Andhra HC (Pre-Telangana)
G. Kishan Reddy And Five Ors. vs The Hyderabad Metropolitan Water ... on 18 January, 2008
Equivalent citations: 2008(2)ALD394, 2008(2)ALT162
ORDER C.V. Nagarjuna Reddy, J.
INTRODUCTION:
1. Petitioner No. 1, a member of Legislative Assembly and a resident of 5th Floor, Moti Apartments, Barkatpura, Hyderabad and petitioners 2 to 6, registered flat owners' welfare societies of Hyderabad are seeking to espouse the cause of the residents of the flats of their respective welfare societies. In this writ petition they have called in question proceedings of respondent No. 1 issued vide B.P. No. 121, Administrative (A) Wing, dated 14.12.2006 to the extent that it has imposed minimum charges for water supply and sewerage facilities upon multi- storied residential building complexes with effect from 1.1.2007, as illegal, arbitrary and unsustainable.
THE FACTS:
2. Hyderabad Metropolitan Water Supply and Sewerage Board - respondent No. 1 (for short "the Board") was constituted under the Hyderabad Metropolitan Water Supply and Sewerage Act, 1989 (for short "the Act"). Its general duties as envisaged by Section 7 of the Act are two fold, namely, to provide for supply of potable water including planning, design, construction, maintenance, operation and management of water supply system and sewage treatment works including planning, design, construction, maintenance, operation and management in Hyderabad metropolitan area. In order to provide sufficient revenues to recover operating expenses, taxes, capital works, repayment of loans etc., the Board is empowered under Section 8 of the Act to levy rates, fees, tariffs, rentals, deposits, contributions and other charges and vary such rates, fees, tariffs, rentals, deposits, contributions and other charges from time to time. In exercise of this power the Board has been notifying water tariff, sewage cess, water supply and sewerage connection charges from time to time. Illustrative of such notifications are notifications dated 29.3.1993, 25.1.1997, 29.5.2002, 28.9.2004 and 28.1.2005. The last of these notifications, which is the subject matter of challenge in this writ petition, is B.P. No. 121 dated 14.12.2006, notified in Andhra Pradesh Gazette No. 429 dated 29.12.2006. By this notification the Board revised water rates, tariff, fees, deposits and other charges. The petitioners in this writ petition question the method of levy of minimum charges and calculation of sewerage charges on the individual flats comprised in multi-storied building complexes ('MSBs' for short) as discriminatory, unreasonable and irrational.
THE PLEADINGS:
3. The main plea of the petitioners is that the method of imposition of minimum water supply and sewerage charges upon individual flats in multi-storied residential apartment complexes is palpably arbitrary, unreasonable, illogical and unsustainable. It is averred in their affidavit that treating the individual flats in MSBs on par with the individual domestic houses amounts to treating un-equals as equals. It is specifically averred that single water connection is provided to each of the MSBs comprising several flats and individual domestic houses, that Board supplies water to both these categories' consumers during the same specified and limited timings, but while the domestic individual house consumer pays a minimum charge of Rs. 90/-, a consumer of each flat comprised in MSBs is required to pay Rs. 90/- towards minimum charges, though the quantity of water supplied to both these categories is more or less the same. They further averred that as per the procedure envisaged in the impugned notification, in case of MSBs the deemed agreed quantity for each apartment is 15 KL per month and the tariff applicable at that level of consumption is Rs. 6 per KL, that the notification provides for the flat owners entering into agreement in cases where consumption exceeds 500 KLs per month and in such an event the minimum charges payable would be 60% of the agreed quantity. The petitioners pointed out the anomaly that if consumption in an apartment comprising 33 flats is only 495 KL, they would be liable to pay Rs. 2,970/- and if the consumption exceeds 500 KL, by application of rule of 60%, their liability would be only Rs. 1,782/-. According to the petitioners this is a retrograde step and would result in encouraging the flat owners to waste water to achieve the minimum consumption target of 500 KL per month in order to pay the reduced water tariff. In their affidavit the petitioners also demonstrated that introduction of minimum charges at Rs. 90/- per flat resulted in multi-fold increase in their liability to pay the water charges for the month of January, 2007 under the revised policy when compared to the pre-revised policy. The steepness in the increase in the case of different apartments is mentioned hereunder:
Name of the apartment Dec-2006 Jan-2007
(pre-revised) (post-revised)
