Indian Oil Corporation Ltd vs State Of Gujarat
2023 Latest Caselaw 6431 Guj

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     C/SCA/5371/2006                                  JUDGMENT DATED: 04/09/2023

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             IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

              R/SPECIAL CIVIL APPLICATION NO. 5371 of 2006


FOR APPROVAL AND SIGNATURE:


HONOURABLE MS. JUSTICE VAIBHAVI D. NANAVATI
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1     Whether Reporters of Local Papers may be allowed
      to see the judgment ?

2     To be referred to the Reporter or not ?

3     Whether their Lordships wish to see the fair copy
      of the judgment ?

4     Whether this case involves a substantial question
      of law as to the interpretation of the Constitution
      of India or any order made thereunder ?

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                       INDIAN OIL CORPORATION LTD
                                  Versus
                       STATE OF GUJARAT & 1 other(s)
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Appearance:
M R BHATT & CO.(5953) for the Petitioner(s) No. 1
for the Respondent(s) No. 2
MR AYAAN PATEL, AGP for the Respondent(s) No. 1,2
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    CORAM:HONOURABLE MS. JUSTICE VAIBHAVI D. NANAVATI

                               Date : 04/09/2023
                               ORAL JUDGMENT

1. The petitioner herein is a registered company

incorporated under the Companies Act, 1956 and is engaged in

refining and marketing petroleum products. The petitioner's

refinery at Vadodara is engaged in the processing of crude

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petroleum products and the petitioner plays a vital role in

supplying the petroleum products across the country. By way

of present petition, the petitioner seeks to challenge the action

of the respondent authority whereby, the respondent authority

has ordered to charge and collect water tax to the tune of

Rs.1,82,11,534/-. Being aggrieved by the aforesaid action

initiated by the respondent authority, the petitioner herein has

approached this Court seeking following reliefs:

"[a] this Hon'ble Court be pleased to issue an appropriate writ, order or direction quashing and setting aside the resolution dated 24.09.2002 as also the demand notices dated 01.10.2005, 13.10.2005 and 23.02.2006 and be further pleased to restrain the respondents from raising bills/revised rate;

[b] this Hon'ble Court be pleased to hold and declare that the respondents have acted wholly without jurisdiction in issuing resolution dated 24.09.2002;

[c] that pending admission, hearing and final disposal of this petition, this Hon'ble Court may be pleased to stay the effect and implementation of the demands made under letters of 01.10.2005, 20.10.2005 and 23.02.2006 towards arrears for the period 1997-98 onwards;

[d] that pending admission, hearing and final disposal of this petition, this Hon'ble Court may be pleased to direct the respondents to raise demand for water charges as per the methodology adopted prior to March, 2005;

[e] Be pleased to pass such other and further orders, as may deem just and proper in the facts and circumstances of the case."

2. The brief facts leading to the filing of the present petition

reads thus:

2.1 The petitioner required supply of water from Mahi river,

near Vasad and in view thereof, entered into an agreement

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dated 08.02.2002 with the respondent - State of Gujarat. As

per clause 5(i) of the said agreement, the petitioner was

required to pay at the rate of 0.75 paisa per 1000 liters

towards water charges for industrial use and 0.20 paisa per

1000 liters for drinking purpose for the period from

01.04.1997. As per clause 5(ii) of the agreement, the water

charges for the water actually drawn was at the rate of Rs.2.50

per 1000 liters for industrial use and Rs.0.30 paise per 1000

liters for drinking purposes. The rates stated in clause 5 of the

agreement are subject to the resolution passed by the

Government from time to time.

2.2 The petitioner duly paid the bills raised by the respondent

No.2 from time to time. The petitioner herein is governed by

the provisions of the Bombay Irrigation Act, 1879 which

empowers the respondent No.1 - State to arrive at such

contractual requirement for supply of water from any

interstate river on payment of price at the rate fixed from time

to time. The provision of the said Act empowers the State

Government to enter into an agreement with a party desirous

of drawing water from canal, river, stream, lake, natural

collection of water etc. The Act further provides for

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determination of rates for supply of canal water for irrigation

purpose or for any other purposes.

