IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No 5901 of 1986 with SPECIAL CIVIL APPLICATION No 5902 of 1986 with SPECIAL CIVIL APPLICATION No 5903 of 1986 with SPECIAL CIVIL APPLICATION No 5904 of 1986 with SPECIAL CIVIL APPLICATION No 5905 of 1986 For Approval and Signature: Hon'ble MR.JUSTICE R.K.ABICHANDANI and Sd/- Hon'ble MR.JUSTICE D.H.WAGHELA Sd/- ============================================================ 1. Whether Reporters of Local Papers may be allowed : YES to see the judgements? YES 2. To be referred to the Reporter or not? YES : 3. Whether Their Lordships wish to see the fair copy : NO of the judgement? NO 4. Whether this case involves a substantial question : NO of law as to the interpretation of the Constitution of India, 1950 of any Order made thereunder? NO 5. Whether it is to be circulated to the Civil Judge? : NO NO -------------------------------------------------------------- MUNICIPAL CORPORATION OF CITY Versus UNION OF INDIA -------------------------------------------------------------- Appearance: MR SB VAKIL for Petitioner MR ASIM PANDDYA for Respondent No. 1 MR PM RAVAL for Respondent No. 2 MR KH BAXI for Respondent No. 3 -------------------------------------------------------------- CORAM : MR.JUSTICE R.K.ABICHANDANI and MR.JUSTICE D.H.WAGHELA Date of decision: 05/11/1999 JUDGEMENT (Per R.K.Abichandani, J.) The Municipal Corporation of the City of Ahmedabad has in this group of petitions sought a declaration that the requirements denoted by the word "successfully" and by the words "and so long as it functions successfully" in Rule 6 of the Water (Prevention and Control of Pollution) Cess Rules, 1976 are inconsistent with the provisions of Section 7 of the Water (Prevention and Control of Pollution) Cess Act, 1977 and therefore inoperative and void. The petitioner Corporation has challenged the order dated 31st December, 1985 passed by the appellate authority and the revised assessment order dated 9th January, 1985 which was consequentially made. 2. According to the petitioner, the polluting parameters as mentioned in the conditions imposed under the consent granted to the petitioner under Section 25 of the Water (Prevention and Control of Pollution) Act, 1974 and the maximum permissible limits of ranges allowed as per the consent condition were as under: (1) B.O.D. 20 mg./l. (2) Suspended Solids 30 mg./l. The Legislature with a view to provide adequate funds to the State Boards for their effective functioning, enacted the Water (Prevention and Control of Pollution) Cess Act, 1977. Under the charging section 3 of the Cess Act, it was provided that there shall be levied and collected a cess for the purposes of Water (Prevention and Control of Pollution) Act, 1974 and utilization thereunder. The levy and collection of cess was made applicable not only to persons carrying on any specified industry but to every local authority and, by the Explanation contained in Section 3, it was provided that for the purposes of Section 3 and Section 4, "consumption of water" included supply of water. A provision for rebate was made in Section 7. The grievance of the petitioner is that Rule 6 of the Cess Rules exceeded the ambit of the provisions of Section 7 by limiting the entitlement to rebate till the plant functions successfully, which limitation was not contemplated by the provisions of Section 7 of the Cess Act. 3. According to the petitioner Corporation, it had established sewage water treatment plants at Vasna and Pirana. Vasna Plant was established in 1969 for the purpose of disposal of sewage on the west of river Sabarmati and Pirana Plant was constructed during the period from 1966-1972 for the areas of the City which are to the east of Sabarmati. According to the Corporation, these plants were constructed at a huge cost of more than Rs.4 crores. The Act of 1974 came into force on 24th March, 1974, being the date on which the Corporation was already discharging sewage containing trade effluents into the Sabarmati as stated in the petition. On 4th December, 1978, the Member Secretary of the Gujarat Pollution Control Board addressed a letter to the Municipal Commissioner requiring the Corporation to file returns in Form I prescribed under Rule 4 of the Cess Rules showing the quantity of water consumed from April 1978 onwards. The Corporation accordingly submitted the returns. Thereafter, an order was made by the Member Secretary on 19.4.1980 under Section 5 of the Cess Act read with Section 2 (b) of the Cess Rules assessing the amount of cess payable by the petitioner for the period from 1.4.1978 to 31.3.1979. Since no hearing was given to the petitioner before making of that order, Special Civil Application No.2803 of 1980 was filed by the petitioner. In that