1. Manohar Apartments
Water Cess Rs. 474/- Rs. 4,680
(Rs. 190x52 flats)
Sewer Cess Rs. 166/- Rs. 1,638/-
(35% of water cess) (35% of Rs.4,690/-)
2. Mathrusree Apartment
Water Cess Rs. 1,092/- Rs. 12,660/-
Sewer Cess Rs. 382.25ps Rs. 4,431/-
3. Shantiniketan Apartment
Water Cess & Rs. 700/-
Sewer Cess Rs. 881/- Rs. 945/-
together
4. Thirumala Enclave
Dec-06 Feb-07
Water Cess Rs. 150/- Rs. 2,160/-
Sewer Cess Rs. 52.50 ps. Rs. 756/-
5. Siddhardh Palace Residential Apartment
Water Cess Rs. 564/- Rs. 2,340/-
Sewer Cess Rs. 197.50 ps. Rs. 890/-
6. Paragon Venkatadri Apartments
Nov-2006 Jan-2007
Water Cess Rs. 2,596/- Rs. 13,320/-
Sewer Cess Rs. 907.25 Rs. 4,662/-
4. Dr. K.S. Jawahar Reddy, Managing Director of the Board filed a counter affidavit. He pleaded that the steep increase in the charges which is demonstrated by the petitioners is on account of comparison between the old rates and the revised rates and that by making such a comparison the revised rates cannot be termed as exorbitant. It is averred that the Board is entrusted with the responsibility to supply potable water to the residents of twin cities for drinking and as well as discharging the function to transmit and treat the sewerage water from the city to the Sewerage Treatment Plant located at the outskirts of the city to curb pollution, that for the said purpose the Board needs to spend huge amounts for land acquisition, laying of sewerage pipelines, water supply lines, construction and maintenance of treatment plant etc. It is also pleaded that the Board is made to incur huge expenditure towards salaries and wages to staff, power bills to pump water from long distances from reservoirs such as Singur, Manjeera and Krishna river, payment of interest on the loans and that the rates charged and the amount demanded by the Board still remained heavily subsidized for multi-storied buildings as compared to the costs incurred by the Board. It is also averred that the Board is supplying water free of cost to the poor people living in slums through the Public Stand Posts (PSP's) and water tankers incurring huge expenditure which needs to be met from the water cess levied on different categories of customers including multi- storied buildings to balance the revenue generation with the costs incurred from time to time. It is also stated that the cost of treatment and transmitting the water to city as on date works out to Rs. 18/- per KL, whereas the Board is charging at a heavily subsidized rate of Rs. 6/- per KL. It is also stated that under previous tariff notification dated 29.5.2002 where agreements were not entered into by the multi-storied residential complexes, the agreed quantity is deemed to be 30 KL multiplied by residential apartments in the complexes and the monthly minimum charges for them at 60% of the agreed quantity works out to Rs. 108/- per flat @ Rs. 6 per KL, but the said charges were not collected and that under the present notification the minimum charges are worked out to only Rs. 90/- per flat taking 15 KL as the agreed quantity. While the deponent to the counter has not delved into the allegation of the equal treatment between the un-equals, he however mentioned that the minimum water charges even for an individual domestic household in a slum is Rs. 90/- per month in addition to sewerage cess. It is sought to be explained that the realization of the tariff was done by the Board to rectify the disparity in levying the minimum charges between the individual domestic customers and the multi-storied buildings. He also further sought to justify this by comparing the same with the minimum charges being collected by utilities like electricity and telephone departments in the country.
5. In the reply affidavit filed on behalf of the petitioners it is pleaded that sewer cess is payable at 35% of the water 'supply' charges and not on the minimum charges. The petitioners also pointed out that the respondents failed to refer and reply to the specific as well as hypothetical examples given in the affidavit filed in support of the writ petition.
THE SUBMISSIONS:
6. Sri P.V. Sanjay Kumar, learned Counsel for the petitioners made the following submissions:
1. The impugned Board proceeding is violative of Article 14 inasmuch as it equated individual flats with individual houses in fixing minimum charges and thereby un-equals are treated as equals.
2. With a single water connection, the MSB comprising ten flats (five flats are minimum number to constitute a MSB) is required to pay Rs.900/- while an individual residential house is liable to pay only Rs. 90/- per month towards minimum charges which is highly unreasonable and arbitrary.
3. The policy of allowing payment of 60% of guaranteed quantity in case of consumption of 500 KL and above is a retrograde step inasmuch as it drives the consumers to indulge in wastage of water to pay lesser water bill and is therefore irrational.
