Gujarat High Court
Krishak Bharati Co-Operative Ltd vs State Of Gujarat on 4 September, 2023
Author: Vaibhavi D. Nanavati
Bench: Vaibhavi D. Nanavati
NEUTRAL CITATION
C/SCA/4918/2006 JUDGMENT DATED: 04/09/2023
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 4918 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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KRISHAK BHARATI CO-OPERATIVE LTD.
Versus
STATE OF GUJARAT & 1 other(s)
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Appearance:
M R BHATT & CO.(5953) for the Petitioner(s) No. 1
MR AYAAN PATEL, AGP for the Respondent(s) No. 1
RULE SERVED 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 Society registered under the Delhi Cooperative Societies Act, 1972. The Petitioner is also Page 1 of 28 Downloaded on : Sat Sep 16 16:02:33 IST 2023 NEUTRAL CITATION C/SCA/4918/2006 JUDGMENT DATED: 04/09/2023 undefined deemed to be registered under the Multi - State Cooperative Societies Act, 1984. That one Krishak Bharati Cooperative Ltd. (KRIBHCO) was set up in April 1980 for the manufacture and distribution of chemical fertilizers and allied products and to undertake activities as are incidental and conductive to give fill up to agriculture and rural development. Petitioner has setup the World's Largest Ammonia - urea complex in the Cooperative sector at Hazira with two Ammonia plants of 1350 MTPD capacity. The Petitioner continues to assist the cooperative movement under the KRIBHCO - NCDC scheme to develop the weaker cooperative societies. The petitioner is providing assistance to each of the 865 societies by way of supplying furniture, fixtures, agriculture implements etc., under this scheme. By way of present petition, the petitioner seeks to challenge the action of the respondent no. 2 whereby, the respondent no. 2 on the basis of reassessment has asked the Petitioner to pay the water charges in respect of water supply for drinking purposes to the tune of Rs.3,01,11,432/-. Being aggrieved by the aforesaid action initiated by the respondent no. 2, the petitioner herein has approached this Court seeking following reliefs:
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NEUTRAL CITATION C/SCA/4918/2006 JUDGMENT DATED: 04/09/2023 undefined "[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 21.07.2005 and 15.02.2006 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 21.07.2005 and 15.02.2006 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 June, 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 Hazira Branch, and in view thereof, entered into an agreement dated 16.04.1980 with the respondent - State of Gujarat for the period of 25 Years. As per clause 6 of the said agreement, IFFCO (the predecessor of the present petitioner) shall pay the quantity of water drawn and measured as provided under clause 7 of the said Agreement at the rate of Rs. 0.20 paisa per 10000 liters for the first five years from the commencement of drawal of water subject to the payment of interest at the rate of 15% and service charges at 1% on the amounts of the bills Page 3 of 28 Downloaded on : Sat Sep 16 16:02:33 IST 2023 NEUTRAL CITATION C/SCA/4918/2006 JUDGMENT DATED: 04/09/2023 undefined remaining outstanding for more than 3 months, provided the monthly minimum water charges shall be calculated at the rate of Rs. 2500 for drawals corresponding to each Million Gallons per day or part thereof during construction period of first three years and thereafter Rs. 62,500/-. These rates shall be liable for upward revision from time to time or whenever the general question arises with respect to the revision of the rates in connection with water used for irrigation or non irrigational purposes is considered by the Government and the rates fixed by the Government does not include cost of pumping, convoying etc. of water from its source.
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 Page 4 of 28 Downloaded on : Sat Sep 16 16:02:33 IST 2023 NEUTRAL CITATION C/SCA/4918/2006 JUDGMENT DATED: 04/09/2023 undefined 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 has referred 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.Page 5 of 28 Downloaded on : Sat Sep 16 16:02:33 IST 2023
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(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 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 Hazira Branch canal. The Petitioner submits that despite the actual drinking water distribution of 1.30 million Gallons of water per day, the respondent no. 2, upto June 2005, was applying the drinking water rate only in respect of the theoretical quantity of drinking water estimated at 70 liters per day per person i.e. 0.59 Million gallons of water per day. The Petitioner, however, without raising any dispute on that count, was making payment for the water charges and the demand raised by the Respondent No. 2 from time to time. The Petitioner submits that since the earlier agreement of 1980 came to an end, Page 6 of 28 Downloaded on : Sat Sep 16 16:02:33 IST 2023 NEUTRAL CITATION C/SCA/4918/2006 JUDGMENT DATED: 04/09/2023 undefined another agreement was executed on 21-6-2005, a copy of which is annexed and marked at Annexure 6.
