x4133 HIGH COURT OF CHHATTISGARH AT BILASP DIVISION BENCH: HON. MR. DHIRENDRA MISHRA, & HON. MR. R.N. CHANDRAKAR1 JJ Present: Mr. Bhaskar Pyasi, counsel for the petitibner. Mr. YS Thakur, Dy. Advocate General for the State. Writ Petition No. 5777 of 1998 PETITIONER : Lafarge India Limited, (A Public Limited Company incorporated under the provisions of the Companies Act, 1956) having its registered office at DBS Corporate Club, Raheja Chambers 213, Nariman Point, Mumbai. Having is industrial Unit Sonadeeh, PO Raseda Via- Baioda Bazar, Raipur — 493332 MP Represented through its Officer incharge of the case Shri HS Routray, aged about 33 years, S/o MK Routray, R/o Cement Colony, - Village Sonadih, Tahsil Baioda Bazar, District Raipur (MP) Versus RESPONDENTS 1. State of Chhattisgarh, Through its Secretary, Water Resources Department, DKS Bhawan, Raiur, (CG) 2. Chief Engineer, Water Resources Department, Tahsil Baloda Bazar, District Raipur(CG) ‘3. State of Chhattisgarh, Through its Secretary, irrigation Department, DKS Bhawan, Raipur (CG) 4. Chief Engineer, Mahanadi Godavari Basin Tahsil Baioda Bazar, District RaipurLCG) (Passed on O 27> R a January, E R 201 1) The following order of the Court was passed by Dhirendra Mishra, The petitioner has filed the instant petition and prayed for the following reliefs: “(i) The Hon’ble High Court be pleased to declare the issuance of appropriate writ, order or direction that the notification dated 29.4.98 (Annexure P-15) and notification dated 6.5.98 (Annexure P-16) and the order dated 1.6.98 (Annexure P—19) are illegal and opposed to law. ‘g (ii) The Hon’ble High Court may be pleased to quash the notification (Annexure P-15 and P-16) and order (Annexure P-19) by issuance of appropriate writ, order or direction being illegal and opposed to law. (iii) The Hon’ble High Court may be pleased to declare that the petitioner company is not liable to pay cess on water to the respondents Water Resources Department as the petitioner is paying cess on water to the MP. Pollution Control Board. (iv) (a) The Hon’ble Court be further pleased to issue a writ in the nature of certiorari or any other appropriate writ, order or direction quashing the impugned demand notice dated 17.10.2000 (Annexure P-24) as arbitrary and illegal. (v) (b) That, this Hon‘ble Court may kindly be pleased to declare Rule 71-A as illegal, ultra vires to Section 91 and 93 of the C.G. Irrigation Act, 1931 and also unconstitutional being ultra vires of Articles 14, 246 and 265 of the Constitution of India and thereby quash the notification \ dated 09.082000 (P—26). x@” (vi) Any other order or direction as deemed fit in the facts and circumstances of the case may also kindly be issued.“ 02. Briefly stated, facts of the case are that the petitioner has a cement manufacturing unit in the State of Chhattisgarh. The plant was established by Tata iron and Steel Co. Ltd. (in short “TISCO"). TISCO applied for permission to the Department of Water Resources of the erstwhile State of MP in the year 1986 and the State Govt. granted permission to draw 2 Cusecs of water per day on 2m September, 1998. TISCO also approached 1 the State Govt. for entering into an agreement in this regard. However, no decision could be taken on execution of the agreement as there was no / rule or other provision for fixing charges for drawing water from any natural resources. lt started drawing water from the river w.e.f. 1“ April, 1993 in anticipation that the State Govt. would enter into an agreement after completing the required formalities. TISCO installed the measuring meter, water pumping devices, treatment plant, storage tank, pipelines etc. at its Own expenses. 03. On 29th April, 1998 the State Govt. in exercise of powers conferred under Sections 37 and 40 of the MP Irrigation Act, 1931 (in short “the Act”) and the rules made thereunder, fixed water charges for supply of water for various purposes, including supply of water to industries, from natural resources. The water rate for supplyof water from natural/self created resources was fixed at the rate of Rs. 0.30 per cubic meter vide Annexure P/15. Thereafter, Water Resources Department of the State Govt, vide notification dated 6““ May, 1998 in the official Gazette, in exercise of powers conferred underSections 92 and 93 of the Act, notified a proposal to amend the MP irrigation Rules, 1974 by inserting Rule 71-A after Rule \\\7\1for the purposes of prescribing water charge for supplying water to ..