4. Treating an individual domestic house irrespective of the number of portions it contains, as one unit and charging Rs. 90/- per month as minimum is irrational and unreasonable, and
5. The Board's impugned policy seriously affects the interests of middle and lower strata of the society who comprise the majority of the occupants of the flats in the MSBs.
7. The learned Counsel relied on the following judgments. State of M.P., and Ors. v. Nandlal Jaiswal and Ors. , Premium Granites and Anr. v. State of T.N. and Ors. , Centre for Public Interest Litigation and Anr. v. Union of India and Ors. , Bannari Amman Sugars Ltd. v. Commercial Tax Officer and Ors. , Pallavi Refractories and Ors. v. Singareni Collieries Co.Ltd., and Ors. and Directorate of Film Festivals and Ors. v. Gaurav Ashwin Jain and Ors.
8. Smt. M. Venkateswari, learned Standing Counsel for respondent No. 1 however submitted that the Board is empowered to formulate its own policies regarding tariff fixation under Section 8 of the Act and the courts ordinarily do not interfere with such policies. She denied the allegation that fixation of minimum charges under the impugned notification is either irrational or arbitrary or unreasonable and contended that the impugned notification is not liable to be interfered with.
SCOPE OF JUDICIAL REVIEW:
9. The courts are loath to interfere with the policy matters of the State and its functionaries and in particular when they relate to price fixation. The Apex Court repeatedly held that price fixation is neither the forte nor the function of the Courts. In Prag Ice & Oil Mills and Anr. v. Union of India the Supreme Court held as under:
In the ultimate analysis, the mechanism of price fixation has necessarily to be left to the judgment of the executive and unless it is patent that there is hostile discrimination against a class of operators, the processual basis of price fixation has to be accepted to the generality of cases as valid.
10. In Rohtas Industries Ltd., and Anr. v. The Chairman, Bihar State Electricity Board and Ors. the Supreme Court re-iterated the above mentioned dicta.
11. In Kerala State Electricity Board v. S.N. Govinda Prabhu and Brothers while dealing with the challenge to revision of electricity tariffs made by the Kerala Electricity Board the Supreme Court re-stated the above legal principle and held that the court will not strike down the tariffs unless it is satisfied that the revision is plainly arbitrary.
12. In Nandlal Jaiswal (supra) the Supreme Court held that the court must while adjudging the constitutional validity of an executive decision relating to economic matters grant a certain measure of freedom or "play in the joints" to the executive and the court can interfere only if the policy decision is patently arbitrary, discriminatory or malafide. These principles are re- iterated by the Supreme Court in various subsequent judgments in Premium Granites (1994) 2 SCC 691 (supra), Centre for Public Interest Litigation (2000) 8 SCC 606 (supra), Bannari Amman Sugars Ltd. (2005) 1 SCC 625 (supra), Pallavi Refractories (2005) 2 SCC 227 (supra) and Directorate of Film Festivals (2007) 4 SCC 737 (supra).
THE CONCEPT OF MINIMUM CHARGES:
13. Levy of minimum charges is an age-old concept and it is being upheld by the Courts all over the world. In order to ensure supplies, an utility or a company is required to provide for infrastructure such as erecting the sub-stations and electricity lines in the case of supply of electricity, laying down of pipe lines in the case of water supply etc. For these purposes the supplier is required to invest on capital works, pay salaries to its employees and incur expenditure on maintenance of the lines and other overheads. Expenditure on these various counts does not vary with the variation in the consumption. Even if the consumers do not consume any electricity or water, the supplier is bound to incur expenditure on the above mentioned and other necessary heads which are called fixed overheads. Therefore, whenever there are challenges to the levy and collection of minimum charges, the courts seldom interfere except on the ground that levy of these charges is in violation of any of the facets of Article 14 of the Constitution of India. In Amalgamate Electricity Company Limited v. Jalagaon Borough Municipality the Supreme Court succinctly explained the doctrine of minimum charges as under:
The High Court seems to have completely overlooked the fact that Clause 3 of the agreement embodied what is known in common parlance as the doctrine of minimum guarantee. i.e., the Company was assured of a minimum consumption of electrical energy by the Municipality and for the payment of the same whether it was consumed or not. That was the reason why the Company was prepared to charge a minimum rate of 0.5 ana per unit over and above the first 50 units. The minimum charge of 0.5 ana per unit, therefore, was actually the consideration for the minimum guarantee allowed to the plaintiff under Clause 3 of the agreement.
