of water per annum to the company. If the company would draw less than 90% of the sanctioned and allocated water per annum then irrespective of the quantity of water drawn during the year, the company shall be liable to pay the charges at the agreed rate for 90% of the sanctioned and allocated quantity. For the remaining 10% of the quantity of sanctioned and allocated quantity of water, the company shall pay the commitment charges @ 5% of the agreed rates. If the total water drawn by the company during the year would exceed 115% of the yearly sanctioned and allocated quantity of water then excess quantity of water exceeding 115% of the yearly sanctioned and allocated quantity of water, will be charged at 1.5 times the agreed rate.

(ii) For any unforeseen reason, if the company would like to reduce/increase the demand of water made earlier/entered in

9 of 18 the agreement, they will be required to make the revised acceptance of such revised demand and the company will be charged as per changed demand for period specified, other conditions remaining the same. A supplementary agreement on One thousand rupees stamp paper for this changed quantity shall be executed which will form part of this main agreement. If the company would draw less than 90% of the quantity of water for which the annual demand shall be made by it before 1st of November every year, then irrespective of the quantity of water drawn during the year, the company shall be liable to pay the charges at the agreed rate for 90% of the quantity of water for which annual demand would be made. For the remaining 10% of the quantity of water for which the annual demand would be made, the company shall pay the commitment charges @ 5% of the agreed rates. If the total water drawn by the company during the year would exceed 110% of the quantity for which the annual demand would be made then excess quantity of water exceeding 110% of the quantity for which the annual demand would be made, will be charged at 1.5 times the agreed rate.

(iii) Whenever the company shall make a revised yearly demand proposing to reduce the demand of water as compared to the sanctioned and allocated 87600 million liters of water per annum, as contemplated by clause-ii(ii) above then in addition to the charges that would be payable by the company as stated in clause-11(ii) above, the company shall also be liable to pay the commitment charges @ 5% in respect of the difference of the total quantity of water by which the annual demand shall be reduced as compared to the sanctioned and allocated 87600 million liters of water per annum."

15. In view of the above unequivocally clauses in the new

agreement which speak voluminious that respondent No.4 is

10 of 18 entitled to the Commitment Charges for fetching less water

than allocated quota per annum from the date 18/05/2018

when new agreement came to be executed. Thus, the question

regarding charging of Commitment Charges at the rate of 5%

and other charges is settled after the execution of new

agreement i.e. with effect from 22/05/2018.

16. The above undisputed facts would resolve the

controversy to the effect that respondent No.4 would be

entitled to the Commitment Charges and other charges

only after the date of execution of new agreement. Thus, we

hold that the demand letter dated 26/10/2017, demanding

Commitment Charges for year 2017-18 prior to execution of

new agreement dated 18/05/2018 does not stand in wake of

judgment dated 14/07/2017 in Writ Petition No.1372/2016.

17. This takes us to next submission of learned Senior

Counsel for the petitioner. It is submitted that the petitioner

has moved the application for partial surrender of quota of

27.60 MCM of water on 13/10/2017, which has been allowed

by the Government on 29/07/2020. The Government already

sat on the said application for almost three years. According to

him, for inordinate and unexplained delay on the part of the

State Government, the petitioner cannot be made liable to pay

for intermediate period. Therefore, he submits that the effect of

11 of 18 partial surrender should be made from the date of application

i. e. with effect from 13.10.2017. According to him, once the

State Government has found the application genuine and

opined to accept the surrender of partial quota by 27.60 MCM

of water, such acceptance must relate back to the date of

application or at least from the date of fresh agreement dated

22/05/2018. To buttress his submission, he seeks to rely on

the following judgments :

"Commissioner of Central Excise vs. M.P.V. & Engg. Industries - (2003) 5 SCC 333 , wherein the Apex Court in paragraph 11 has held that -

"11. It was then submitted by the Appellant that in construing a notification granting exemption, the notification must be strictly construed without stretching the language of the notification to confer any unintended benefit. Similar argument was advanced before the Tribunal. In dealing with the submission the Tribunal noticed the decision of this Court in CCE v. Parle Exports (P) Ltd., wherein this Court held that exemption should be strictly construed although the exemption clause in the notification may be construed liberally. In other words, eligibility criteria should be construed strictly but a liberal approach may be adopted in construing other conditions. Reliance was also placed in UOI v. Wood Papers Ltd. We may apply this principle to the case in hand. No doubt, so far the authorities are concerned they must examine the claim of the respondent to be a small scale industry strictly and in accordance with the rules. However, once it is found that the industry qualifies as a small scale industry, in the matter of grant of exemption a liberal approach is permissible if it does no violence to the language of the notification. In a case of this

12 of 18 nature it is only reasonable to take the view that the benefit of exemption will accrue to a unit found to be small scale industrial unit from the date on which the application was made for grant of registration certificate. Such a unit should not be deprived of the benefit to which it is otherwise entitled as a small scale industrial unit merely because the authorities concerned took their own time in disposing of the application. We therefore, agree with the majority view of the Tribunal and hold that the benefit of exemption under the notification in question should be extended to the respondent with effect from the date on which the application for grant of registration was made by it before the competent authority. This is also in accord with the principle which found favour with this Court in State of U.P. v. Haji Ismail Noor Mohd. & Co. and Assessing Authority v. Patiala Biscuits Manufacturers (P) Ltd."

Adani Ports and Special Economic Zone Limited & 1 vs. Union of India & 2 - 2017 SCC OnLine Guj 1837, wherein the Gujarat High Court at Ahmedabad in paragraph 10 has held that -

"10. Taking us through the materials on record, the learned counsel for the petitioners submitted that there was no requirement for the petitioners to apply for waiver of the cost recovery charges in terms of circular dated 10/04/2016. The circular provided for an inbuilt mechanism under which, the Commissioner would suo motu examined the requirements of the circular and recommend the case accordingly to the concerned departments who would take a decision based on such report. Even otherwise, the petitioners had without any delay, applied for the exemption on 12/04/2013 itself. No further details or documents were called for from the petitioners by the department.