\ @ private/government organizations for industrial purposes vide Annexure P/16. By the above notification, the proforma of Form 7-A,. in which agreement was to be executed, was also published. Objections were invited within 30 days of the date of publication 6f the notification. O4. The State Govt, vide circular dated 13‘ June, 1998, circulated the agreement proforma of Form 7—A to all the Basin Chief Engineers and directed them to ensure that agreement is executed with all industrial establishment, who are drawing water from the government/natural resources for their industries in Form 7—A, and to recover the water charges as per notification dated 19th April, 1998 w.e.f. 15‘ May, 1998. Thereafter, the State Govt., vide notification dated 9‘“ August, 2000 published in the official Gazette (Annexure P/26) amended the MP Irrigation Rules, 1974 to insert Rule 71-A and Form 7-A'with retrospective effect from 6m June, 1998. O5}. The Executive Engineer, Water Resources Department, Raipur, sent a bill (Annexure P/24) dated 17th October, 2000 for water charges to TISCO for payment of Rs.16,38,000/— as water charges for the period, from June 1993 to July, 2000. lt was also called upon to furnish information regarding the volume of water drawn between August, 2000 till date. The writ petition was filed by TISCO on 2.12.1998. Subsequently, the present petitioner was substituted in place of TISCO vide Court’s order dated 7th December, 2001. Submission on behalf of the petitioner by Shri Bhaskary Pyasi, Advocate. 06. The petitioner has questioned the constitutional validity of Rule 71-A \\\on the ground that List ii, Entry No.17 of Schedule Vii of the Constitution qé/cbw empowers the State Legislature to legislate on “water”. However, taxing entries in List ii of Schedule Vii, which includes Entry from 46 to 63, do not include tax on water, whereas Entry 66 of List ii of Schedule Vll empowers the State Legislature to levy fee on the subjects of all the entries in List ll. Thus, the State Legislature is competent to impose a fee and not a tax on water. Since the State Govt. does not render any service to the industries, who draw water from natural recourses, water charges imposed are in reality a “tax” and not a “fee” and for this reason, the levy is ultra vires the Constitution of India. O7. The provision is also ultra vires the Act as the Act does not permit imposition of water charges on drawing water from natural resources. Section 4O does not speak of water from natural resources at all. In the context of other sections preceding and succeeding Section 40, it can safely be inferred that Section 4O applies to water supplies from a canal t only and not from a natural resources. Section 40 falls under Chapter V of he Act, which deals with “supply of water from canals and charges therefor". Thus, intention of the legislature in using the word “supply of water for industrial, urban or other purposes” under Section 40 of the Act can be safely inferred as from canals and not from natural resources, therefore, the impugned amendment in the Rules is beyond the scope of rule making power as Section 4O does not delegate power to fix charges and it only permits fixing of charges in accordance with the rules. 08. The action of the respondents has also been challenged on the ground that the petitioner is paying cess imposed under the Pollution Control Act and taxing again for the same purpose amounts to double &xation. The retrospective operation of the Rules w.e.f. 6m June, 1998 has *\ V @ also been challenged on the ground that the State is demanding water charges for the period when no provision for charging was made by framing suitabie ruies as provided under Section 4O of the Act. The order dated 15‘ June, 1998 (Annexure P/19) is also bad for the same reason. The bin or demand dated 17‘“ October, 2000 (Annexure P/24) is based on retrospective operation of Rule 71—A and it imposes penalties for delay in paying water charges and for the same reason as urged earlier, it is also " illegal. Submission on behalf of the State by shri Yashwant Singh Thakur, Dy. Advocate General. 09. The water cess paid by the petitioner to the Pollution Control Board is leviable under the Water Cess Act, 1977 whereas water charges are recoverable under the Act. Both the levies are made for different purposes under two different Acts and the same cannot be termed as double taxation. Section 26 of the Act specifically provides that all right in the water of any river, natural stream or natural drainage channel, natural lake or other natural collection of water shall vest in the Government. Similarly, Article 39B of the Constitution also provides that the ownership and controi of the material resources of the community are so distributed as best to subserve the common good. The Act has been enacted by the State Legislature in exercise of powers conferred under List ll, Entry 17 of Schedule Vll of the Constitution. Section 4O of the Act provides for supply of water for industrial and other purposes