14. The Supreme Court further explained this doctrine as under:
Moreover it is obvious that if the plaintiff company was to give bulk supply of electricity at a concessional rate of 0. 5 anna per unit it had to lay down lines and to keep the power ready for being supplied as and when required. The consumers could put their switches on whenever they liked and therefore the plaintiff had to keep everything ready so that power is supplied the moment the switch was put on. In these circumstances it was absolutely essential that the plaintiff should have been ensured the payment of the minimum charges for the supply of electrical energy whether consumed or not so that it may be able to meet the bare maintenance expenses.
In Bihar State Electricity Board v. Green Rubber Industries and Ors. the Supreme Court rejected the contention that the levy of minimum charges was not sustainable and the observations made in that context are apt to be extracted here-under:
Considered by the test of reasonableness it cannot be said to be unreasonable inasmuch as the supply of electricity to a consumer involves incurring of overhead installation expenses by the Board which do not vary with the quantity of electricity consumed and the installation has to be continued irrespective of whether the energy is consumed or not until the agreement comes to an end. Every contract is to be considered with reference to its object and the whole of its terms and accordingly the whole context must be considered in endeavouring to collect the intention of the parties, even though the immediate object of enquiry is the meaning of an isolated clause. This agreement with the stipulation of minimum guaranteed charges cannot be held to be ultra vires on the ground that it is incompatible with the statutory duty.
THE ANALYSIS:
15. Let me now examine the respective submissions of the learned Counsel for the parties, keeping in view the above mentioned settled legal position.
16. Section 8 of the Act empowers the Board, inter alia, to fix tariff for supply of water and to levy sewerage charges. The learned Counsel for the petitioners has conceded to this extent. But the question is whether fixation of minimum charges as is done under the impugned notification violates Article 14 of the Constitution of India and is irrational?
17. The principle of equality and non-arbitrariness is enshrined in Article 14 of the Constitution. In a plethora of judgments the Supreme Court held that Article 14 is violated not only when the state treats equals as un-equals, but also in converse cases where persons who are not similarly placed are treated similarly.
18. In Adoni Cotton Mills v. Andhra Pradesh State Electricity Board the Supreme Court, while dealing with the issue of classification of industries made by the Andhra Pradesh State Electricity Board for imposition of power cuts observed:
It is fairly settled that equality before the law does not mean that things which are different shall be treated as though they were the same. The obligation not to discriminate involves both the right and obligation to make reasonable classification on the basis of relevant factors.
19. To ensure equality the State shall make reasonable classification. The Supreme Court held that the classification must be founded on intelligible differentia which distinguishes persons or things that are grouped together from others left out of the group and that the differentia must have a rational relation to the object sought to be achieved by the statute in question. (See Bhudhan Chowdhary v. State of Bihar , Mohammed Hanif Qureshi v. State of Bihar and Ors. , Harakchand Ratanchand Banthia v. Union of India , Pathumma v. State of Kerala and Baburam v. State of U.P. )
20. The Constitution Bench of the Supreme Court in Kunnathat Thathunni Moopil Nair v. State of Kerala and Anr. while dealing with a taxing statute held that so long as there is rational basis for the classification for the purpose of levying taxes, Article 14 will not be in the way of such a classification resulting in un-equal burdens on different classes of properties. But if the same class of properties similarly situated is subjected to an incidence of taxation, which results in inequality, the law may be struck down as creating inequality amongst holders of the same kind of property. It is held that a taxing statute is not wholly immune from attack on the ground that it infringes the equality clause in Article 14 though the courts are not concerned with the policy underlying the statute or whether a particular tax could not have been imposed in a different way or in a way that the court might think more just and equitable.
Whether Classification is reasonable?
21. As noted, the main grievance of the petitioners is that the flat owners of multi-storied buildings are treated on par with the individual domestic consumers and that this resulted in equal treatment of un-equals. To appreciate this contention, it is necessary to delve into the various notifications under which the water charges are being levied by the Board from time to time. The earliest of the notifications made available by the petitioners is B.P. No. 88 dated 20.1.1997. Multi-storied buildings are included in category-I (c). In order to fall within the category of domestic supply 70% of the plinth area must be in domestic use. There was a sub-classification made in respect of multi- storied buildings. Where 90% or more of the plinth area is in domestic use, the Board fixed Rs. 700/- per month as minimum, and aggregated tariff depending upon the quantity of water consumed is prescribed starting from Rs. 3.75ps and up to Rs. 14 per KL. The minimum charges of Rs. 1500/- are prescribed for MSBs where more than 10% but not less than 30% of the plinth area is in non-domestic use and a higher rate of tariff for each KL of water consumed is prescribed. For other domestic supplies minimum charges per month were fixed at Rs. 55/-. 35% of water consumption charges is prescribed as sewerage cess. The said proceedings were substituted with B.P.No. 91 dated 1.10.1997 on the ground that having considered representations from the consumers the Board felt it desirable to simplify the tariff structure by reducing the number of categories of consumers. By the said amendment the basis of monthly minimum charges for all categories of consumers was changed by fixing the minimum charges with reference to the diameter of water supply connection as indicated in the following table:
22. Monthly minimum charges for all categories of consumers Diameter of water supplyMonthly minimum Connection charges.
15 mm (1/2 inch) Rs. 55 20 mm (3/4 inch) Rs. 110 25 mm (1 inch) Rs. 200 40 mm (1 1/2 inch) Rs. 640 50 mm (2 inch) Rs. 1120 100 mm (4 inch) and above Rs. 6300
23. In case of agreements for water supply, charges for 60% of the agreed quantity.
24. Under note-2 it is provided that where water supply is provided through more than one connection to the consumer including multi-storied building in the same premises, the tariff is to be applied for the aggregate supply from all the connections and monthly minimum charges are the aggregate of the minimum charges of each of such connections.
25. The Board vide its proceedings B.P.No. 92 dated 12.3.1998 has done away with supply of water through multiple water connections to MSBs and a single water connection of the specified size has been prescribed. The Board through its notification dated 29.5.2002 revised the water tariff, sewerage cess and water supply and sewerage connection charges. In respect of MSBs and non- domestic supplies, it is provided for the first time that where the monthly demand/consumption exceeds 500 KL, the consumers are required to enter into agreements with board for supply of water. It is also provided that 60% of the agreed quantity shall be paid as minimum charges and where such agreements are not entered into the agreed quantity is deemed to be 30KL multiplied by the number of residential apartments in the complex. The sewerage charges are continued to be at 35% of the water supply charges.
26. The tariffs were further revised by the Board through its notification dated 28.9.2004 with effect from 1.10.2004. No changes in respect of water tariff and sewerage cess have been made in this notification. The tariffs were further revised under B.P.No. 117 dated 28.1.2005 where under the slabs and the tariffs were varied in respect of the water charges, but the basis of levy of minimum charges remained the same. Under the impugned notification which was issued on 29.12.2006 and brought into effect from 1.1.2007, monthly minimum charges for individual domestic houses and flats in the MSBs have been fixed on par with each other at Rs.90/- per house/flat per month as the case may be. For the MSBs deemed agreement quantity is fixed at 15KL multiplied by the number of residential apartment complexes. It is stipulated by way of note-1 that in all cases of bulk supplies, multi-storied buildings and non-domestic supplies, where the monthly consumption exceeds 500 kL, the consumers are required to enter into agreements with the Board for supply of water. Under note-2 where the agreed quantity is 500 KL per month and above, the minimum monthly charges levyable shall be the consumption charges for 60% of the agreed quantity. In cases other than the categories of consumers falling under (a) to (d), the size of connection pipe is made the basis for prescribing the minimum charges.
27. A careful consideration of the various notifications shows that the Board has been varying its basis for the levy of minimum charges. The method of levying minimum charges on the size of the pipe which was in vogue prior to the year 2002 was changed under B.P.No. 114 dated 24.5.2002 and in respect of independent residential houses and the multi-storied buildings the minimum charges were prescribed as agreed in the agreement or on the 60 % of the agreed quantity and where the agreements were not entered into, the agreed quantity was deemed to be 30 KL multiplied by the number of residential apartments in the MSBs. The same method has been continued in B.P.No. 116 dated 28.9.2004. In the impugned notification the Board, while continuing the earlier policy of allowing the MSBs whose consumption is above 500 KL to enter into agreements, however for the first time stipulated in the case of MSBs falling under category-II minimum charges of Rs. 90/- per flat per month and similar charges have been fixed for individual domestic houses. The deemed agreed quantity is stipulated as 15KL per flat multiplied by the number of apartments. But in the case of MSBs whose consumption exceeds 500 KL per month the minimum monthly charges levyable shall be the consumption charges for 60% of the agreed quantity.
28. In their counter affidavit the respondents sought to justify the method of levying minimum charges as under:
The Government of Andhra Pradesh, vested with the mandate to supply potable water to the residents of twin cities for drinking and as well as to discharge the function to transmit and treat the sewage water from the city to the Sewerage Treatment Plant (STP) located at the outskirts of the city t curb pollution. The said responsibilities were entrusted to the Hyderabad Metropolitan Water Supply & Sewerage Board consequent to its constitution. The HMWSSB has accordingly employed all its endeavor to supply potable water as well as to transmit and treat the sewage water at STP for disposal. For the said purpose the Board needs to spend huge amounts for land acquisition, laying of sewerage pipe lines, water supply lines, construction and manning of treatment plants etc. eventually to discharge the said functions effectively as per the HMWSS Act in force.
