Case: VASANT CHEMICALS LTD Vs. HYDERABAD METROPOLITAN WATER SUPPLY AND SEWERAGE BOARD THE MANAGING DIRECTOR

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 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 atsewer 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 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 seweragesystem of theBoard. 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 1 st 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 thepremises is not directly connected to the 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 seweragesystem of theBoard. 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 seweragesystem of theBoard. 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.6. The appellant filed review petitions being Review MP No.33154/2003 in WP(C) No.4917/2000 and Review MP No.33158/2003 in WP(C) No.5044/2000 before the High Court which came to be dismissed vide order dated 29.12.2003 on the ground that the judgment dated 29.10.2003 does not suffer from any error apparent on the face of the record.

Court's reasoning:
Admittedly, JETL is neither a consumer of bulk water supply nor generating any sewage/industrial effluents of its own. The effluents of the appellant industry are not of acceptable standards for transmissionsystem of theBoard. Before the effluents of the appellant industry are to be let into the sewer line of the Board, the appellant industry has to get the effluents treated at its own cost to bring the quality of the effluents to an acceptable level. After getting partial treatment from JETL, the effluents are let into the said dedicated pipeline which belongs to the Board at Kukutpally/Balanagar and then they are let into 1000 mm diameter sewage trunk belonging to the Board through which the effluents are carried to Sewerage Treatment Plant (STP) at Amberpet measuring a distance of 18.90 kilo meters. The length of the pipeline from JETL to Amberpet is 29.28 kilo meters. Though theunit is not directly connected with the Board sewer line, the industrial effluents of the appellant unit partially treated at JETL are ultimately let into the Board sewer line which is finally carried to STP at Amberpet. In the light of this admitted factual position, the appellant is liable to pay sewerage cess under Section 55 of the Act. Proviso to Section 55 of the Act contemplates that the sewerage cess shall not be levied on the occupier of the premises if such premises is stated to be in an area which is not served by the seweragesystem of theBoard. The proviso implies that the occupier of such premises cannot use the Board sewer by any means whatsoever. Therefore, the contention of the appellant that it is not liable to pay sewerage cess to the Board as it is not directly letting out sewage effluents into the sewage line of the Board and that it is carrying its effluents in the tanker, lorries and letting out in the effluent treatment plant of JETL and thus not connected with the sewagesystem of theBoard, in our view, is wholly untenable. Since the sewage of the appellant is ultimately let into the sewer line of the Board, the appellant cannot contend that it is not covered under Section 55 of the Act and that it is covered under proviso to Section 55 of theagreement between the appellant and JETL for partial treatment ofindustrial 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.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 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.24. Admittedly, theindustrial effluents are carried to JETL in closed tankers and after partial treatment at JETL, let into thesewer line. Admittedly, the effluents of theunit are not of acceptable standards for transmission through the sewer line of the Board and therefore, theindustry 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.25. The sewerage cess aims to recover the cost of treating the effluents of strength stronger than domestic sewage and to make the effluents of acceptable quality. In addition to partial treatment at JETL, the effluents require further treatment and their transmission to Sewer Treatment Plant (STP) at Amberpet situated at 18.90 kms from Bala Nagar which requires huge finance. The maintenance of sewer line is highly essential for proper transmission of the effluents from JETL tosewer system at Amperpet where the Board brings down the industrial effluents to the tolerance limits. It requires huge amount to maintain the STP treatment of industrial effluents. Further, it requires high demand of energy, STP personnel to operate and maintain the system, skilled and unskilled workers for proper maintenance of the plant. The respondent-Board unless it collects sewerage cess and other charges cannot meet the heavy expenditure on the operation and maintenance of sewerage system. The liability of the appellant to pay sewerage cess to the Board arises from the Statute and also by way of an agreement which was agreed upon by the appellant. There is no merit in the contention of the appellant unit that its liability has ended upon transferring the industrial effluents to the respondent-JETL and that it is not connected to thesewer line. As discussed earlier, the partially treated effluents of theunit are ultimately let into the sewer line provided by the Board which is being carried to Amberpet STP for further treatment and discharge. After partial treatment at JETL, wheneffluents are let into thesewage system, the appellant is not justified in contending that it is not connected to the sewer line of the Board and hence, covered under the proviso to Section 55 of the Act.26. It is well-settled that the normal function of a proviso is to except something out of the enactment.30. As rightly contended by learned senior counsel for the respondent-Board, the plea of double payment of sewerage cess was never raised in the writ petition filed by the appellant; but it was raised by way of oral submission before the High Court and thereafter, by way of review petition. The plea of double levy was rightly rejected by the High Court inter alia holding thatassuming for a moment that the petitioner-company is paying some amounts to the JETL, it cannot be