2.3 It is the case of the petitioner that the respondent -

State, from time to time, prescribed the rate for supply of

water. So far as the present petition is concerned, the

petitioner herein states that a reference is required to be made

to certain Government letters/Resolutions, which read thus:

(a) Government Resolution dated 22.05.1990 fixing rates of water for industrial purposes and for drinking water purposes.

(b) Government Resolution dated 01.05.1997, by which the rates of water effective from 01-04-1990 were upwardly revised.

(c) Government Resolution dated 27.01.1999, by which it was abundantly made clear that out of the total quantity of water supplied to an industry, rebate for the drinking water quantity be given and in respect of the said quantity for drinking water, rate of Rs. 0.50 paise per 1000 litres be assessed.

(d) Government Resolution dated 30.01.2001, by which the water charges came to be revised.

(e) Government Resolution dated 24.09.2002, refers to the earlier resolutions Dated 1-5-1997, 27-1-1999 and 30-1-2001. By this resolution, it is reiterated that separate rates will be applicable for water supply towards industrial purposes and for drinking water purposes. This resolution, for the first time, stipulated that in the first

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instance, the entire quantity of water given to an industry is to be assessed at the rates applicable for industrial purpose and from the said estimation, the quantity of water for drinking purposes is required to be rebated.

2.4 The petitioner herein draws water from river Mahi. The

inter-say agreement between the petitioner and the

respondent - State is for drawal of 56.37 = 12.4 million gallons

of water per day. Out of the water so drawn, approximately

0/445 million gallons of water per day is utilized for drinking

purpose. The petitioner spends huge amount towards

processing and purification of water for drinking purposes. As a

social obligation, the petitioner also supplies drinking water

free of charge to the surrounding villages.

2.5 The petitioner herein received a letter dated 01.10.2005

from the respondent No.2 stating that due to reassessment of

water charges in respect of water supply for drinking purposes,

an amount of Rs.2,05,81,809/- was payable by the petitioner. A

copy of the said letter dated 01.10.2005 is duly produced at

Annexure - 5. In response to the said, the petitioner addressed

a letter/representation dated 13.10.2005 stating that the

unilateral interpretation of the Circular dated 24.09.2002

raised by the Respondent No. 2 was not valid.

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2.6 Pursuant to the said representation dated 13.10.2005 at

the instance of the petitioner, the respondent No.2 issued a

revised differential bill for the period between 1997-98 to

2004-05 raising a demand of Rs.1,82,11,534/-. A copy of the

said revised bill dated 20.10.2005 is duly produced at

Annexure - 7. It is the case of the petitioner that for the month

of April, 2005 onwards, the respondent No.2 started issuing

bills on an erroneous interpretation of the Circular/Resolution

dated 24.09.2002. The petitioner herein made payment of

water charges for the subsequent months under protest as

also requesting the respondent No.2 to give proper treatment

of rebate as represented earlier.

2.7 The Petitioner submits that in response to the

representation dated 13.10.2005, the respondent No.2 by

communication dated 14.11.2005 has negatived the request

for reconsideration as requested by the petitioner herein and

reiterated that the difference bill for the period from

01.04.1997 to 31.03.2005 has been correctly issued. The

petitioner herein requested the respondent No.2 to grant

extension of two months since the bill was under consideration

of the management of the petitioner however, the said request

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came to be rejected by a communication dated 10.02.2006.

The petitioner reiterated its request by communication dated

23.02.2006 whereby, the respondent No.2 replied that the

differential bill has been correctly issued and along with the

said communication, a revised bill for an amount of

Rs.1,82,24,074/- was also issued. On 08.03.2006, the

petitioner herein while making payment of water charges for

the month of November, 2005 recorded that it had

recalculated the amount payable with rebate taken as was

drawn prior to April, 2005 and accordingly the excess amount

for the earlier months was deducted from the bill for the Month

of November, 2005 and after adjusting the said amount, the

payment for the said month was made. Further submissions

were made by the petitioner by a communication dated

10.03.2006.