petition, a statement was made by the Counsel appearing for the Board that the assessment order which was made on 19.4.1980 would be treated only as a provisional order and that final order will be made after giving a reasonable opportunity of hearing to the Corporation. It was understood between the parties that the Corporation will make a representation against the assessment order. Accordingly, a representation was submitted by the Corporation on 29.11.1980 to the Member Secretary as per Annexure-D to the petition. They made a further representation on 14.5.1981 as per Annexure-E to the petition. After hearing the petitioner, the Member Secretary made a revised assessment order on 10.9.1981 under Section 6 of the Cess Act as per Annexure-F to the petition. The petitioner preferred an appeal against the order before the Appellate Committee. The Member Secretary on 9.1.1985 issued assessment orders under Section 6 for the respective years upto March 1983 and the petitioner preferred appeals also against those orders before the Appellate Authority. The Appellate Authority by its judgment and order dated 31.12.1985, dismissed all the appeals. 4. In its order dated 31.12.1985, the Appellate Authority held that the object of the Cess Act was to augment the resources of Water Pollution Control Boards constituted under the Act of 1974. Section 7 of the Cess Act provides for an incentive to consumers who instal treatment plants. It was held that it was not enough to put up and operate some kind of plant. The plant must yield a reasonable measure in the matter of reducing pollution. The extent to which the plant has succeeded can be measured by reference to the conditions and directives imposed by the State Board while giving consent under Section 25 (4) of the Water Act of 1974. It was held that if effluents analysed were found to be below the standards given to the Corporation, the plants installed by the Corporation cannot be said to have been successful. It was held that the words "from such date as may be prescribed" occurring in Section 7 cannot be read in isolation but have to be read subject to the general power given under Section 17 (1) of the Act, under which the Central Government may frame rules for carrying out the purposes of the Act. It was held that literal construction of the provisions of Section 7 of the Cess Act would lead to absurdity if only the installation of the plant was to be considered and not its working. The Appellate Authority held that the Act and the Rules should be read together to give the meaning intended by the Legislature and that when both are read together, the words "to instal a plant" cannot ignore successful working of a plant. The Authority noted that in para 5 of the representation of the Corporation made on 14.5.1981 it was admitted by the Corporation that percentages of removal of B.O.D. and Suspended Solids by Pirana and Vasna Sewage Treatment Plants during the years in question were not according to the directives of the consent order issued by the Board. It was held that the provision regarding rebate was introduced with a view to provide an incentive to those who refine the effluent to the required standards and, if that standard is not achieved, pollution remains. The Appellate Authority further held that pro-rata rebate cannot be allowed. Success must be achieved in relation to the prevention of pollution. In spite of installation and functioning of the plants, if the pollution remains, success cannot be said to have been achieved and, if pro-rata rebate is allowed, it would frustrate the very idea of removing pollution. The Appellate Committee opined that it was not proved by the Corporation that the plants installed by them were successful during the periods under assessment. The decision of the Member Secretary rejecting the claim to rebate was accordingly confirmed in respect of these years. 5. The impugned order made by the Appellate Authority and the consequential assessment orders have been challenged before us by raising the following contentions:- The learned Counsel appearing for the petitioner Corporation argued that the entitlement to get 70% rebate under Section 7 came into existence when the plant for treatment of sewage or trade effluent was installed. It was submitted under Section 7, for the purpose of eligibility, the only criterian prescribed was that any plant for treatment of sewage or trade effluent must be installed. Having laid down the criterian for eligibility, it refers to entitlement to such rebate from the date as may be prescribed by the Rules. This means that the Rule making authority was required to decide the entitlement date which may be from the date of pre, post or actual installation. It was submitted that the