Vasant Chemicals Ltd. vs Hyderabad Metropolitan Water Supply ...

2. The facts giving rise to these appeals are that the appellant- M/s Vasant Chemicals Limited which is an amalgamation of three companies is engaged in the manufacture and export of dye intermediates and other organic chemicals in their units at Jeedimetla Industrial Estate, Ranga Reddy District, Hyderabad. The effluents of the appellant industry and other industries were not of acceptable standards to be let into the sewer line of the Board and required treatment and therefore, the industrial units in Jeedimetla Estate decided to establish the Common Effluent Treatment Plant (CETP). Hence, under the joint efforts of all the chemical units and other industries including the appellant, a company was formed namely M/s Jeedimetla Effluents Treatment Limited (JETL) in the year 1987 to get the effluents treated at their own cost to bring the quality of the effluents to an acceptable level. The appellant and the other industrial units made investment by way of shares in the said company towards its capital. According to the appellant, it has invested to the extent of more than 29% of the shares in JETL towards its equity.

3. After treating the effluents to sewer standards as prescribed under the Water (Prevention and Control of Pollution) Act, 1974 (Water Act, 1974) and the Environment (Protection) Act, 1986 (Environment Act, 1986) between 1988 and 1995, JETL was 2 discharging the treated waste water/effluents into the open drains/nalas in Jeedimetla Area. After discussion with Hyderabad Metropolitan Water Supply and Sewerage Board (HMWS&SB-the Board) and the Government of Andhra Pradesh and APPCB, a dedicated pipeline was laid from the premises of JETL to connect to the sewerage system of HMWS&SB which is located at a distance of about 10.38 kilometers at Balanagar at an estimated cost of Rs.346 lakhs. For the said dedicated pipeline, JETL paid an amount of Rs.75,00,000/- as its contribution and the balance amount was contributed by the Board and the Government of Andhra Pradesh. The pipeline became operational on 31.01.1998. As per the direction of APPCB, the industries in IDA Jeedimetla are discharging their industrial effluents to JETL, which in turn partially treat effluents and let into the dedicated pipeline connecting JETL and sewer line at Board’s sewer at Kukatpalli, Balanagar and then carried to Sewerage Treatment Plant (STP) at Amberpet.

4. The appellant has obtained bulk water supply connection from the respondent-HMWS&S Board and the Board accorded sanction for supply of 36,200 gallons water per day @ Rs.12 per kilo litre to the appellant-Industry. An agreement was entered into by the appellant with the respondent-Board on 27.04.1995 stipulating the terms and conditions of supply of water and the payments required to be made in terms thereto. The agreement provides that HMWS&SB will supply water to the appellant industry 3 and water charges will be levied for the supply of water as per the agreement. Clause 16 of the agreement inter alia provided for payment of sewerage cess and that the appellant is liable to pay a sewerage cess in accordance with Section 55 of the HMWS&S Act. Clause 17 of the agreement obligates the appellant to avail the sewer facility provided by the HMWS&SB if the premises of the appellant is located at a distance of less than thirty-five meters from the sewer line of the HMWS&SB.

5. The appellant made representations between 1998 and February, 2000 stating that levy of sewerage cess was illegal and contrary to the provisions of HMWS&S Act as the appellant is not discharging its effluents into the sewerage system of the Board. According to the appellant, the Board insisted upon payment of the arrears and sought payment of the sewerage cess for the period January, 1998 to March, 2000 and sought certain amount towards water cess from 1st January, 1998 to February, 2000 vide two notices dated 25.01.2000. Aggrieved thereby, the appellant filed writ petitions in WP(C) No.4917/2000 and WP(C) No.5044/2000 challenging the notices levying of water cess and sewerage cess respectively. The writ petitions were dismissed by the High Court by the common judgment dated 29.10.2003 upholding the levy of sewerage cess by holding that such levy is in terms of Section 55 of HMWS&S Act. The High Court held that though the appellant’s premises is not directly connected to the 4 sewer line of the Board, the industrial effluents of the appellant are being carried to JETL and after partial treatment at JETL, the same is let into the sewerage system of the Board. It was further observed that as per Section 55 of the HMWS&S Act, the occupier of the premises from where the sewerage or effluents are let into the sewer facility provided by the Board by any means, has to pay the sewerage cess irrespective of the fact that whether or not the area is served by sewerage system of the Board. The High Court pointed out that this statutory liability is incorporated in Clause 16 of the agreement as per which the appellant has to pay sewerage cess along with water cess @ 20% of the water charges. The High Court dismissed the writ petitions vide judgement dated 29.10.2003 holding that the demand notices are not arbitrary and that do not suffer from any legal infirmities.