2.8 It is the case of the petitioner herein that when the letter

dated 01.10.2005 was issued by the respondent No.2, it was

noticed by the petitioner that by the Government Resolution

dated 24.09.2002, the entire basis for giving rebate for supply

of water for drinking use was changed. It is the case of the

petitioner that only on issuance of the aforesaid letter, the true

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impact and interpretation of the Resolution dated 24.09.2002

was noticed by the petitioner herein and therefore, the said

Resolution is subject matter of challenge by filing the present

petition along with the demand letters dated 01.10.2005,

20.10.2005 and 23.02.2006. Being aggrieved and dissatisfied

with the same, the petitioner herein is constrained to approach

this Court invoking Article 226 of the Constitution of India

seeking the reliefs, as referred above.

3. Heard Mr. Manish Bhatt, learned Senior Counsel

appearing for the petitioner and Mr. Ayaan Patel, learned AGP

appearing for the respondent No.1.

4. Mr. Manish Bhatt, learned Senior Counsel appearing for

the petitioner, submitted that the respondent No.1 has acted

high handedly and in most oppressive manner in invoking

clause 1 of the Resolution dated 24.09.2002. It was submitted

that the Resolution dated 24.09.2002 would reveal the method

of computation and assessment stated in para 2. As per the

said paragraph, it is categorically decided that separate rate

be assessed for industrial consumption and drinking water and

the rate will be assessed as indicated in the resolution dated

30.01.2001. Only the recovery is to be made as per the

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conditions to follow. While enumerating the conditions for

recovery in para 1, the entire mode of giving rebate is

changed, which is not permissible in law. Once the

methodology of assessment and applicability of rate is decided

in guise of imposing conditions for recovery, the entire mode of

assessment cannot be changed. It was submitted that by the

impugned Resolution, impliedly uniform rate is sought to be

charged for the supply of water for industrial purpose and for

drinking water purpose and therefore, the Resolution is dehors

the jurisdiction of the respondent No.1.

4.1 Mr. Bhatt, learned Senior Counsel, submitted that right

from initial year till date, the respondent No.2 was billing the

petitioner as per the separate rate for industrial purpose and

for drinking water purpose and by the said resolution, the

respondents now seek to charge difference and that too for a

retrospective period, which is not permissible in law. It was

submitted that as per the Resolutions of 1997 and 1999, the

respondent No.2 had rightly raised the bills of water

consumption from time to time, which were duly paid by the

petitioner. There was no rational or basis for the respondent

No.1 to change the mode of giving rebate in the Resolution

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dated 24.09.2002.

4.2 Mr. Bhatt, learned Senior Counsel, submitted that the

respondents ought to have appreciated that approximately

0.445 MGD is distributed by the petitioner to meet with the

drinking water needs. Providing of drinking water is the

obligation of the respondent No.1 - State. The respondent -

State instead of providing the drinking water, is charging the

petitioner with the rates applicable as per industrial use, which

is wholly untenable in law and in the facts of the present case.

Mr. Bhatt, learned Senior Counsel, submitted that the

respondents ought to have granted complete exemption in

respect of the quantity supplied by the petitioner to the

villages, social and cultural organizations etc.

4.3 Mr. Bhatt, learned Senior Counsel, submitted that the

respondents ought to have appreciated that if the cost of

drinking water is increased by 638%, there will be no option for

the petitioner but to drastically reduce/stop supply of drinking

water to surrounding villages which would seriously prejudice

the residents of the villages. It was submitted that there was

no rational or reason or logic advanced by the respondents so

as to revise the assessment retrospectively. The respondent

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authority lack power and jurisdiction to raise such demand

retrospectively from 1997-98. It was submitted that the

demand raised retrospectively by the respondent - State is in

complete violation of principles of natural justice wherein, no

opportunity worth the name came to be granted to the

petitioner herein before altering the contractual terms and

conditions.

4.4 Mr. Bhatt, learned Senior Counsel, submitted that the

entire basis of the demand raised by the respondent No.1 -

State through alleged reassessment is untenable. It was

submitted that the petitioner is supplying huge quantity of

drinking water to the nearby villages. If the respondents

initiate any precipitative action, it will create tremendous

prejudice not only to the petitioner but also to the residents of

surrounding villages as stated above. In view thereof, it was

submitted that the prayers, as prayed for, be allowed.