said that it is towards sewerage. As pointed out by the learned senior counsel for the respondent-Board, JETL never sought to implead itself as a party respondent in the writ petition filed by the Board. It is also pertinent to point out that one Mr. G.K.B. Chowdary who was then the Managing Director of the appellant-group of companies, was also the Managing Director of JETL. It passescomprehension as to why JETL whose Managing Director is the same as the Managing Director of the appellant Group of Companies had not taken any step to get themselves impleaded in the writ petition before the High Court and raise the plea of double taxation.Insofar as the charges paid by the appellant to JETL for the treatment and processing of its effluents, it is purely contractual pursuant to the agreement entered into between the appellant unit and JETL dated 01.04.2000 and the earlier agreement dated 22.01.1996. As pointed out earlier, the appellant unit is obligated to treat and process the industrial effluents and bring them down to permissible standard limits in accordance with the provisions of the Water Act, 1974 and Environment Act, 1986 before they are let into the sewer line of the Board.discharge its statutory as well as contractual obligation, the appellant unit has entered into agreement with JETL for the treatment and processing ofeffluents before being let intosewer line. Payment of charges by the appellant to JETL is purely contractual between the parties and the same cannot be considered to be in deference to the statutory cess/statutory charge which can only be levied by the Board. In this regard, the High Court has rightly observed that assuming that the appellant is paying some amount to JETL, the same cannot be termed ast to the provisions of Water Act, 1974 and Environment Act, 1986 and subject to the restrictions of Section 54 of HMWS&S Act and in terms of Rule 4 and other terms and conditions, Board has the right to permit theseeking to discharge their trade or industrial effluents into thesewer system and Sewerage Treatment Plant subject to the imposition of costs. The treatment for letting the trade or industrial effluents into thesewer shall be subject to such terms and conditions and in such form of agreement as may be prescribed in the regulations made by the Board in accordance with these rules. Having entered into the agreement with the Board on 31.08.2000 and on prior dates, JETL cannot turn around and challenge the terms and conditions imposed upon it by virtue of the agreement.37. So far as the various payments made by JETL to the Board, levy is in terms of Rule 4 of the Sewerage Rules and as per the contract and is purely contractual between JETL and the respondent Board for letting partially treated the industrial effluents of the appellant and other units into thesewer. Likewise, charges paid by JETL to the Board cannot be said to be in lieu of the sewerage cess that the appellant unit is liable to pay which is a statutory liability. It is pertinent to note that many industries about fifty units, apart from the appellant unit, discharge their effluents to the CETP/JETL. The agreement dated 31.08.2000 and the earlier agreements between JETL and the Board are purely contractual consciously entered into between the parties.38. JETL lets partially treated effluents into thesewerage system for further treatment. As discussed earlier, for further treatment of sewerage, the effluents are to be taken to Sewerage Treatment Plant (STP) at Amberpet which is situated at the distance of 08.30 kilometres from Balanagar. It requires huge amount for transmission of the effluents tosewer system at Amberpet where the Board brings down the industrial effluents to tolerance limits. As pointed out earlier, the treatment of industrial effluents requires high demand of energy, personnel to operate the system and skilled workers for maintenance of the plant. Unless the Board collects sewerage charge/sewerage surcharge, the Board cannot meet the heavy expenditure on the operation and maintenance of sewerage system. Various other members of JETL who discharge sewage into JETL which is ultimately let into Board sewer line, may or may not be consumers of water supply by the Board. That apart, members of JETL may have their own source of water supply or they may supplement the supply of water from the Board through different sources either by extraction of ground water or supply through tankers which cannot be quantified by the Board. In pursuance of the provisions of the HMWS&S Act and the Sewerage Rules and pursuant to the agreement dated 31.08.2000, the charges are levied on JETL who in turn collects the charges from its member industrial units who discharge their effluents into JETL. Therefore, the payments made by JETL to the Board and the charges in turn collected by JETL from the appellant and other member units, cannot absolve the appellant unit from its statutory liability to pay the sewerage cess. We find no merit in the contention that there is double levy of sewerage cess.39. Levy of sewerage cess being a statutory levy in terms of Section 55 of HMWS&S Act and Clause 16 of the agreement which incorporates the statutory levy under Section 55 of HMWS&S Act, the learned Single Judge and the Division Bench rightly recorded concurrent findings upholding the levy. Observing that the appellant being occupier of the premises, though not directly connected to the sewer line of the Board, is ultimately letting into the seweragesystem of theBoard after partial treatment at JETL, the High Court was right in holding that the levy of sewerage cess is in accordance with Section 55 of HMWS&S Act. The payment of sewerage surcharges and the other charges by JETL cannot take away the statutory liability of sewerage cess levied on the occupier of the premises who consumes water and lets out the sewage into the Board sewer system. The payment of sewerage surcharge and other charges by JETL to the respondent-Board will not amount to double levy and the High Court rightly dismissed the writ petitions and also the review petitions filed by the appellant. The impugned order does not suffer from any infirmity warranting interference.