PEPSICO INDIA HOLDING PVT. LTD.versusSTATE OF MAHARASHTRA & ORS.

              [2011] 15 (ADDL.) S.C.R. 675

          PEPSICO INDIA HOLDING PVT. LTD.                     A
                             v.
           STATE OF MAHARASHTRA & ORS.
           (CIVIL APPEAL NO. 7780 OF 2011)
                  SEPTEMBER 12, 2011
                                                              B
[DR. MUKUNDAKAM SHARMA AND ANIL R. DAVE, JJ.]

     Water charges - Levy of increased water charges -
Challenged, on ground that it could not be given retrospective
effect - Held: In the instant case, decision was taken by the C
Corporation to increase the water charges based on the
decision of the State Government to increase such rates of
water charges - The Corporation had no other alternative but
to revise the same and follow the increased rates as
demanded by the State Government itself - The State D
Government had increased the water charges and the said
rates were circulated by the Government to the Corporation
in 2001 itself - However, demand for payment of water
charges at the aforesaid increased rates was for some time
kept in abeyance in view of the several representations E
pending at the level of the Government from appellant and
others - But the Government did not change its position -
The appellant is receiving the facility of water supply from the
Corporation and is obliged to pay at such rates which are
demanded by the Corporation as the same rate is being F
charged by the Government - The Corporation cannot be
asked to suffer a Joss for extensive user of water by the
appellant - Although in 2003 a policy decision was taken to
charge half the rate of the increased rate, but later on it was
found that half the rate was not feasible and Corporation's G
financial loss was continuously increasing - That policy
decision of 2003 was a/so a stop gap arrangement and the
said decrease finally came to be amended in the notification
of 2005 - The stand of the appellant that the increased rate

                            675                               H
    676    SUPREME COURT REPORTS [2011J 15 (ADDLJ S.C.R.


A of water charges is being demanded from them on a
  retrospective basis is erroneous and fallacious and not proper
  because it is established from the record that the appellant
  had the knowledge ·about the aforesaid increase in 2001 itself
  when the Government issued the notification intimating such
B increase which fact is an admitted position - There was no
  violation of the water supply agreement between the appellant
  and respondent-corporation nor was there any question of
  giving any retrospective effect to the aforesaid increase.

        Constitution of India, 1950 - Article 14 - Levy of water
C charges - Classification of consumers on basis of user -
  Three categories of consumers - Higher rates for industrial
  consumers using water as a raw material - Held: Requirement
  and use of water by such industrial consumers is huge and
  therefore they are placed as one distinct category or class of
D their o.vn - These industries stand apart from other industries
  and are also differently situated from residential houses -
  There is an intelligible differentia between these three
  categories so there is no discrimination.

E     Appellant-company manufactures non-alcoholic
  beverages using water as one of the raw materials. There
  was a water supply agreement between the appellant and
  the respondent-corporation in terms of which the
  respondents could fix charges for water from time to time
F and increase or decrease the water charges in its
  discretion after giving notice to the consumer.

       In the year 2001, water cess was increased by
  issuance of a Government Resolution. The revision was
  made after drawing a classification differentiating three
G categories of consumers of water, namely:- a) water used
  for purpose of drinking; b) water for industrial use and
  c) Industries where water was being used as a raw
  material as drinking water, for such industries (that is,
  cold drinks, mineral water etc.). Subsequently,
H respondent-corporation issued Circular deciding to
 PEPSICO INDIA HOLDING PVT. LTD. v. STATE OF 677
               MAHARASHTRA
increase its water charges from November.1, 2001 A
onwards. The demand for payment of water charges at
increased rates was, however, kept in abeyance in view
of the several representations pending at the level of the
Government from the appellant and others. The
Government did not change its position and ultimately in B
the year 2005, water rates for industrial consumers using
water as a raw material was notified by the respondent-
corporation to have been revised w.e.f. 01.11.2001.

     Appellant filed writ petition before the High Court    C
questioning the levy of increased water charges on
ground that it could not be given retrospective effect by
the respondent. The High Court dismissed the writ
petition. Hence the present appeal.