5. Per contra, Mr. Ayaan Patel, learned AGP appearing for

the respondent authority, placed reliance on the affidavit-in-

reply filed by the respondent authority and submitted that the

respondent authority sought to recover total amount of

Rs.2,05,81,809/- for the period from 01.04.1997 to 31.03.2005

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strictly in consonance with the formula fixed in the

Government Resolutions dated 27.01.1999, 30.01.2001 and

24.09.2002 which have been accepted by the petitioner herein

by way of agreement as referred above. Mr. Patel, learned

AGP, further submitted that the action of the Government is

valid wherein, the respondent Government seeks to levy the

rates for the supply of water from river and to recover the

same from users/consumers.

5.1 Mr. Ayaan Patel, learned AGP placed reliance on the

statement showing re-assessment of water used for drinking

purpose by the petitioner, which is also produced along with

the petition and submitted that in view thereof, the petitioner

herein is liable to pay the amount to the tune of

Rs.2,05,81,809/-.

5.2 Mr. Ayaan Patel, learned AGP, further placed reliance on

the following decisions:

a.      (2008) 8 SCC 172 (paragraphs 15 and 17)
b.      (2010) 15 SCC 546 (paragraphs 6 and 7)
c.      (1994) 3 SCC 552 (paragraphs 2 and 22)
d.      Civil Appeal No.8550 of 2022 in SLP No.2816 of 2016
        (paragraphs 1 and 17)

Analysis:-

6. Having heard the learned advocates appearing for the

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respective parties, the undisputed facts emerge for the

consideration of this Court, are as under:

6.1 The petitioner required supply of water from Mahi river,

near Vasad and in view thereof, entered into an agreement

dated 08.02.2002 with the respondent - State of Gujarat.

6.2 As per clause 5(i) of the said agreement, the petitioner

was required to pay at the rate of 0.75 paisa per 1000 liters

towards water charges for industrial use and 0.20 paisa per

1000 liters for drinking purpose for the period from

01.04.1997. As per clause 5(ii) of the agreement, the water

charges for the water actually drawn was at the rate of Rs.2.50

per 1000 liters for industrial use and Rs.0.30 paise per 1000

liters for drinking purposes. The rates stated in clause 5 of the

agreement are subject to the resolution passed by the

Government from time to time.

6.3 The dispute in the present petition is with regard to the

levy of water charges.

6.4 Pursuant to the aforesaid agreement, the petitioner

herein stand governed by the following Government

Resolutions:

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"(a) Government Resolution dated 22.05.1990.

(b) Government Resolution dated 01.05.1997.

(c) Government Resolution dated 27.01.1999.

(d) Government Resolution dated 30.01.2001.

(e) Government Resolution dated 24.09.2002."

6.5 As per The Government Resolution dated 30.01.2001,

water rate structure was framed for two purposes; (i) water

used exclusively for drinking purpose and (ii) water used

exclusively for industrial purpose. There was no separate

provision for quantity or water used for drinking purpose by

the industry and as per the Government Resolution Dated 24-

09-2002, which also refers to the earlier resolutions dated 1-5-

1997, 27-1-1999 and 30-1-2001 states that separate rates will

be applicable for water supply towards industrial purposes and

for drinking water purposes. This resolution, for the First time,

stipulated that in the first instance, the entire quantity of water

given to an industry is to be assessed at the rate applicable for

industrial purpose and from the said estimation, the quantity of

water for drinking purposes is required to be rebated. The said

provision was made vide two Government Resolutions dated

27.01.1999 and 24.09.2002 according to which, fixed and

normal water charges for full quantity drawn for industries are

to be charged at industrial usage rate out of which, rebate for

the quantity of water used for drinking purpose is to be given.

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6.6 It is the case of the respondent authority that owing to

inadvertence legally claimable amount was not shown in the

bill raised at the material time in consonance with the

prevailing Government Resolutions and no sooner the mistake

was detected by the authorities, immediately by letter dated

20.10.2005, the respondent authority demanded the

outstanding amount of Rs.1,82,11,534/-, which is under

challenge.