The Board as part of its responsibilities to discharge the functions mandated by the HMWS&S Act incurs huge expenditure towards (i) salaries and wages to staff to an extent of Rs. 84.00 crores per annum (ii) huge power costs to an extent of Rs. 144.00 crores per annum to pump water from long distances to bring water from Singoor, Manjeera and Krishna River for supply of water to the residents of twin cities, (iii) payment of interest and principal of the loans obtained by the Board for creating the needed infrastructure to meet the growing demand for the services. The rates charged and the amount demanded by the Board still remains heavily subsidized for multi-storied buildings as compared to the costs incurred by the Board. Besides, the Board also supplies water, free of cost to the poor people living in slums through Public Stand Posts (PSPs) and water tankers incurring huge expenditure which needs to be met from the water rates levied on different categories of customers including MSBs to balance the revenue generation with the costs incurred from time to time. In addition, the Board is supplying water to the pollution affected villages at Medak district free of cost as per the directions of the Hon'ble Supreme court and the High Court.
29. In para-10 it is mentioned that the concept of levying minimum charges is also in vogue in utilities like electricity and telephones etc., and also in other water supply Boards of the country.
30. The Board has not explained as to why it switched over from the method of levying minimum charges on the basis of the size of the connection pipe as was in vogue till the year 2002. (Even in the present notification the Board continued this procedure for the residuary category of consumers).
31. In the impugned notification, the Board sought to justify fixing of Rs. 90/- per flat as minimum charges by stating:
Under the tariff notification effective from 1st June, 2002 under Notes to Part-II, item No. 2, it has been stipulated that "in all cases of bulk supplies, multistoried buildings and non-domestic supplies where the monthly demand/consumption exceeds 500 KL, the consumers are required to enter into agreement with the HMWSSB for supply of water". In most of the Multistoried Buildings, the consumption recorded has been less than 500 KL and therefore no agreement could be entered into. However, no minimum charges were also prescribed for such multistoried complexes.
In the absence of non-application of the clause pertaining to 60% levy as minimum charge, the Multistoried Buildings were not charged minimum charges. Therefore, since minimum charges are levied even to individual domestic houses, it is deemed appropriate that similar minimum charges should be levied to them to equate the individual flat owners on par with the individual domestic customers. Since the application of 60% levy as minimum charge is not levied under category-II as per the Tariff notification, it is decided to apply and levy minimum charges on par with individual domestic customers. Such an application of the minimum charges can be justified on the principle of equity, besides augmenting additional resources to the board by such levy of minimum charges. This concept of minimum charges is also in vogue in other water utility boards in the country.
32. If failure to enter into agreements is the only reason for not levying the minimum charges at 60% of the agreed quantity, there is absolutely no reason for the board for not entering into agreements with the MSBs irrespective of whether their consumption exceeds 500 KL or not. In the guise of the Board being unable to enforce the minimum charges, it cannot equate two un-equals on par with each other. I find force in the contention of the learned Counsel for the petitioner that there is no justification whatsoever in treating the individual domestic consumer who is supplied with one water connection to be treated on the same footing as the consumer of a residential flat comprised in multi-storied complex which is also allowed to have only one connection. In the absence of any restriction on the size of the pipe, an individual domestic consumer can have connection pipe of any size between 15 mm and 50 mm and a multi-storied building which can also have such a connection, cannot have more than one connection. While, in the case of former an individual consumes the entire water for himself, in the latter case the water received from the connection pipe of the same size will be distributed among number of flats varying from the minimum number of five and without any maximum limit. It is not in dispute that water supply is made for limited hours in a day and in the case of flats comprised in a multi-storied building there is no guarantee that each flat would receive the assumed quantity of 15 KL per flat as in the case of an individual domestic house even if the multi-storied complex has obtained the connection pipe of the maximum size. In cases where the individual domestic consumer and the MSB comprising, say, 25 flats are located in the same area of supply and get the supply from the connection pipes of the same size, the supply hours being uniform to both the consumers, the quantity of water supplied to both of them remains the same. In such a case by applying the procedure laid down in the impugned notification, the Board will collect Rs. 90 from the individual domestic consumer and Rs. 90 from each of the 25 flat owners which comes to Rs. 2,250/-.