    Dismissing the appeal, the Court                        D

     HELD:1. It is establis~ed from all the policy decisions
of the Government for increasing the rates of water
supply charges and also from the resolution of the
Corporation taking a policy decision and also from the E
circulars issued for raising the water charges to 10 times
that the decision was taken by the Corporation to
increase the water charges based on the decision of the
State Government to increase such rates of water
charges. The Corporation supplies water to all needy
persons be it residential houses, industrial units or to F
those industries where water is used as raw material on
"no profit no loss basis". Consequent upon revision of
the rates by the Government at which rate the
Corporation is to make payment to the Government, the
Corporation has no other alternative but to revise the G
same and follow the increased rates as demanded by the
State Government itself. The State Government has
 increased the water charges so far those industries
where water is used as raw material to 10 times and the
 said rates were circulated by the Government to the H
     678   SUPREME COURT REPORTS [2011] 15 (ADDL.) S.C.R.

 A Corporation in 2001 Itself. The fact of such increase was
     intimated to all the persons to whom water was supplied
     by the Corporation including the appellant who was fully
     aware about the aforesaid increase of water charges from
     2001. [Para 37] [700-C-F]
 B
       2. There cannot be any dispute to the fact that in the
   industries like that of the appellant, consumption of water
  is much more than all other types of industries as they
  use water as raw materials. Requirement and use of
  water in these industries is huge and therefore they are
C placed as one distinct category or class of their own.
  These industries stand apart from other industries and
  also differently situated from residential houses.
  Therefore, there is an intelligible differentia between
  these three categories so there is no discrimination. [Para
D 38] [700-G-H; 701-A]

        3. However, demand for payment of water charges
   at the aforesaid increased rates was for some time kept
   in abeyance in view of the several representations
E pending at the level of the Government from the
   aggrieved and affected persons inclu.ding that of the
  appellant. But since the Government did not change its
  position and informed the Corporation to make payment
  at the revised rate which was increased in 2001 itself, the
F Corporation has no other alternative but to release the
  payment of water tax/bill at the increased rate demanded
  by the State Government. Although in 2003 a policy
  decision was taken to charge half the rate of the
  increased rate i.e. five times instead of ten times, at par
G with the industrial uses, but later on it was found that half
  the rate is not feasible and that what is being charged at
  the earlier point of time is required to be paid as
  Corporation'sfinancial loss was continuously increasing.
  That policy decision of 2003 was also a stop gap
  arrangement and the said decrease finally came to be
H
 PEPSICO INDIA HOLDING PVT. LTD. v. STATE OF 679
               MAHARASHTRA
amended in the notification of 2005. [Para 39] [701 ·B·E]       A

     4. The appellant is receiving the facility of water
supply from the Corporation and is obliged to pay at
such rates which are demanded by the Corporation as
the same rate is being charged by the Government. The
                                                                8
Corporation cannot be asked to suffer a loss for
extensive user of water by the appellant using water as
raw material for its business as it is discharging its public
and welfare duty for supplying water to help and assist
industries like the appellant. The stand of the appellant       C
that the increased rate of water charges is being
 demanded from them on a retrospective basis is
 erroneous and fallacious and not proper because it is
 established from the record that the appellant had the
 knowledge about the aforesaid increase in 2001 itself
 when the Government issued the notification intimating         D
 such increase which fact is an admitted position.
 Therefore, there is no violation of clause 27 of the water
 supply agreement between the appellant and respondent·
 corporation nor is there any question of giving any
 retrospective effect to the aforesaid increase. [Para 40]      E
 [701·F·H; 702-A]

    CIVIL APPELLATE JURISDICTION : Civil Appeal No.
7780 of 2011.

    From the Judgment & Order dated 4.11.2009 of High           F
Court of Judicature at Bombay in Writ Petition No. 5834 of
2005.

     L. Nageshwara Rao, Divyam Agarwal, Dbeeraj Nair,
Santosh for the Appellant.                                      G

     Shyam Divan, G. Pal Swati Sinha, Taruna A. Prasad (for
 Fox Mandal & Co.), Sanjay V. Kharde, Dushyant Parashar,
 Asha Gopalan Nair for the Respondent.

     The Judgment of the Court was delivered by                 H




                                                          '
      680     SUPREME COURT REPORTS [2011] 15 (ADDL.) S.C.R.


 A          DR. MUKUNDAKAM SHARMA, J. 1. Leave granted.
            2. The appeal is directed against the judgment and order
      dated 04.11.2009 passed by the High Court of Judicature at
      Bombay in Writ Petition No. 5834 of 2005. The said Writ
      Petition was filed by the appellant herein questioning the levy
8
      of increased water charges on ground that it cannot be given
      retrospective effect by the respondent herein.