2.5 The petitioner herein received a letter dated 21.07.2005 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.3,01,11,432/- was payable by the petitioner. A copy of the said letter dated 21.07.2005 is duly produced at Annexure - 8. In response to the said, the petitioner addressed a letter/representation dated 3.8.2005 in which the petitioner communicated in the said letter that it is a cooperative sector and fertilizer manufacturing organization working for the betterment of the farmers, that though not obligatory, it was supplying drinking water to the villages of Kawas and Icchapore, that supplying of water to the villages was, in fact, the state obligation and thereupon making a request to the respondents to reconsider the revision of water charges. 2.6 The Petitioner further submits that since the said representation dated 3.8.2005 was not responded by the Respondents, the Petitioner made further representation on 13-10-2005, a copy of which is annexed and marked at Annexure 12.
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NEUTRAL CITATION C/SCA/4918/2006 JUDGMENT DATED: 04/09/2023 undefined 2.7 The Petitioner submits that without adverting to the representations made by the Petitioner, the Respondent No.2 has now issued a notice Dated 15-2-2006, which is marked at Annexure 13, which is also impugned in the present Petition, threatening to take coercive measure.
2.8 The Petitioner submits that only when Letter of 21-7-2005 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 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 21.7.2005 and 15.02.2006 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 with Mr. Page 8 of 28 Downloaded on : Sat Sep 16 16:02:33 IST 2023 NEUTRAL CITATION C/SCA/4918/2006 JUDGMENT DATED: 04/09/2023 undefined Munjaal Bhatt, learned advocate 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 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 Page 9 of 28 Downloaded on : Sat Sep 16 16:02:33 IST 2023 NEUTRAL CITATION C/SCA/4918/2006 JUDGMENT DATED: 04/09/2023 undefined 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 dated 24.09.2002.
4.2 Mr. Bhatt, learned Senior Counsel, submitted that the respondents ought to have appreciated that approximately 1.30 Million Gallons of water per day 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 to industrial Page 10 of 28 Downloaded on : Sat Sep 16 16:02:33 IST 2023 NEUTRAL CITATION C/SCA/4918/2006 JUDGMENT DATED: 04/09/2023 undefined 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 637%, 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 logic advanced by the respondents to revise the assessment retrospectively. The respondent authority lack power and jurisdiction to raise such demand retrospectively from the Year 1997-98 onwards. 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 conditions of contract. 4.4 Mr. Bhatt, learned Senior Counsel, submitted that the entire basis of the demand raised by the respondent No.1 - Page 11 of 28 Downloaded on : Sat Sep 16 16:02:33 IST 2023
NEUTRAL CITATION C/SCA/4918/2006 JUDGMENT DATED: 04/09/2023 undefined 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 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.3,01,11,432/- with retrospective effect from the Year 1997- 1998 strictly in consonance with the formula fixed in the Government Resolutions dated 27.01.1997, 30.01.2001, 05.07.2002 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 Page 12 of 28 Downloaded on : Sat Sep 16 16:02:33 IST 2023 NEUTRAL CITATION C/SCA/4918/2006 JUDGMENT DATED: 04/09/2023 undefined 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.3,01,11,432/-.
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 respective parties, the undisputed facts emerge for the consideration of this Court, are as under:
6.1 The petitioner required supply of water from Hazira Branch canal and in view thereof, entered into an agreement dated 16.04.1980 with the respondent - State of Gujarat.