7. At this stage, it is apposite to refer to the ratio as laid

down by the Hon'ble Supreme Court in case of the Union of

India and Ors. vs. M/s. Anglo Afghan Agencies Etc. , reported in

AIR 1968 SC 718, wherein the relevant paragraphs reads thus:

"9. "The Crown cannot escape by saying that estoppels 'do not bind the Crown for that doctrine has long been exploded. Nor can the Crown escape by praying in aid the doctrine of executive necessity, that is, the doctrine that the Crown cannot bind itself so. as to fetter its future executive action. That doctrine was propounded by Rowlatt J., in Rederiaktiebolaget Amphitrite v. The King but it was unnecessary for the decision because the statement there was not a promise which was intended to be binding but only an expression of intention. Rowlatt, J., seems to have been influenced by the cases on the right of the Crown to dismiss its servants at pleasure, but those cases must now all be read in the light of the judgment of Lord Atkin in Reilly v. The King--(1954) A.C. 176, 179).

In my opinion the defence of executive necessity is of limited scope. It only avails the Crown where there is an implied term to that effect or that is the true meaning of the contract." Denning, I was dealing with a case of a serving army officer, who wrote to the War Office regarding a disability and received a reply that his disability had been accepted as attributable to "military service". Relying on that assurance he forbore to obtain an independent medical opinion. The Minister of Pensions later decided that the appellant's disability could not be

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attributed to war service. It was held that as between subjects such an assurance would be enforceable because it was intended to be binding intended to be acted upon, and was in fact acted upon; and the assurance was also binding on the Crown because no term could be implied that the Crown was at liberty to revoke it.

16. In each of the three cases, the Court observed that the Court was competent to grant relief in appropriate cases, if, contrary to the Scheme, the authority declined to grant a licence or import certificate or the authority acted arbitrarily. Therefore even assuming that the provisions relating to the issue of Trade Notices offering inducement to. the prospective exporters are in character executive, the Union Government and its officers are, on the authorities of tiffs Court, not entitled at their mere whim to ignore the promises made by the Government. We cannot therefore accept the plea that the Textile Commissioner is the sole judge of the quantum of import licence to be granted to an exporter, and that the Courts are powerless to grant relief, if the promised import licence is not given to an exporter who has acted to his prejudice relying upon the representation. To. concede to the Departmental authorities that power would be to. strike at the very root of the rule of law.

23. Under our jurisprudence the Government is not exempt from liability to, carry out the representation made by it as to its future conduct and it cannot on some undefined and undisclosed ground of necessity or expediency fail to carry out the promise, solemnly made by it, nor claim to be the judge of its own obligation to the citizen on an ex parte appraisement of the circumstances. in which the obligation has arisen. We agree with the High Court that the impugned order passed by the Textile Commissioner and confirmed by the Central Government imposing cut in the import entitlement by the respondents should be set aside and quashed and that the Textile Commissioner and the Joint Chief Controller of Imports and Exports be directed to issue to the respondents import certificates for the total amount equal to 100% of the f.o.b. value of the goods exported by them, unless there is some decision which fails within cl. 10 of the Scheme in question."

7.1 It is also apposite to refer to the ratio as laid down by the

Hon'ble Supreme Court in case of Madhyamam Broadcasting

Limited Vs. Union of India and Others , reported in 2023 SCC

Online SC 366. Paragraph 62 and 184 of the said decision read

thus:

"62. The principles of natural justice ensure that justice is not only done but it is seen to be done as well. A reasoned order is one of the fundamental requirements of fair administration. It holds utmost significance in ensuring fairness; scholars and courts now term it as the third principle of natural justice. The rule of a reasoned order serves five important purposes. Firstly, it ensures transparency and accountability. It

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places a check on arbitrary exercise of power. Lord Denning observed that in giving reasons "lies a whole difference between a judicial decision and an arbitrary one". Justice Bhagwati observed in Maneka Gandhi (supra) that the rule is "designed to secure the rule of law and the court should not be too ready to eschew it in its application to a given case." Secondly, non-reasoned orders have the practical effect of placing the decision out of the purview of judicial review. A non-reasoned order limits the power of the courts to exercise judicial review because the scope of judicial review is not limited to the final finding on law or facts but extends to the reasons to arrive at the finding. A limitation on the right to appeal necessarily means that the scope of judicial review is restricted. Thirdly, articulation of reasons aids in arriving at a just decision by minimalizing concerns of arbitrary state action. It introduces clarity of thought and eschews irrelevant and extraneous considerations. Fourthly, it enhances the legitimacy of the institution because decisions will appear to be fair. There is a higher probability that the finding through a reasoned order is just.