       3. The facts leading to the filing of the present appeal are
  that the appellant - PepsiCo India Holdings Pvt. Ltd. is
C incorporated in India under the Companies Act, 1956 for
  manufacturing and distributing carbonated soft drinks, bottled
  drinking water and other food products. Appellant stated that it
  is one of the leading manufacturers of Carbonated Soft Drinks
  and bottled drinking water iri the entire State of Maharashtra
D and a significant portion of the entire national demand for the
  appellant's product is met from the production made within the
  State of Maharashtra itself.

        4. The State of Maharashtra, represented by Secretary,
  Deptt. of Industries, Mantralaya is respondent no. 1, the
E Maharashtra Industrial Development Corporation ["MIDC"] is
  respondent no. 2 which is responsible for infrastructure required
  for any industry, i.e. land, water and electricity. All the Industrial
  Estates of State Gcvernment in Maharashtra come under the
  purview of respondent no. 2. MIDC at Roha Div. Alibag is
F respondent no. 3 and is the branch of respondent no. 2 and
  shares the same objective. Department of Irrigation is
  respondent no. 4 and is responsible for the supply of water to
  all industrial estates under respondent no. 2 in Maharashtra.

G         5. The appellant stated that respondent no. 2, acting
     through respondent no. 3 invited business undertakings to set
     up industrial units in the industrial areas to add impetus to
     industrial development in the State of Maharashtra. Accordingly,
     the appellant decided to set up its manufacturing plant in the
H    State of Maharashtra at Paithan, Distt. Aurangabad and Roha,'
PEPSICO INDIA HOLDING PVT. LTD. v. STATE OF 681
MAHARASHTRA [DR. MUKUNDAKAM SHARMA, J.J
Dist. Raigad. In this case, however, we are concerned with the     A
manufacturing plant of the appellant located at Roha.

     6. The primary business of the appellant is to manufacture
non-alcoholic beverages in its plant and for the manufacturing
of the same, water is used as one of the raw materials.
                                                                   B
      7. The plant from where the appellant operates its unit at
Roha, Maharashtra was earlier owned by another company by
the name Valtas India Limited. The said company had entered
into a Water Supply Agreement with respondent no. 3 for its
facilities at Dhatav, Roha under the Water Supply Regu!ation       C
Act, 1973.

     8. There are regulations in respect of supply of water,
namely, 'Maharashtra Industrial Development Corporation
Water Supply Regulations'. Regulation 2(2) defines D
"Consumer", which means any person or persons who has
applied for supply of water from any works of the Corporation
and to whom MIDC has agreed to supply water or any person
or persons otherwise liable for payment of water charges to the
Corporation. Clause 27 of the Water Supply Agreement E
provides that the Respondents shall fix charges for water from •
time to time and increase or decrease the water charges in its
discretion after giving notice of one month to the consumer.
Clause 36 of the Water Supply Agreement provides for penalty
in case of failure on part of the consumer to pay the water bill.
Clause 27 of the Water Supply Regulations, 1973 are as F
under:

     "Clause 27: Water Rate: The charges for water shall be
     fixed by the Corporation from time to time. The
     Corporation shall increase or decrease the water charges      G
     in its discretion after giving notice of one month to the
     consumer. The rates of water charges so fixed or altered
     shall be conclusive and be binding on the consumers."

 Regulation 28 provides for recovery of arrears on account of      H
      682   SUPREME COURT REPORTS [2011) 15 (ADDL.) S.C.R.

 A water charges or any other expenses incurred by the
   Corporation in connection with water supply to the consumer,
   which shall be recoverable as arrears of land revenue. The
   Corporation also has the right to disconnect the water supply
   in the event of contingencies provided under the regulations.
 B
        Regulation 35 is in respect of Water Rate, which reads as
   under:

          "Regulation 35: Water Rate: The consumer shall pay the
         charges for water supply which shall be fixed by the
 c        Corporation from time to time. The Corporation shall
         increase the water charges in its discretion after giving
         notice of one month to the consumer. The rates so fixed
         or altered by the Corporation shall be final and binding on
         the consumer."
D
  Regulation 36 provides for recovery of arrears as land revenue.
  Clause 42 of the agreement provides for a forum of Chief
  Engineer, MIDC, for resolution of the disputes arising out of
  interpretation or otherwise of the regulations and that the
E decision of the dispute resolution authority shall be final and
  binding on the consumer. Regulation 51 provides that for
  disputes arising out of the interpretation or otherwise of the
  provisions of the Agreement, the decision of the Chief Engineer,
  MIDC shall be final and t:inding on the consumer.