580. Similar problem arose in the case of World Saviors v. Union of India and others (1998) 9 SCC 247. In order to comply with the provisions of the Water Act, 1974 and the Environment Act, 1986 and in order to carry the industrial sewage to the Board’s sewer trunk, a dedicated pipeline to the extent of 10.38 kilo meters from JETL to Kukatpally and Sanathnagar Main Line was laid. The cost of laying the pipeline is stated to be Rs.346 lakhs out of which contribution of the JETL was Rs.75 lakhs and the balance amount was contributed by the Board and the Government of Andhra Pradesh. This dedicated pipeline became operational from 31.01.1998. The pipeline from JETL to Balanagar is a dedicated pipeline used exclusively by the JETL. As per the agreement entered into with the Board, the management of the JETL pays the amount to the Board towards surcharge for discharging partially treated effluents from JETL into Board sewer and also for maintenance of the sewerage system. After the industrial effluents are partly treated at JETL, the industrial effluents are let into the dedicated pipeline belonging to the Board system at Balanagar and from there, the sewage is let into 1000 mm diameter sewage trunk main belonging to the Board through which the effluents are carried to Sewerage Treatment Plant (STP) at Amberpet.

23. Let us now consider the effect of the agreement between the appellant and JETL on the statutory liability of the appellant under Section 55 of the Act. The agreement between the appellant and JETL for partial treatment of appellant’s industrial effluents is the internal contractual agreement between JETL and the appellant. The appellant unit is to treat and process the industrial effluents and bring them down to permissible standard limits in accordance with the provisions of Water Act, 1974 and Environment Act, 1986 relating to discharge and disposal of industrial effluents and other objectionable effluents into sewers before discharging of the effluents into the Board sewer. The treated effluents should also have to conform to the IS specification laid down from time to time for disposal of effluent into the domestic sewer of the Board. To discharge their contractual obligation in bringing the industrial effluents to permissible standard limits, the appellant unit entered into an agreement dated 22.01.1996 with JETL engaging it to treat its industrial effluents in accordance with the environmental laws in force. The appellant instead of treating the effluents at its 19 premises at its own cost engaged JETL for treating its effluents. Thus, for its convenience, the appellant unit has entered into an agreement with JETL for treating its effluents and the charges paid by them to JETL are towards the treatment of effluents and bring it to permissible standards. Therefore, the function of JETL is that of an intermediary with whose assistance, the appellant is discharging its statutory obligation.

32. In the Supreme Court, notice was ordered on 07.07.2004 and permitted the appellant to implead JETL as party respondent. It was thereafter, JETL filed writ petition in WP(C) No.17381/2004 (24.09.2004) inter alia for various reliefs:- (i) That clauses 28 and 29 of the agreement dated 10.06.2003 between the petitioner company Jeedimetla Effluent Treatment Limited and HMWS&SB as shylockin and unconscionable, usurious, exorbitant, unconstitutional, ultra vires the powers of the HMWS&SB; and (ii) That the action of the HMWS&SB in collecting various charges under Clause 4 of the agreement and other charges levied upon JETL. The said writ petition that kept pending for many years came to be dismissed by the High Court’s order dated 21.12.2015 for non-prosecution. JETL has also filed WP(C) No.20117/2017 challenging the enhancement of sewerage surcharge and the said writ petition is also said to have been dismissed on 25.06.2014.

24. Admittedly, the appellant’s industrial effluents are carried to JETL in closed tankers and after partial treatment at JETL, let into the Board’s sewer line. Admittedly, the effluents of the appellant’s unit are not of acceptable standards for transmission through the sewer line of the Board and therefore, the appellant’s industry and other industries have to get the effluents treated at their own cost to bring the quality of the effluents to an acceptable level by treating the same to some extent. The sewerage cess of 35% levied by the Board is for carrying the sewerage of acceptable quality through its sewer line and further treating it at STP at Amberpet.

Each parameter/COD and TDS will be considered independent for levy the surcharge.

40. In the result, these appeals are dismissed. The arrears of sewerage cess, if any, to be paid by the appellant within a period of eight weeks from today with 6% interest with effect from the date cess fell due. If the arrears are not paid within the stipulated period of eight weeks, it shall carry interest at the rate of 12% thereafter.

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