quantum of rebate was specifically mentioned as 70% and not upto 70% in Section 7. The learned Counsel argued that, so far as the Corporation is concerned, two such sewage plants were installed much before the coming into force of the Cess Act. These plants were meant for the treatment of sewage. It was submitted that the nature of a plant which is installed must be viewed in context of the establishment and that installation of a plant for treatment of sewage or trade effluent cannot be read in vacuum or in abstract. It was submitted that the word "treatment" in Section 7 means treatment for prevention and control of pollution and the word "control" would suggest degrees of control. It was submitted that the concept of treatment did not mean all defects should be cured. By way of an analogy, it was argued that a patient who undergoes medical treatment can be said to have been given treatment even if he does not cure. The learned Counsel further argued that the words "from such date as may be prescribed" in Section 7 have to be construed bearing in mind that a delegate cannot exceed the scope of delegation. It was submitted that the Court cannot in the process of removing absurdity or supplying omissions interpret the Rule to give a meaning which will take it beyond the scope of delegation. It was submitted that Section 7 of the Act must be interpreted according to its language alone without any addition of words because the expression "from such date as may be prescribed" occurring therein was in no way ambiguous. It was submitted that Section 7 speaks of prescribing only terminus ad quo, i.e. starting point, and did not require the rule making authority to prescribe terminus ad quam, i.e. terminal point, for the entitlement of rebate. It was submitted that as long as installation existed, there was entitlement to rebate. It is only when eligibility ceases that entitlement would cease and eligibility would cease only when the plant ceases to be a plant or a machinery for treatment of sewage or trade effluent for preventing or controlling pollution. It was also submitted that the expression "successfully functions" in Rule 6 cannot be construed so as to mean 100% success for all the time that the plant works. The learned Counsel further argued that the Court cannot assume that the phraseology in Section 7 is mistaken. Section 7 intended to confer upon the delegate only the power to fix the date from which the entitlement would commence. It may be that the plenary Legislature for a good reason delegated only the power to prescribe the date from which the person or the local authority installing plant would be entitled to rebate and not the power to fix the date upto which the entitlement would continue. It was submitted that there can be several reasons for not delegating such power, such as (i) the plenary Legislature could have proceeded on the footing that the section itself is explicit on the period upto which the entitlement is there or, (ii) it may be wanting to watch how the provisions operate to make a provision in future or that, (iii) it might have thought if once a plant is installed as contemplated under Section 7 and expenditure is incurred, the entitlement to rebate should not cease because of its malfunctioning. It was submitted that, when several such rational explanations are available as to why the plenary Legislature has not delegated to the rule making authority the power to prescribe the period for entitlement of rebate or the terminal point, there was no question of ambiguity or absurdity in the provisions of Section 7. It was also argued that the word "control" was more qualitative than quantitative and it would be difficult, if not always impossible, to express the extent of control in mathematical terms. It was therefore argued that so long the treatment plant controls pollution, it should be considered as a plant which entitled the earning of a rebate under Section 7. It was further submitted that the provision of rebate was made not for all the polluters but only for those who instal a plant for treatment and therefore rebate was relatable to and is given as an incentive to a polluter who instals a treatment plant. If that is so, Section 7 cannot be construed, unless the language compels, so as to totally take away the incentive given to the polluter who instals a plant. If the interpretation put to Section 7 results in virtual denial of rebate, it would be self-defeating and counter-productive. It was also argued that Section 7 provides for rebate of 70% and not upto 70% and therefore any interpretation which takes into account the concept of prescribed norms will make the provision unworkable. Consideration of prescribed norms is not warranted by the language of