F      9. Appellant purchased its plant at 100/1, A-Road, MIDC,
  Dhatav, Roha, Dist!. Raigad from Voltas Limited, the original
  owners of the property. Voltas issued its no objection to transfer
  water connection in the name of the appellant. Since then, the
  respondent no. 3 has been issuing all the water bills in the name
G of the appellant.

       10. Respondent no. 4 while acting upon a recommendation
  of the Finance Commission issued Government Resolution No.
  WSR 1001/(5/2001)/IM (P) dated September 12, 2001
H increasing the water cess. The revision was made after drawing
 PEPSICO INDIA HOLDING PVT. LTD. v. STATE OF 683
 MAHARASHTRA [DR. MUKUNDAKAM SHARMA, J.)
a classification differentiating three categories of consumers       A
of water, namely:-

    "Category 1 - Water used for purpose of drinking - present
    rates of water cess doubled.

    Category 2 - Water for industrial use - present rates of         B
    water increased three times.

    Category '3 - Industries where water is being used as a
    raw material as drinking water,--for such industries (that is,
    cold drinks, mineral water etc.} - present rates of water        c
    increase ten times".

     For category 3 this is what was provided:-

     xxxxxxxxxxxxxxx
                                                                     D
    xxxxxxxxxxxxxxx
    AS "Drinking water industries where water is being used
    as raw material means cold drinks, breweries, mineral
    water and similarly based industries."
                                                                     E
    Above increase in rates was made effective from 1st
September, 2001 ~s per clause A4.

     11. The old rate.of water was Rs. 3.65 per cubic meter
which was increased to Rs. 36.50 pcm from September 1,               F
2001 for industries where water is being used as a raw material
as drinking water. It was also specified that the revised rates
would increase by 15% in the month of July of every following
year.
    12. Consequently, the appellant was placed in the third G
category i.e. industry using water as raw material. On that basis,
the appellant was directed to pay water cess, on increased
rates. Subsequently, some industrial associations/
organisations/ industrialists made representations to the State
Government requesting it not to increase the water cess.           H
        684    SUPREME COURT REPORTS (2011] 15 (ADDL.) S.C.R.


    A      13. On October 24, 2001 the respondent no. 4 issued
      another Govt. Resolution Errata No. WSR 10001 / (5/2001 )/IM
      (P). The corrigendum changed the increased water cess from
      the new rates of Rs. 36.50 pcm to Rs. 40 pcm and made the
      same effective from September 1, 2001 with a clarification that
    B while deciding/fixing water rates vide Government Resolution
      No. WSR 1001/(5/2001)/IM (P) dated September 12, 2001,
      some deficiencies were left out and the same are being
      removed by Errata dt. 24.10.2001 with the following resolution:

              "A(3), In. the industries where water is being used as raw
    c       material as drinking water, for such industries (i.e. Cold
            Drinks, Mineral Water etc.) present rates, (which have
            been made effective from 01/07/2000) are being 1)1ade 10
            times.

    D       A (4) Above increase in rates shall be effective from 1st
            September, 2001"

           14. On 31.10.2001, respondent no. 2 issued a Circular No.
      G/30/2001 deciding to increase its water charges levied on the
.   E consumers   and thereby implementing the revised rates of water
      charges from November 1, 2001 onwards. Relevant portion of
      the Circular is reproduced hereunder:

            "Pursuant to the policy decision taken during 246th
            meeting of Board of Directors of MIDC he1d on 3.10.1997
    F      and as approved by the Sub-Committee of the Corporation
           appointed for that purpose, the Corporation has issued
           revised rates of water supply from 1.4.2001 vide the
           Circular under reference No. 1. Thereafter the Irrigation
           Department of Government of Maharashtra have· issued
    G      revised rates of water supply for drinking and for industrial
           use vide the aforesaid reference No.2. The prevailing
           charges for drinking water have been doubled (from
           1.7.2000) and water charges for industrial use have been
           increased three times (from 1.7.2000). It has been
    H      mentioned that the said increase in rate is effective from
PEPSICO !NOIA HOLDING PVT. LTD. v. STATE OF 685 ·
MAHARASHTRA [DR. MUKUNDAKAM SHARMA, J.]
   the date 1st September, 2001.                                  A
    Due to this increase in water charges, the amount to be
    paid by the Corporation to the Irrigation Department would
    be increased and therefore, it is inevitable for the
    Corporation to increase its water charges. Pursuant
    thereto the Corporation has decided to implement the          8
    revised rates of water charges from the date 1.11.2001.