Fifthly, reasoned orders are in furtherance of the right to information and the constitutional goal of open government. Secrecy broods partiality, corruption and other vices that are antithetical to a governance model that is premised on the rule of law.

184. In view of the discussion above, the appeals are allowed and the order of the MIB dated 31 January 2022 and the judgment of the High Court dated 2 March 2022 are set aside. We summarise our findings below:

(i) Security clearance is one of the conditions required to be fulfilled for renewal of permission under Uplinking and Downlinking Guidelines;

(ii) The challenge to the order of the MIB and judgment of the High Court on procedural grounds is allowed for the following reasons:

(a) The principles of natural justice were constitutionalised by the judgement of this Court in Maneka Gandhi (supra). The effect is that the courts have recognised that there is an inherent value in securing compliance with the principles of natural justice independent of the outcome of the case. Actions which violate procedural guarantees can be struck down even if non-compliance does not prejudice the outcome of the case. The core of the principles of natural justice breathes reasonableness into procedure. The burden is on the claimant to prove that the procedure followed infringes upon the core of procedural guarantees;

(b) The appellants have proved that MBL's right to a fair hearing has been infringed by the unreasoned order of the MIB dated 31 January 2022, and the non-disclosure of relevant material to the appellants, and its disclosure solely to the court. The burden then shifts on the respondents to prove that the procedure that was followed was reasonable and in compliance with the requirements of Articles 14 and 21 of the Constitution. The standard of proportionality has been used to test the reasonableness of the procedure.

(c) The judgments of this court in Ex-Armymen's Protection Services (supra) and Digi Cable Network (supra) held that the

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principles of natural justice may be excluded when on the facts of the case, national security concerns overweigh the duty of fairness;

(d) Though confidentiality and national security are legitimate aims for the purpose of limiting procedural guarantees, the state has been unable to prove that these considerations arise in the present factual scenario. A blanket immunity from disclosure of all investigative reports cannot be granted;

(e) The validity of the claim of involvement of national security considerations must be assessed on the test of (i) whether there is material to conclude that the non-disclosure of information is in the interest of national security; and (ii) whether a reasonable prudent person would draw the same inference from the material on record;

(f) Even assuming that non-disclosure is in the interest of confidentiality and national security, the means adopted by the respondents do not satisfy the other prongs of the proportionality standard. The non- disclosure of a summary of the reasons for the denial of security clearance to MBL, which constitutes the core irreducible minimum of procedural guarantees, does not satisfy the suitability prong;

(g) The courts assess the validity of public interest immunity claims, which address the same harms as the sealed cover procedure, based on the structured proportionality standard. The power of courts to secure material in a sealed cover when contradistinguished with the scope of assessment of public interest immunity claims is rather unguided and ad-hoc. The standard of review that is used by the courts in public interest immunity claims and the lack of such a standard in sealed cover proceedings to protect procedural safeguards indicates that public interest immunity claims constitute less restrictive means. Additionally, while public interest immunity claims conceivably impact the principles of natural justice, sealed cover proceedings infringe the principles natural justice and open justice;

(h) The courts could take the course of redacting confidential portions of the document and providing a summary of the contents of the document to fairly exclude materials after a successful public interest immunity claim; and

(iii) The challenge to the order of MIB is allowed on substantive grounds. The non-renewal of permission to operate a media channel is a restriction on the freedom of the press which can only be reasonably restricted on the grounds stipulated in Article 19(2) of the Constitution. The reasons for denying a security clearance to MBL, that is, its alleged anti- establishment stance and the alleged link of the shareholders to JEI- H, are not legitimate purposes for the restriction of the right of freedom of speech protected under Article 19(1)(a) of the Constitution. In any event, there was no material to demonstrate any link of the shareholders, as was alleged."

7.2 Further, it is also apposite to refer to the order dated

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24.03.2006 whereby Rule came to be issued and interim relief

came to be granted in favour of the petitioner. The said order

reads thus:

"1. Rule. Notice as to interim relief returnable on 29th March 2006.