the section. The learned Counsel for the petitioner Corporation in support of his arguments referred to the following decisions: (A) SITA DEVI v. STATE OF BIHAR AND OTHERS reported in 1995 Supp (1) Supreme Court Cases 670 was cited for the proposition that clear and unambiguous language of a provision has to be given effect to despite suggested absurdity or irrationality. In that case, the Supreme Court observed that policy and the wisdom of the Legislature could not be tested by taking aid of the preamble of the Act particularly when the language of the provision was inclusive, unambiguous, specific and explicit. (B) M/S. OSWAL AGRO MILLS LTD. v. COLLECTOR OF CENTRAL EXCISE AND OTHERS reported in AIR 1993 Supreme Court 2288 was referred to for the proposition that, where the words of the statute are plain and clear, there is no room for applying any of the principles of interpretation which are merely presumptions in cases of ambiguity in the statute. The court would interpret them as they stand. The object and purpose has to be gathered from such words themselves. Strictly speaking, there is no place in such cases for interpretation or construction except where the words of statute admit of two meanings. It was held that the Court would endeavour to eschew literal construction if it produces manifest absurdity or unjust result. The earlier decision of the Constitution Bench in Manmohan Das v. Bishun Das reported in AIR 1967 SC 643 was referred to therein for its proposition that the ordinary rule of construction of the provision of a statute is that it must be construed in accordance with the language used therein unless there are compelling reasons, such as, where a literal construction would reduce the provision to absurdity or prevent manifest intention of the legislature from being carried out. (C) The learned Counsel referred to BABUA RAM AND OTHERS v. STATE OF U.P. AND ANOTHER reported in (1995) 2 Supreme Court Cases 689 in which the Supreme Court held that, when the language is not only plain but admits of but one meaning, the task of interpretation can hardly be said to arise. Such language best declares, without more, the intention of the legislature and is decisive on it. Therefore, when the language is clear and capable of only one meaning, anything enacted by the legislature, must be enforced, even though it be absurd or results in startling consequences. The endeavour therefore must be to collect the meaning of the statute from the expressions used therein rather than from any notions which may be entertained by the court as to what is just or expedient. When two interpretations are possible, the task of the court would be to find which one or the other interpretation would promote the object of the statute, serve its purpose, preserve its smooth working, and prefer the one which subserves or promotes the object over the other which introduces inconvenience or uncertainty in the working of its system. (D) R.RUDRAIH AND ANOTHER v. STATE OF KARNATAKA AND OTHERS reported in (1998) 3 Supreme Court Cases 23 was cited for its proposition that the principle of interpretation of statutes that plain or grammatical construction which leads to injustice or absurdity is to be avoided can be applied only if "the language admits of an interpretation which would avoid it". (E) UNION OF INDIA AND ANOTHER v. DEOKI NANDAN AGGARWAL reported in AIR 1992 Supreme Court 96 was referred to for its holding that the Court cannot rewrite, recast or reframe the legislation for the very good reason that it has no power to legislate. The court cannot add words to a statute or read words into it which are not there. Assuming there is a defect or an omission in the words used by the legislature, the court could not go to its aid to correct or make up the deficiency. The court shall decide what the law is and not what it should be. To invoke judicial activism to set at naught legislative judgment is subversive of the constitutional harmony and comity of instrumentalities. (F) The learned Counsel in support of his contention that the doctrine of implied power will not apply for construing Section 7 so as to read the termination point of entitlement of rebate therein, relied upon the decision of the Supreme Court in B.B.L.& T MERCHANTS' ASSOCIATION v. BOMBAY STATE reported in AIR 1962 Supreme Court 486 at page 494 wherein it was held that the doctrine of implied powers can be legitimately invoked when it is found that the duty cannot be discharged or the power cannot be exercised at all unless some auxiliary or incidental power is assumed to exist. In such a case, in the absence of any implied power, the statute itself would become impossible of compliance. (G) The decisions of the Supreme Court in the case of COMMISSIONER OF INCOME-TAX, AMRITSAR v. STRAW BOARD MANUFACTURING CO .LTD. reported in AIR 1989 Supreme Court 1490, and, BROACH DIST. CO.OP. C.S.G. & P.S. LTD. v. INCOME TAX COMMISSIONER, AHMEDABAD at page 1493 were cited for the proposition that when a provision is made in the context of a law providing for concessional rate of tax for the purpose of encouraging an industrial activity, a liberal construction should be put upon the language of the statute. 