    Revised rates to be implemented from 1.11.2001 have
    been mentioned in the accompanying schedule No A-1 to
    ~5.                                                           c
    While determining the revised rate of water supply the
    prevailing water charges for domestic use have been
    increased by Rs.0.25 per c.m. while for industrial usage it
    has been increased by Rs. 6.50 p.c.m. and accordingly the
                                                                  0
    revised rates have been made applicable to all the
    concerned consumers from the date 1.11.2001.
    As stated above, all the Executive Engineers are
    requested to issue a separate circular regarding increase
    of water charges and to supply it immediately to all the      E
    consumers as per the accompanying form.

    Water consumed by the consumers from the date
    1.11.2001 should be charged at the revised rates."

     15. On 06.12.2001, respondent no. 2 issued a Circular No. F
G-32/2001 informing the industrial organisations that the
proposed increase in rates is due to the increase in water
charges effected by n;ispondent no. 4 and till the time
respondent no. 4 does not withdraw the increase in water
charges, the respondent no. 2 cannot reduce the water rates. G
It was further stated that representations received have been
forwarded to the Government and therefore during the
pendency of the said representations, ·the industrialists can pay
the water bills at previous rates. On 13.08.2002, respondent
no. 2 issued another Circular informing the pendency of H
    686     SUPREME COURT REPORTS [2011] 15 (ADDL.) S.C.R.

 A representations before the Government, in which it was also
   stated that industrialists are allowed to pay the bills at the old
   rates and the same should be accepted and the balance
   amount should be shown as arrears.

       16. On 28.11.2002, respondent no. 4 issued a fresh Govt.
 8 Resolution No. SANKIRN 2002/(148/2002)/IM (P), whereby the
   water cess for different categories was amended as folfows:-

          "Category 1 - Water used for purpose of drinking - present
          rates of water cess doubled.
c         Category 2 - Water for industrial use - present rates of
          water increased doubled.

          Category 3 - Industries where water is being used as a
          raw material as drinking water, for such industries (that is,
D         cold drinks, mineral water etc.) - present rates of water
          increase ten times."

      . 17. By the above amendment, the only change was made
  in category 2 and no change was made for the use of water by
E the Industry where water is being used as a raw material.

        18. On 27.05.2003, a Circular No. G/06/2003 was issued
  by Chief Engineer (Head Office) MIDC, Mumbai 93 stating
  about the water tariff increase and thereby confirming the rates
  set out vide Govt. Resolution dated 28.11.2002. The said
F Circular provided for the amended policy of water supply of
  industrial and residential use, which was required to take effect
  from June 1, 2003. On the same day respondent no. 2 issued
  another Circular No. Gn/2003 wherein the rate of water supply
  of the consumers under the industrial area using water as raw
G material was fixed at same as of the rates in industrial area.
  Relevant portion of the Circular is reproduced hereunder:
        "1. As per the Circular dated 24.10.2001 of the Irrigation
        Department, water rate is increased for industrial use -
H       water rate 200 percent for residential use - water rate 100
   ''




PEPSICO INDIA HOLDING PVT. LTD. v. STATE OF 687
MAHARASHTRA [DR. MUKUNDAKAM SHARMA, J.]
  percent for use water as raw material - water rate at 1000 A
  percent. For recovering the increasing rate in water
  charges, by amending the rate of water supply of
  Corporation, were made applicable by Circular No. G/30
  dated 31.10.2001 and the rate for use water as raw
  material, the rates were made applicable as per Circular B
  No. G/17 dated 30.7.2002, with effect from 01.11.2001.
  The Corporation had raised the issue/representation
  against this price revision with the State Government. The
  said case/representation seeking reduction in water rate
  was under consideration of Government. Therefore, c
  approval was given to accept the bills of wate• supply at
  old rate from the Industrialists under the industrial area as
  per Circular No. G/31 dt. 6.12.2001 and Circular No. GI
  18 dt. 13.8.2002 of this Office. Similarly, it was informed
  by Circular No. G/433 di. 26.11.2001 not to increase rate D
  of water supply at the placed where water charges are not
  payable to the Irrigation Department for industrial area.