and the charges are to be fixed as agreed upon between the State Govt. and the concerned company in accordance with the rules made under this Act. Sub-rule (6) of Rule 92 provides that the rules framed under the Act can be given retrospective @ effect also. Rule 93 (c) confers power upon the State Govt, to make rLiles generally for the purpose of carrying into'effect the provisions of this Act. 10. Referring to Annexure P/6, it was argued that the petitioner applied for permission to draw water from Shivnath river and permission was granted by the Government on the condition that the Company has to enter into a contract with the Water Resources Department before drawing water and it shall be bound to pay water charges at rates fixed by the ,\‘ \ Government from time to time and it shall install necessary measuring devices to measure water-drawn from the river. After this, permission was granted, and the Company started drawing water from Shivnath and thus, the Company had accepted the conditions by conduct and therefore, now it is not open to the Company to challenge the water charges fixed as per rules. From perusal of the amended Rule 71-A, it is clear that the amendment fixes water charges for various purposes and it provides for agreement between the State and the user of water and thus, the use of water and charges therefor is by an agreement. 11. lt was finally argued that water is an important natural resource and the State is duty bound to ensure its distribution amongst its users. The mercantile projects cannot be allowed to-use the water free of cost to the detriment of the need of other users. 12. We have heard learned counsel for the parties and perused their pleadings. 13. indisputably, at the time of installing industry, the petitioner applied w Engineer—in-Chief, Water Resources Department, for permission to r\¥ ~\ draw water from Shivnath river for its cement plant way back in the year 1986, vide application dated'29‘h March; 1986 (Annexure P/1). The officers of the Water Resources Department gave their no objection for drawing water @ 2 Cusecs per day as per provisions of the Act. The petitioner v installed suitable measuring devices in accordance with the Act and entered into an agreement with [the Department in this regard. Accordingly, the Water Resources Department of the State Govt, vide their communication dated 2'” September, 1988 (Annexure P/6), accorded permission on the condition that before drawing water from the river, the Company will have to enter into an agreement with the State, the Company shall be bound to pay water charges as fixed by the Government from time to time and install equipments, at its own expenses, for measuring water drawn by it. The petitioner, vide its Memo dated 15‘ April, 1993 (Annexure P/10), informed the Chief Engineer (irrigation), that they have been granted permission for drawing water in the year 1988 vide Annexure P/6 subject to fulfilling the conditions stipulated in the letter. They have already installed the required equipments indicated in the letter, except agreement, which is required to be done for this purpose, and in anticipation of their approval, they are going ahead with commissioningof their Pump House for drawing 2 Cusecs of water from Shivnath river. Thus, from the conduct of the petitioner, it is clear that the petitioner accepted the conditions of Annexure P/6 and started drawing water from the year 1993 in anticipation that formal approval would be given after fulfilling the other conditions. 14. The Act has been enacted by the State Legislature in exercise of powers conferred under List il, Entry 17 of Schedule Vll of the Constitution. @ Section 26 of the Act deals with rights in water of the Government, which is reproduced hereunder: "26. Rights of the Government in water. — All rights in the water of any river, natural stream or natural drainage channel, natural lake or other natural collection of water shall vest in the Government, except to the extent to which rights may have been acquired in water affected by a notification published under section 27 prior to the publication of such notification.” Chapter V of the Act deals with supply of water from canals and charges therefor. Section 37 provides for the purposes for which water may be supplied, whereas Section 4O deals with supply of water for industrial, urban or other purposes. Both the above provisions are reproduced hereunder: “37. Purposes for which water may be supplied. — (1) Water may be supplied from a canal — (a)under an irrigation agreement, in accordance with the provisions of Chapter Vl, (b)on demand, for the irrigation of specified areas, (c) to supplement a village tank, (d)for industrial, urban or other purposes not connected with agriculture, (e)for the irrigation of a compulsorily assessed area. (2) Charges for the supply of water under clause (a), (b), (c) or (e) of sub-section (1) shall be paid at such rates as may be fixed by the State Government in accordance with rules made under this Act. 40. Supply of water for industrial, urban or other purposes.