6.2 As per clause 6 of the said agreement, IFFCO (the Page 13 of 28 Downloaded on : Sat Sep 16 16:02:33 IST 2023 NEUTRAL CITATION C/SCA/4918/2006 JUDGMENT DATED: 04/09/2023 undefined predecessor of the present petitioner) shall pay the quantity of water drawn and measured as provided under clause 7 of the said Agreement at the rate of Rs. 0.20 paisa per 10000 liters for the first five years from the commencement of drawal of water subject to the payment of interest at the rate of 15% and service charges at 1% on the amounts of the bills remaining outstanding for more than 3 months, provided the monthly minimum water charges shall be calculated at the rate of Rs. 2500 for drawals corresponding to each Million Gallons per day or part thereof during construction period of first three years and thereafter Rs. 62,500/-. These rates shall be liable for upward revision from time to time or whenever the general question arises with respect to the revision of the rates in connection with water used for irrigation or non irrigational purposes is considered by the Government and the rates fixed by the Government does not include cost of pumping, convoying etc. of water from its source.
6.3 The dispute in the present petition is with regard to the levy of water charges for domestic use. It is apposite to refer to Clause 6 of the said agreement dated 16.04.1980, which reads thus:Page 14 of 28 Downloaded on : Sat Sep 16 16:02:33 IST 2023
NEUTRAL CITATION C/SCA/4918/2006 JUDGMENT DATED: 04/09/2023 undefined "6. As per clause 6 of the said agreement, IFFCO (the predecessor of the present petitioner) shall pay the quantity of water drawn and measured as provided under clause 7 of the said Agreement at the rate of Rs. 0.20 paisa per 10000 litres for the first five years from the commencement of drawal of water subject to the payment of interest at the rate of 15% and service charges at 1% on the amounts of the bills remaining outstanding for more than 3 months, provided the monthly minimum water charges shall be calculated at the rate of Rs.
2500 for drawals corresponding to each Million Gallons per day or part thereof during construction period of first three years and thereafter Rs. 62,500/-. These rates shall be liable for upward revision from time to time or whenever the general question of the revision of the rates in connection with water used for irrigation or non irrigational purposes is considered by the Government and the rates fixed by the Government does not include cost of pumping, convoying etc. of water from its source."
6.4 Pursuant to the aforesaid agreement, the petitioner herein stand governed by the following Government Resolutions:
(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 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.Page 15 of 28 Downloaded on : Sat Sep 16 16:02:33 IST 2023
NEUTRAL CITATION C/SCA/4918/2006 JUDGMENT DATED: 04/09/2023 undefined 6.5 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. 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.
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 21.07.2005, the respondent authority demanded the outstanding amount of Rs.3,01,11,432/-, which is under challenge.
7. At this stage, it is apposite to refer to the ratio as laid Page 16 of 28 Downloaded on : Sat Sep 16 16:02:33 IST 2023 NEUTRAL CITATION C/SCA/4918/2006 JUDGMENT DATED: 04/09/2023 undefined 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. Paragraph 9,16 & 23 of the same 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 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 Page 17 of 28 Downloaded on : Sat Sep 16 16:02:33 IST 2023 NEUTRAL CITATION C/SCA/4918/2006 JUDGMENT DATED: 04/09/2023 undefined 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 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 Page 18 of 28 Downloaded on : Sat Sep 16 16:02:33 IST 2023 NEUTRAL CITATION C/SCA/4918/2006 JUDGMENT DATED: 04/09/2023 undefined 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 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) Page 19 of 28 Downloaded on : Sat Sep 16 16:02:33 IST 2023 NEUTRAL CITATION C/SCA/4918/2006 JUDGMENT DATED: 04/09/2023 undefined 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 20.03.2006 whereby Rule came to be issued and interim relief came to be granted in favour of the petitioner. The said order reads thus:
th "1. Rule. Notice as to interim relief returnable on 29 March 2006.Page 20 of 28 Downloaded on : Sat Sep 16 16:02:33 IST 2023
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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 th by letter dated 15 February 2006 Annexure-"13" 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 required supply of water from Hazira Branch, and in view thereof, entered into an agreement dated 16.04.1980 with the respondent - State of Gujarat for the period of 25 Years. As per clause 6 of the said agreement, IFFCO (the predecessor of the present petitioner) shall pay the quantity of water drawn and measured as provided under clause 7 of the said Agreement at the rate of Rs. 0.20 paisa per 10000 litres for the first five years from the commencement of drawal of water subject to the payment of interest at the rate of 15% and service charges at 1% on the amounts of the bills remaining outstanding for more than 3 months, provided the monthly minimum water charges shall be calculated at the rate of Rs. 2500 for drawals corresponding to each Million Gallons per day or part thereof during construction period of Page 21 of 28 Downloaded on : Sat Sep 16 16:02:33 IST 2023 NEUTRAL CITATION C/SCA/4918/2006 JUDGMENT DATED: 04/09/2023 undefined first three years and thereafter Rs. 62,500/-. These rates shall be liable for upward revision from time to time or whenever the general question of the revision of the rates in connection with water used for irrigation or non irrigational purposes is considered by the Government and the rates fixed by the Government does not include cost of pumping, convoying etc. of water from its source.