  2.      Now as per the circular dated 28.11.2002 of the
  Irrigation Department, the water rate for industrial use has
  been decreased from 200 percent to 100 percent. The             E
  increase in residential use and use water as raw materials
  is confirmed. The amended rates are made applicable
  from 1.9.2001. As per circular dt. 28.11.2002, the Irrigation
  Department has increased 15 percent increase from
  1.7.2002 and 15 percent increase from 1.7.2003.                 F

  5.    The rate of water supply of the consumers under
  the Industrial area using water as raw material will be the
  same as of the rates in Industrial area. However, the rate
  of water of such consumers outside industrial area be           G
  charged by including difference of rates of water tax.

   6. The representations seeking reductions of water
   charges are under the consideration of Government.
   Therefore, though the bills are sent to the consumers at
                                .
   increased rate, the concession was given to pay the same       H
     688      SUPREME COURT REPORTS [2011] 15 (ADDL.) S.C.R.


 A          at the earlier rate (of prior to 01.11.2001 ). For this reason,
            the arrears to that extent and late charges thereon have
            been shown in the bills of consumers, however, the rates
           during the period from 01.11.2001 to 31.05.2003 and the
           bills may not be revised presently. The decision in that
 B         regard will be issued separately. All consumers will be
           bound to pay the bills of water at the rate of water supply
           in this circular is made applicable from 01.06.2003."

  In this view of the matter, no final decision was taken for the
C bills relating to the period from 01.11.2001 to 31.05.2003. The
  Maharashtra Industrial Development Corporation an
  undertaking of the Maharashtra Government issued a Policy of
  water supply and made it effective from 1st June, 2003.

         19. On 11.06.2003, the respondent no. 2 issued Circular
D No. G/08/2003 revising rates of water supply for the period from
   November 1, 2001 till May 31, 2003. It was specified that for
  the period November 1, 2001 to November 30, 2002, the
   different amount as per the revised rates should be shown as
  arrears in the water bills. It was mentioned that if an undertaking
E is given by the consumer to pay the arrears, then the arrears
  would not be shown. Further, for the period from December 1,
  2002 to May 31, 2003, the arrears calculated as per the revised
  rates were to be retrospectively recovered from the consumer
  in three equal monthly instalments.
F      20. On 18.05.2005, respondent no. 2 vide its Circular No.
  G/01 /2005 revised the rates in respect of water supply to the
  customers in industrial area using water as raw material.
  Respondent no. 2 specifically observed that Circulars dated
  27.05.2003 and 11.06.2003 provided for amended policy,
G which implemented equal rates for all types of industries. By
  Circulars dated 27.05.2003 and 11.06.2003 3qual rates were
  fixed for the water supply to all industries including the industries
  using water as raw material in industrial area. Relevant part of
  the Circular is reproduced hereunder: -
                                                                    ;-




PEPSICO INDIA HOLDING PVT. LTD. v. STATE OF 689
MAHARASHTRA [DR. MUKUNDAKAM SHARMA, J.]

    "B. In accordance with Government Resolution dated A
-   28.11.2002 of the Irrigation Department, the rates of using
    residential water use and industrial water use under the
    Industrial area and outside the area by Circular No. G/7/
    2003 and by Circular No. G-8 dated 11.6.2003, the orders
    are issued regarding as to how the said rates should be B
    implemented.

     C. By these circulars, equal rates are fixed for the water
      supply to all industries including the industries using water
      as raw material in industrial area. However, while
      implementing this policy it is found that in some industrial C
      area, the use of water by industries which are using water
      as raw material, is in huge extent. Since the rates of water
    . use as raw material, are more than five time of the water
      tax rate of general industrial use, the financial burden of
      amount of difference is falling on Corporation. With a view D
       not to put financial burden of such type on Corporation, the
       decision of amending the rates of water sypply of the
       customers using water as raw material under the Industrial
       area, has been taken. The rates of water supply of such
       customers be amended as follows: -                           E

     1) Revised rates: -

     By extending the rates by Rs. 34.60 per c.m. of water
     supply of respective industrial area issued by issued under
     Circular No. G/7 dated 27/05/2003, the rates of water         F
     supply be amended from 1/11/2001.