33. Thus fixation of uniform minimum charges both for the individual domestic houses and the flats in the multi-storied apartments irrespective of the size and number of the connection pipes, in my opinion appears to be wholly unscientific and unreasonable and the very classification of individual domestic houses and the flats in the multi-storied residential apartments in the same category for the purpose of levying minimum charges does not appear to be based on intelligible differentia. Though specific averment in this regard has been made by the petitioners in their affidavit filed in support of the writ petition, the same has not been specifically adverted to in the counter affidavit of the Board except saying that even an individual domestic house-hold in a slum is being levied Rs. 90/- per month. Such a stand cannot offer a valid justification because nobody compelled the Board to levy the same charges to the slum dwellers on par with the individual domestic consumer.
34. Whether denial of option to MSBs which consume less than 500 KL per month to enter into agreements is reasonable?
35. A close analysis of the concept of minimum charges would reveal that it contains two assumptions which are inbuilt viz., 1) the consumer requires certain quantity, and 2) the supplier is ready to supply such quantity and for that purpose he makes his arrangements to be in a state of readiness at all times to ensure supply upto the guaranteed quantity. In my opinion, these two assumptions transform into reality only if the parties enter into an agreement. Before entering into such an agreement, the consumer and the Board will have the opportunity to know as to what is the minimum quantity a consumer will require and the Board would supply and whether the proposed minimum guaranteed quantity could be delivered through the size of the connection pipe, which is laid to the consumers' premises. The quantity of water delivered depends upon the size of the supply connection pipe and unless the Board and the consumer are satisfied that considering the number of hours of water supply and the size of the supply pipe, the minimum guaranteed quantity could be delivered, it would be hazardous to fix a hypothetical uniform minimum guaranteed quantity as is done under the impugned notification.
36. Further, the quantity which a consumer requires varies from consumer to consumer and the supplier cannot assume that minimum requirement of every consumer is the same. It is therefore necessary that the consumers are given the freedom to enter into agreements and to indicate therein minimum required quantity, which then will be treated as the agreed quantity.
37. As seen from paras 2 and 3 of the notification extracted supra, it is stated that in B.P.No. 114 dated 29.5.2002 it was stipulated that MSBs shall enter into agreements where consumption exceeds 500 KL and that in most of the MSBs the consumption being less than 500 KL, no agreements could be entered into. It was further stated that no minimum charges were prescribed for such MSBs and that since minimum charges are levied to individual domestic houses, it was deemed appropriate that similar charges should be levied to MSBs to equate the flat owners on par with the individual domestic customers. Thus the whole logic and reason behind prescribing minimum charges of Rs. 90/- appear to be failure of MSBs to consume 500 KL to qualify themselves to enter into agreements. But neither in the notification nor in the counter affidavit, the Board explained the significance of the minimum consumption figure of 500 KL per month by the MSBs. It is not the case of the Board that entering into agreements with MSBs which do not consume the minimum quantity of 500 KL per month is economically unviable or not feasible. The Board failed to offer any justification to classify the consumers into two categories on the basis of consumption for the purpose of levy of minimum charges. By making such a classification, the MSBs who are not in a position to consume upto 500 KL per month are denied the freedom to enter into agreements and consequently to avail the facility of payment of 60% of the agreed quantity towards minimum charges in case they fail to consume the agreed quantity. Instead of allowing them to indicate the quantity they require, the Board itself assumed that the guaranteed quantity for each flat in an MSB is 15 KL per month. The Board nowhere revealed the basis for fixing the quantity as minimum for the purpose of levy of minimum charges. If, in a given case the individual flats do not require 15KL per month, it would be wholly arbitrary on the part of the Board to levy and collect minimum charges on the quantity hypothetically fixed by it.
To test the reasonableness or otherwise of fixation of deemed agreed quantity, let me take a case where the occupant of a flat has a small family consisting of two or three persons and his family may not require more than 5 KL of water per month. In such a case if an option is given to him to enter in to an agreement, he may indicate the minimum quantity as only 5 KL and his minimum charges will be accordingly stipulated as Rs. 30 per month or 60% of the agreed quantity which would be Rs. 18 per month at the present level of tariff. By the impugned notification the Board foreclosed such an option. In my considered view it would be highly unreasonable to levy minimum charges without providing option to the consumers to enter into an agreement and opportunity to them to specify therein the quantity required by them. If the consumers in spite of giving such an opportunity do not avail the same, it may then be open to the Board to fix minimum charges on its own as it has done under the earlier notifications.