2. It is stated that the petitioner has regularly paid the amount of water charges as per demand made by the respondents and there is no outstanding amount against the bills given by the respondents.

3. In view of this, the water connection given to the petitioner shall not be disconnected on the basis of demand made by the respondents by letter dated 23rd February 2006 Annexure-"12" on condition that the petitioner shall not transfer, assign, alienate or in any way create encumbrance on the property in question till 29th March 2006."

8. Considering the aforesaid, in the facts of the present

case, the following emerge for the consideration of this Court:

(a) The petitioner entered into an agreement with the State

Government for drawing water from river Mahi, near Vasad by

an agreement dated 08.02.2002. As per clause - 5(i) of the

said agreement, the petitioner was required to pay at the rate

of 0.75 paisa per 1000 liters towards water charges for

industrial use and 0.20 paisa per 1000 liters for drinking

purpose for the period from 01.04.1997. As per clause 5(ii) of

the agreement, the water charges for the water actually drawn

was at the rate of Rs.2.50 per 1000 liters for industrial use and

Rs.0.30 paise per 1000 liters for drinking purposes; subject to

the revision of rate in future from time to time.

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(b) The respondent State Government raised bills for supply

of water in accordance with the said agreement till 2004-2005.

As per Page 76, Annexure 13, the Petitioner states that the

Petitioner has recalculated the amount payable by them

alongwith the rebate and states that they are liable to pay an

Amount of Rs. 45,18,386/- , which the Petitioner has paid vide

Cheque No - 268421, Date - 08-03-2006.

(c) The State Government demanded further amount by the

impugned communication dated 20.10.2005 seeking further

recovery on the basis of reassessment of water charges used

for drinking purposes towards fixed charges and normal water

charges for the entire period between 1997-98 to 2004-05.

Upon the said reassessment, the respondent Government has

claimed that the petitioner corporation owes to the respondent

an amount of Rs.2,05,81,809/-.

The State Government has issued the impugned

communication dated 01.10.2005 & 20.10.2005 placing

reliance on the ground that owing to inadvertence legally

claimable amount could not be shown in the bill raised at the

material time in-consonance with the prevailing Government

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Resolution and no sooner the said mistake was effected by the

respondent authority immediately, a letter dated 01.10.2005 &

20.10.2005, duly produced at page 50 and 59, came to be

addressed to the petitioner herein demanding total

outstanding dues to the tune of Rs. 2,05,81,809/- for the period

from 1997-1998 to 2004-2005 in accordance with the

Government Resolution.

(d) The question arises whether the State Government may

seek further recovery by the impugned communication dated

20.10.2005 through re-assessment of water charges used for

drinking purposes, fixed charges and normal water charges for

the period from 1997-98 to 2004-05, claiming an amount of

Rs.2,05,81,809/-.

(e) It is the case of the petitioner and undisputed that the

water supplied by the petitioner to the surrounding villages

was free of charge. While entering into an agreement with the

respondent - State on 08.02.2002, as per the said agreement,

the petitioner herein is governed by the Government

Resolutions and the petitioner has been paying the said

charges as levied by the respondent State till June, 2005. The

Petitioner states that as per the Government Resolution dated

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30-01-2001, drinking water is to be charged for fixed rate for

reserved/approved quota @ Rs. 0.20 per cu.mtr. and actual

consumption @ Rs. 0.50 per cu.mtr. plus escalation @10% per

year, which comes to Rs. 0.64 cu.mtr. for the Year 2005. The

same rate has been applied for billing purpose even after the

implementation of the Government Resolution Dated 24-09-

2002 and the practice continued till March 2005. The Petitioner

further states that it is not clear to them that after all these

years, how there has been a change in interpretation of the

Government Resolution Dated 24-09-2002 by the Department

to levy a charge of Rs. 4.72 per cu.mtr. instead of Rs. 0.64 per

cu.mtr., affecting a jump of 638% increase from the current

level. The Petitioner also further states that they have no

objection in the revised method of calculation for raising bills

as per Government Resolution Dated 24.09.2002, provided the

rebate for Drinking Water is considered @ Rs. 4.72 per cu.mtr.

(Rs. 5.36 - Rs. 0.64) and not @ Rs. 0.64 per cu.mtr., which is

actually the rate of Drinking Water to be applied for billing.