     2) Recovery of Bills of water supply: -

       (i)   For the period from 01/11/2001 to 30/11/2002 - G
             The water-tax be levied at revised rates for the
             aforesaid period. The amount of difference drawn
             by amended rates of water be shown as arrears.
             On the amount comes due to difference in rate of
             water during this period, late fee may not be
                                                                   H.
        690      SUPREME COURT REPORTS [2011] 15 (ADDL.) S.C.R.

  A                     charged. The amount of arrears may not be shown
                        in the monthly bill of water and for recovery of this
                       amount, undertaking be taken from the customers
                       on court-stamp paper of Rs. 20/-. In respect of the
                       said arrears, separate orders will be issued as per
 B                     the decision of Irrigation Department.

              (ii)     For the period from 01/12/2002 to 30/04/2005 -
                       For the aforesaid period. the amount of difference
                       of amended bill be recovered in six equal
                       instalments. First instalment be recovered with the
 c                    bill of May, 2005 and last instalment be recovered
                      with the bill of October, 2005. On the arrears of
                      amount of its difference, no late fees be charged
                      till 30.11.2005.

 D            (iii)    Recoverv of bills of water supply from 1/5/2005 -
                       The recovery of further bills from 1/5/2005 be made
                       regularly by amended rates of water supply as
                      "above."

E       21. On 06.06.2005, the Deputy Engineer of respondent no.
   2 issued a letter to the appellant regarding revision of water
   rates for the consumers within the Industrial Area using water
  as raw material. By the said letter respondent no. 2 informed
  the appellant that respondent no. 4 had increased the rate of
  royalty by five times w.e.f. 01.09.2001 for consumers within the
F Industrial Area using water as raw material and appellant was
  further informed that its rate has been revised to Rs. 48.10 pcm
  w.e.f. 01.09.2001. The Deputy Engineer proposed recovery of
  water charges in the following manner:
G            (1) The water bills at revised rate will be paid regularly by
      the appellant from 01/05/2005 onwards. Accordingly, May 2005
      bill is prepared & issued at the rate of Rs. 48. 10 pcm.
       (2) The water bills for the period 01 /11 /2001 to 30/1112005
H revised as per revised rate. Differential amount given in
 PEPSICO INDIA HOLDING PVT. LTD. v. STATE OF 691
 MAHARASHTRA [DR. MUKUNDAKAM SHARMA, J.]

separate page in tabular form amount to Rs. 69,97 ,385/-. A
However, the recovery of i!oe differential payment will be kept
in abeyance till the issue of royalty payment for this period is
resolved by the Irrigation Department. For arrears of this period
appellant will have to give an undertaking on the stamp paper
of Rs. 20/- regarding payment of water charges to this office. B

     (3) For making differential payment of water bills as per
revised rates for the period from 01/12/2002 to 30/04/2005
amounting to Rs. 1,57 ,62,618/- appellant will be allowed six
monthly equal instalment of Rs. 26,27, 103/- each.
                                                                 c
    The appellant was directed to pay the instalments failing
which the amount would be charged along with interest to be
calculated after six months.

      22. On 24.06.2005, respondent no. 3 issued another letter D
to the appellant reiterating the observations made by the Deputy
Engineer, MIDC, and reminding the appellant about the
increased water rates for consumers using water as a raw
material with effect from 01.11.2001. Through this letter
appellant was directed to submit bank guarantee of Rs. E
69,97,385/- towards differentia.I amount due to revision of water
 rates and to pay Rs. 1,57,62,618/- being differential amount
 from December 1, 2002 to April 30, 2004 in six equal
 installments of Rs. 26,27, 103/- each from May 2005 to October,
 2005.
                                                                 F
      23. Thereafter, Mis. Waluj Industrial Association Paithan,
 Aurangabad, who was facing the similar situation as the
 appellant herein, filed Writ Petition No. 4263 of 2005 before
 the High Court of Judicature at Bombay, Aurangabad Bench,
 challenging the circulars and notices issued by respondents. In G
 the said case similar·agreement and the same regulation were
 applicable to the writ petitioner as the present appellant.
  Relevant part of the Judgment delivered by the High Court and
  having relevance to the present case is reproduced hereunder:
                                                                 H
        692      SUPREME COURT REPORTS [2011] 15 (ADDL.) S.C.R.