Whate4ver delay that took place in processing and granting the application for exemption, can be attributed only to the

13 of 18 respondents. Once the competent authority was of the opinion that the petitioners satisfied necessary requirements for grant of exemption, such exemption must relate back to the date of application. Counsel further submitted that the petitioners fulfilled all the requirements. At no stage, there was any communication from the respondents that in view of the outstanding payments for cost recovery charges, application of the petitioners would not be considered for such period."

18. Let us state here that the transaction between the

petitioner and respondent No.4 is governed by the agreement

executed between them. Any modification in the term of

agreement is to be done, mutually. Thus, if any proposal is

made by the petitioner, unless the respondents agree to accept

the said proposal it cannot become part of agreement. If any

condition is to be modified, then unless both the parties agree,

effect cannot be given to such proposal. By letter dated

24/08/2020, respondent No.4 agreed to accept the request

made by the petitioner about the surrender of water quotaof

27.60 MCM of water. Therefore, the effect cannot be given to

this surrender from the date of the application i. e. from

13.10.2017. So far as the cases of M.P.V. & Engg. Industries

and Adani Ports and Special Economic Zone (supra) are

concerned, in those cases, there were statutory obligations on

the State Government to perform an act as a State under the

scheme introduced by the State and, thereefore, the delay in

deciding the application of the petitioner in those cases did not

14 of 18 take away the benefit during intervening period, which was

available to them. In that scenario, the Apex Court has held

that the benefit shall be given to the petitioner-Industry from

the date of application. Whereas, in the present case, there is

mutual agreement in between the parties and the respondents

were not under the statutory obligation to process the

application as a State. Rather the respondents acted as a party

to the agreement and if any condition is to be altered, it cannot

be given effect from the date of proposal, but can have effect

from the date of acceptance of proposal as envisaged in the

Contract Act. So, unless the proposal is accepted, the proposal

cannot be termed as an enforceable contract. Therefore, we do

not find force in the argument of the learned Senior Counsel for

the petitioner that the partial surrender of water allocation of

27.60 MCM shall be given effect from the date of application

i.e. from 13/10/2017 or from the date of fresh agreement.

19. It is germane to note here that respondent No.1

accepted the proposal of the petitioner for the surrender of

27.6 MCM of water from reserved water on the condition of

the payment of remaining outstanding due of Irrigation

Restoration charges. Though, this court by judgment dated

05/05/2016 in Writ Petition No.4968/2015 reduced the

Irrigation Restoration Charges from Rs.100000/- per hector of

land to Rs.50000/-, recently, the apex court by its judgment

15 of 18 dated 13/01/2023 allowed the Civil Appeal No. 8550/2022

arising out of Special Leave petition (C) No. 28161/2016 filed

by the respondents and set aside the order of this court. In

wake of the judgment of the supreme court, the petitioner is

liable to pay Irrigation Restoration Charges @ Rs. 1,00,000/-

per hector. Therefore, the petitioner is liable to pay the

remaining outstanding dues towards Irrigaion Restoration

Charges, as mentioned in the letter dated 20.07.2020 of

respondent No. 1. Thus, we find force in the argument of the

respondents that unless the petitioner pays the remaining

outstanding dues to it towards Irrigation Restoration Charges,

the effect cannot be given to the surrender of water quota of

27.6 MCM, since the acceptance of the proposal for surrender

of water quota was conditional one i. e. on payment of the

remaining outstanding towards the Irrigation Restoration

Charges.

20. So far as question of refund of Irrigation Restoration

Charges is concerned, it is submitted on behalf of the petitioner

that in wake of acceptance of surrender of quota of 27.6 by the

respondents, the petitioner would not be liable to pay

Irrigation Restoration Charges on entire water quota of 87.6

MCM, but on the reduced water quota of 60 MCM. According to

learned Senior Counsel for the petitioner, the water Irrigation

Restoration Charges paid the petitioner excess to water quota

16 of 18 of 60 MCM are required to be refunded to the petitioner. On

the other hand, the learned senior Counsel Shri M.V. Samarth

appearing for respondent Nos. 2 to 5 for the respondents

submits that Irrigation Restoration Charges is imposed only

once when the initial demand of water quota of 87.6 was made

by the petitioner that too under old agreement which is

already expired, now subsequent surrender of the water quota

would not give any right to the petitioner for refund of

Irrigation Restoration Charges. According to him, the

minimum requirement was fixed so as to meet the capital

expenditure incurred by the respondents for arranging the

water for affected land due to reservation of water for the

petitioner.

21. We find force in the argument of the learned senior

counsel for the respondents for the reason that the Irrigation

Restoration Charges were levied only once under the first

agreement on the quantity of water quota demanded by the

petitioner i.e.87.6 MCM. Water Irrgation Restoration Charges

are not recurring charges and it was a capital expenditure.

Those charges under earlier agreement were levied to make

alternate arrangement for the irrigation of 23218 hector land

affected due to the stoarge/reservation of water for the

petitioner for six years. This was agreed by the petitioner

under the agreement. Thus, we do not find force in the

argument of the petitioner in this regard.

17 of 18

22. In the light of above observations, the petition is

partly allowed. The demand letter date 26/10/2017 is quashed

and set aside. The petitioner is entitled to refund of the

Commitment Charges paid by it for the year 2017-18.

(M.W. CHANDWANI, J.) (A.S. CHANDURKAR, J.)

*sandesh

18 of 18