— The conditions for the supply of water for industrial, urban or other purposes not connected with x\\§riculture and the charges therefor, shall be as \ \ 10 MW} agreed upon between the State Government and the company, furm, private person or local 'body concerned and fixed in accordance with rules made under this Act.” 15. Sub—section (2) of Section 37 specifically provides that the charges for supply of water shall be paid at such rates as may be fixed by the State Government in accordance with the rules made under this Act, except for charges under Section 37(1)(d) i.e. for industrial, urban or other purposes not connected with agriculture. Whereas Section 40 provides that“ charges for supply of water for industrial and other purposes not connected with the agriculture shall be as agreed upon between the State Government and the Company, firm, private person or local body concerned and fixed in accordance with the rules made under this Act. Section 40 nowhere provides for supply of water for industrial and other purposes from canals. Whereas Section 37 specifically provides that water may be supplied from a canal for ”various purposes, including for industrial, urban or other purposes not connected with agriculture. 16. We do not find any substance in the argument of learned counsel for the petitioner that the State Legislature has no power to impose tax on water as taxing entries in List ll of Schedule VII from Entries 46 to 63 do not include tax on water. Entry 17 of List ii of Schedule Vii read with Article 246 of the Constitution confers exclusive powers upon the State Legislature to make laws with respect to water, that is to say, water supplies, irrigation and canals, drainage and embankments, wate storage and water power subject to the provisions of entry 56 of List i. r \\ accorda \ r ¥ \\\ nce with the rules made under this Act. 12 0‘” 18. The State Govt. in exercise of powers conferred by Sections 40, 92 & 93 of the Act, has émended MP Irrigation Rules, 1974,‘after duiy following the procedure prescribed in sub-section (3) of Section 92 i.e. after publication of the proposal vide Annexure P/16, which is well within the competence of the State Govt. under the Act. 19. indisputably, the State Govt. has all rights in the water of any river, natural stream, or natural drainage channel, .natural lake or other natural collection of water, and Section 40 of the Act empowers the State Govt. to fix water charges for the aforesaid purposes in accordance with the rules made under this Act. it is also clear that the water charges, as fixed under the rules, can be recovered only after an agreement is executed in Form 7—A by the consumer with the State Govt. in this regard. Thus, when the consumer intends to 'draw water from any natural resources, he has to seek permission from the State Govt. and only after he executes an agreement in Form 7-A for the aforesaid purpose as per rules, he can draw water from any natural reSOU I'Ces. 20. As already observed in the foregoing paragraphs, the petitioner had applied for permission to draw water from Shivnath river and was ready and willing to enter into an agreement. The permission was granted vide Annexure P/6 dated 2nd September, 1988 specifically mentioning that an agreement would be executed before drawing water with the irrigation Department and water charges, as fixed by the State Govt. from time to time, would be payable. The petitioner had conveyed its acceptance of the above conditions vide Annexure P/10 dated 15‘ April, 1993 and started drawing water in anticipation of approval of the Khaz. State Govt, clearlywmentioning therein that they shall be fulfi||ing the other formalities as intimated in this regard. ‘ 21. On the basis of aforesaid discussions, we do not find any substance in this writ petition, whereby constitutionai validity of the amendment in Irrigation Rules, 1974 has been chailenged and we hold insertion of Rule 71-A, inclusion of Proforma 7—A under the rules, in which an agreement is to be executed between the State Govt. and the User of water from natural resources for other than agricultural purposes, intra vires, and notice for demand for water charges in pursuance thereof in accordance with law. 22. In the result, the instant petition being without any merits is hereby \ i‘ dismissed. No order as to costs. _ 5d]. ' <‘ R.N. Chandrakar Sd/- y DHIRENDRA MIsmtA Judgé \,\ Judge 7’ . i 03.1.2011