6. The learned Counsel appearing for the respondent - Pollution Control Board contended that a treatment plant contemplated by section 7 was a plant which continues to be effective, which means it continues to achieve the standards of treatment. He submitted that mere installation of a plant was not enough. He argued that, even according to the petitioner Corporation, its treatment plant did not achieve the prescribed standards which were mentioned in the Consent of the Board issued under Sec.25 of the Act of 1974. He submitted that there was no scope for giving any pro-rata rebate or any rebate less than 70% if the plant does not function successfully even for a single day in a given month. He submitted that the Appellate Authority had acted in the lawful exercise of its powers in making the order after hearing the petitioner and there was no warrant for any interference with its decision. He relied upon the decision of the Hon'ble Supreme Court in the case of COMMISSIONER OF WEALTH TAX, ANDHRA PRADESH v. OFFICIAL -IN-CHARGE (COURT OF WARDS) reported in AIR 1977 Supreme Court 113 for its proposition that courts have to endeavour to find out the exact sense in which the words have been used in a particular context. They are entitled to look at the statute as a whole and give an interpretation in consonance with the purposes of the statute and what logically follows from the terms used. They are to avoid absurd results. The learned Counsel referred to MAHARASHTRA S.B.O.S. & H.S. EDUATION v. PARITOSH reported in AIR 1984 Supreme Court 1543 in which it was held that the question whether a particular piece of delegated legislation - whether a rule or regulation or other type of statutory instrument - is in excess of the power of subordinate legislation conferred on the delegate, has to be determined with reference only to the specific provisions contained in the relevant statute conferring the power to make the rule, regulation etc. and also the object and purpose of the Act as can be gathered from the various provisions of the enactment. 7. The learned Counsel appearing for the Union of India submitted that under Section 7 of the Cess Act, mere installation of a plant was not enough for granting rebate and something more was intended by the Parliament. He submitted that, that something more was a treatment to the trade effluent or sewage for reaching the prescribed norms. He submitted that section 7 should be interpreted in a way that does not defeat its purpose. According to him, if the entitlement to rebate was to continue even when the prescribed norms were not reached by treatment or when after installation of a plant it did not work satisfactorily, it would lead to manifest absurdity, since notwithstanding the failure of the plant, the person or the local authority, who has installed it would continue to avail the rebate on it. He submitted that the word "installed" partakes its meaning from the words "for the treatment" and that it was implicit in section 7 that the plant should be functioning and should remain functioning for the entitlement of rebate. The learned Counsel relied upon the decision of the Supreme Court in BUDHAN SINGH v. BABI BUX AND ANOTHER reported in AIR 1970 Supreme Court 1880 in which it was held that justice and reason constitute the great general legislative intent in every piece of legislation. Consequently, where the suggested construction operates harshly, ridiculously or in any other manner contrary to prevailing conceptions of justice and reason, in most instances, it would seem that the apparent or suggested meaning of the statute was not the one intended by the law-makers. The court while construing the word "held" in section 9 of the U.P.Zamindari Abolition and Land Reforms Act, 1950 held that, "by interpreting the word 'held' as 'lawfully held', we are not adding any word to the section. We are merely spelling out the meaning of that word". He also referred to AMERICAN HOME PRODUCTS CORPORATION v. MAC LABORATORIES PVT. LTD. reported in AIR 1986 Supreme Court 137, in para 66 of which the Supreme Court held that it was a well-known principle of interpretation of statutes that a construction should not be put upon a statutory provision which would lead to manifest absurdity or futility, palpable injustice, or