38. In seeking to justify levy of minimum charges, the Board has drawn parallels with electricity and telephone utilities, but it failed to notice that in case of supply of electricity the suppliers enter into agreements wherein the consumers are given liberty to indicate their requirement of electricity, which is called contracted demand. Minimum charges are levied on the basis of such contracted demands in respect of each consumer and not on the assumed minimum guarantee fixed by the suppliers. Even in case of telephone services, the consumers are provided with different packages giving options to them to choose the package of his choice and minimum charges are levied based on the options given by the consumers. I am therefore of the opinion that the procedure of levying minimum charges based on the unilaterally deemed agreed quantity and without reference to the size of the connection pipe and the possible quantity of water to be supplied by the Board is unreasonable and arbitrary.
39. The contention of the petitioners that fixing the minimum quantity of 500 KL per month as the criterion for entering into agreement is a retrograde step, deserves to be accepted. The respondents neither explained the criterion behind fixing such a limit for entering into an agreement, nor their counsel had denied the argument advanced by the learned Counsel for the petitioners that there is huge disparity in levying minimum charges between the consumers who entered into agreements and those who have not entered into agreements. He gave an illustration where a multi-storied building consisted of 33 flats with the deemed agreed quantity as 495 KL (15 KL x 33) at the applicable tariff of Rs. 6 per KL. They are liable to pay Rs. 2,970/-. But if the same multi-storied complex consumes 500 KL instead of 495 KL they will be liable to pay 60% of the agreed quantity i.e., Rs. 1,800 (60% of 500 KL is =300 KL and 300 x Rs. 6 = Rs. 1,800/-). The learned Counsel contends, in my view justifiably, that there is no rationale at all in denying the benefit of the multi-storied complexes entering into agreements on the ground that their consumption does not exceed 500 KL per month. As contended by the learned Counsel for the petitioners this policy would certainly encourage the residents of the multi-storied complexes to indulge in wastage of water to reach the level of consumption of 500 KL per month to render themselves eligible to enter into agreements.
40. On an analysis of the method of levy as discussed above, I am of the view that the impugned notification falls foul of Article 14 of the Constitution of India on both the counts, namely, it failed to make a proper classification of the domestic consumers for levy of minimum charges and also arbitrarily fixed 500 KL per month as the criterion for entering into agreements.
SEWERAGE CESS:
41. The notification relating to sewer charges reads as under:
The minimum charges payable as indicated above applies to water cess only. 35% of the water supply charges shall be payable in all cases where sewer cess is applicable.
Other customer Existing Proposed
Charges Rs. Ps. Rs. Ps.
15 mm 3.00 5.00
20 mm 4.50 8.00
25 mm 6.00 10.00
40 mm 9.00 15.00
50 mm 12.00 20.00
>50mm Rs. 12 plus Rs. 5 Rs. 20 plus Rs. 5
for each for each
additional 1/2" dia additional 1/2" dia
42. In addition to the minimum charges, the impugned notification envisages levy of 35% of the water supply charges as sewer cess. The grievance of the petitioners is that the amount of sewer cess is being collected by the respondents on the minimum charges and not on the actual water supply charges. The respondents have not offered any justification for collecting these charges on the minimum charges. A plain reading of the notification shows that the sewer cess shall be levied on "water supply charges" and not the "minimum charges". As the very nomenclature "sewer cess" indicates that it is being levied for managing sewer disposal, the activity of sewerage disposal depends upon the quantum of actual discharge of water which in turn depends upon the actual consumption of water. Therefore, the respondents can levy and collect sewer charges on the water actually supplied and not on the minimum charges. This is not only irrational, considering the purpose for which the sewer charges are levied but also the same is contrary to the plain language of the notification.
43. For the reasons aforementioned, I hold that the classification of flats in MSBs alongwith the individual residential houses and levy of uniform minimum charges on them is arbitrary and unreasonable. I further hold that denying the MSBs the option of entering into agreements where consumption is less than 500 KL per month is irrational, arbitrary and invalid. The Board is left free to re- formulate its tariff policy and till then it shall follow the same method as was being followed prior to the coming into force of the impugned notification in case of MSBs to the extent of levy and collection of minimum charges. The excess collection of minimum charges, if any, made from the petitioners shall be adjusted in future bills. I further hold that the Board shall collect sewer cess on the actual water supply and not on the minimum charges. If any excess charges are recovered towards sewer cess they shall be adjusted in future bills. The writ petition is accordingly allowed to the extent indicated above.