(b) The respondent State Government raised bills for supply of water in accordance with the said agreement till June 2005. It is undisputed that the petitioner has already paid the charges for the supply of water in accordance with the bills raised by the respondent State as on June, 2005.
(c) The State Government by the impugned communication dated 15.02.2006, threatened the Petitioner to take coercive action against them The State Government has issued the impugned communication dated 21.07.2005/15.02.2006 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 Resolution Page 22 of 28 Downloaded on : Sat Sep 16 16:02:33 IST 2023 NEUTRAL CITATION C/SCA/4918/2006 JUDGMENT DATED: 04/09/2023 undefined and no sooner the said mistake was effected by the respondent authority immediately, a letter dated 21.07.2005/15.02.2006, duly produced at page 87-90 and 104- 105, came to be addressed to the petitioner herein demanding total outstanding dues to the tune of Rs.3,01,11,432/- for the period from the Year 1997-1998 onwards in accordance with the Government Resolution.
(d) The question arises whether the State Government may seek further recovery by the impugned communication dated 21.07.2005/15.02.2006 through re-assessment of water charges used for drinking purposes, fixed charges and normal water charges for the period from the Year 1997-98 onwards claiming an amount of Rs.3,01,11,432/-.
(e) It is the case of the petitioner and undisputed that the water supplied to the petitioner under the said agreement was free of charge. While entering into an agreement with the respondent - State on 16.04.1980, 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 from time to time. It appears that the respondent authority has charged the Page 23 of 28 Downloaded on : Sat Sep 16 16:02:33 IST 2023 NEUTRAL CITATION C/SCA/4918/2006 JUDGMENT DATED: 04/09/2023 undefined petitioner herein at the rate of Rupees 4.72 instead of Rupees 0.64 for drinking water purposes.
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 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 onwards 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 of July, 2005 seeking recovery of the amount due and payable qua the drinking water charges retrospectively from 1997- 1998 onwards.
(f) It is the submission of the petitioner that the respondents ought to have appreciated that approximately 1.30 Million Gallons of Water per day 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 637%, the petitioner has no option but, to reduce/stop supply Page 24 of 28 Downloaded on : Sat Sep 16 16:02:33 IST 2023 NEUTRAL CITATION C/SCA/4918/2006 JUDGMENT DATED: 04/09/2023 undefined of drinking water to the surrounding villages, which will seriously prejudice the residents of that villages. Further, the petitioner has not charged from the said villages for the water supplied by the petitioner and the same was by way of social gesture to the villages which lack basic infrastructure of potable water.
(g) It was submitted by Mr. Ayaan Patel, learned AGP that the petitioner herein is bound by the terms of the contract.
Considering the aforesaid submission that the Petitioner, however, without raising any dispute was making payment for the water charges and the demands raised by Respondent No. 2 from time to time. 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.
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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.
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 21.07.2005 and 15.02.2006 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 Page 26 of 28 Downloaded on : Sat Sep 16 16:02:33 IST 2023 NEUTRAL CITATION C/SCA/4918/2006 JUDGMENT DATED: 04/09/2023 undefined 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 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 bills/communications dated 21.07.2005 and 15.02.2006 wherein, the respondent has issued a bill amounting to Rs.3,01,11,432/- for drawal of water from Hazira Branch canal for a period from the Year 1997-98 Page 27 of 28 Downloaded on : Sat Sep 16 16:02:33 IST 2023 NEUTRAL CITATION C/SCA/4918/2006 JUDGMENT DATED: 04/09/2023 undefined onwards and the said bills/communications dated 21.07.2005 and 15.02.2006 are 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 Page 28 of 28 Downloaded on : Sat Sep 16 16:02:33 IST 2023