The resolution of 24.09.2002 states that the rates

mentioned in the Government Resolution dated 30.01.2001

would be made applicable retrospectively from 01.04.1997. By

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applying the resolution of 2002, the respondent authority has

proceeded to bill the petitioner herein by raising a separate bill

for drinking water from 1997-1998 to 2005-06 which according

to the respondent authority, indicates that there are two

separate rates prescribed for industrial use and drinking water

use for the entire period and thereby, raised the impugned bill

dated 23.02.2006 seeking recovery of the amount due and

payable qua the drinking water charges retrospectively from

1997-1998 to 2004-05.

(f) It is the submission of the petitioner that the respondents

ought to have appreciated that approximately 0.445 MGD is

distributed by the petitioner to meet with the drinking water

needs. The submissions advanced by Mr. Bhatt, learned Senior

Counsel, also requires consideration that if the cost of drinking

water is increased by 638%, the petitioner has no option but,

to reduce/stop supply of drinking water to the surrounding

villages, which will seriously prejudice the residents of that

villages. Further, the petitioner has not charged any amount

from the said villages and the petitioner by way of social

gesture supplies water to the said villages.

(g) It was submitted by Mr. Ayaan Patel, learned AGP that

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the petitioner herein is bound by the terms of the contract.

Considering the aforesaid submissions and also on the

completion of transaction on payment of charges in June, 2005

as raised by the respondent authority and the petitioner

having paid the said amount of bill duly raised by the

respondent authority, had the petitioner been aware that the

rate of water charges would be increased retrospectively in

such manner, the petitioner could have thought about it while

distributing the said water free of cost to the adjoining villages.

Further, while undertaking the aforesaid exercise of

reassessment of the water charges retrospectively, no

opportunity of hearing was given to the petitioner herein. The

aforesaid is also against the well settled principles of natural

justice.

9. Considering the aforesaid, the transaction having been

concluded, in the opinion of this Court, it is not open for the

respondent State-Government to ask the petitioner to pay

arrears since the petitioner cannot pass on the burden to the

consumers. It was a clear and unequivalent contract knowing

and intending that it would be acted upon by the petitioner on

the price charged.

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10. In the opinion of this Court, it would be unfair now to

demand from the petitioner the arrears of charges on the basis

of the Resolution which was not acted upon. In view thereof,

the contention of the petitioner that the bill raised by the

respondent demanding arrears from the petitioner by

communication dated 23.02.2006 requires consideration. This

Court is inclined to interfere with the said communication

issued by the respondent State Government. The contract

entered into between the parties has been executed,

concluded and the benefit has been passed on to the

consumers by the petitioner. Considering the contract

executed between the parties, the petitioner herein ought not

to have been asked for payment of arrears by the respondent

State placing reliance on the Government Resolution dated

24.09.2002.

11. It is also apposite to take into consideration the present

resolution which is in effect from 03.02.2007 whereby, the 11

previous resolutions of the Government prior to 03.02.2007

stand discontinued in which the resolution dated 30.01.2001

and 01.05.2002 which are subject matter of dispute-in-

question, through which the respondent State Government is

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asking the amount from the petitioner, are also mentioned at

No.4 and No.5 in those 11 resolutions and thus it has been

declared that the water supplied for drinking water purpose

would be charged at Rs.1/- per 1000 ltrs. and water supplied

for industrial use would be charged at Rs.8/- per 1000 liters for

the year 2006-07, Rs.9/- per 1000 liters for the year 2007-08

and Rs.10/- per 1000 liters for the year 2008-09, along with the

rise of 10% every year.

12. Considering the facts of the present case and the position

of law, as referred above, the petition is considered and

allowed to the extent of quashing of the bill/communication

dated 23.02.2006 wherein, the respondent has issued a bill

amounting to Rs.2,05,81,809/- for drawal of water from river

Narmada/Mahi/Orsang for a period between 1997-98 to 2004-

05 and the said bill/communication dated 23.02.2006 is hereby

quashed and set aside by exercising Article 226 of the

Constitution of India. Rule is made absolute to the aforesaid

extent.

(VAIBHAVI D. NANAVATI,J)

NEHA