    A          13. In view of the clauses referred to above, contained in
              Water Supply Regulations and Water Supply Agreement,
              conclusion can be drawn that the Corporation is within its
              right to revise water rates. It is a common grievance made
              by the petitioners, firstly that prescribing exorbitant water
    B         rates is unreasonable for which there is no basis. It is also
              contended that levy of water charges with retrospective
              effect is not permissible.

             14. Respondents have placed on record Government
             Resolution dated 24.10.2001 whereby it has been directed
c            by the State Government that royalty for lifting water by
             MIDC from the Irrigation Department shall be at the rates
             prescribed in the said Resolution. The aforesaid
            Resolution prescribed different rates in respect of use of
            water for normal industrial use as well as for user of water .
D           for manufacturing activity where water is used as a raw
            material. The Corporation issued notices to different
            industrial establishments in respect of revision of water
           rates and made demand in respect of payment of water
           charges at revised rates. Although petitioners have made
E          a grievance that levy of water charges is with retrospective
           effect and respective industrial establishments were not
           informed about the revision of water charges on previous
           occasions, however, Respondent-Corporation has
          contended in its affidavit-in-reply that in fact different
F         industrial establishments, operating within the area of
          Industrial Development Corporation, have been specifically
          informed in respect of revision of water rates and their
          liability to pay water charges at revised rates.

         15. During the course of hearing, learned Counsel for
G
         Respondent-Corporation has made available record in
         respect of communications made by petitioners in Writ
         Petition No. 4263/2005 i.e. Waluj Industries Association.
         On perusal of an application tendered by Waluj Industries
         Association on 23.11.2001, it appears that said
H
                                                                  .'




PEPSICO INDIA HOLDING PVT. LTD. v. STATE OF 693
MAHARASHTRA [DR. MUKUNDAKAM SHARMA, J.]
  communication is in response to a Circular dated                A
  05.11.2001 relating to revision of water rates issued by
  MIDC. It is urged in the application that the whole industry
  is passing through a phase of recession and cannot bear
  the hectic increase. The Association has protested against
  the hike in water charges and requested the Corporation         B
  to take up the issue with Irrigation Ministry. A further
  application appears to have been tendered by the
  Chamber of Marathwada Industries and Agriculture on
  16th August 2003 in respect of revision of water rates and
  communications made by the Corporation in that behalf to        c
  respective industrial units. Similar communications find
  place in the record dated 14th July 2003 by Industries
  Association of Young Entrepreneurs, Aurangabad and
  dated 24th July 2003 by the Chamber of Marathwada
  Industries and Agriculture. Many industrial units operating     D
  within the industrial area have tendered undertakings in the
  prescribed form in compliance with the directives issued
  by MIDC. It is, therefore, unacceptable that petitioners were
  not aware of the decision rendered in respect of revision
  of water rates by the Corporation and were also not
  communicated about such decision. Respondent-                   E
  Corporation has also stated on oath that each industrial
  establishment has been communicated in the year 2001
  and thereafter every time in respect of revision of water
  rates by the Corporation.
       I                                                          F
  16. The argument advanced by petitioners regarding
  impermissibility of revision of water rates by the
  Corporation with retrospective effect is not acceptable. On
  perusal of the decisions rendered by the State Government
  in respect of levy of royalty for supply of water to MIDC at    G
  higher rates, contained in various Government Resolutions,
  it is difficult to accept the argument advanced by the
  petitioners that there is no nexus for upward revision of
  water charges by the MIDC. Petitioners have contended
  that no distinction can be made in respect of levy of water     H
    694     SUPREME COURT REPORTS [2011] 15 (ADDL.) S.C.R.


A         charges on account of user of water for normal industrial
          use or for use as a raw material for finished products. The
          distinction made for charging different rates in respect of
          user of water for normal industrial use as well as in respect
          of user as a raw material for manufacturing activity is
B         based on intelligible differentia and is based on sound
          reasoning."

    Consequently, High Court declined to quash the notices and
    disposed of the petition with following directions: -

c         "(i) Respondent - Maharashtra Industrial Development
          Corporation shall be at liberty to levy water charges at
          revised rates. However, so far as portion of water supplied,
          which is being used for manufacture of liquor, beverages,
          etc., wherein water is used as a raw material, Respondent-
D         Corporation would be within their right to recover water
          charges at higher rates, whereas the portion of water
          utilized for the purposes other than the manufacturing
          activity as raw materials, Respondent-Corporation shall
          have to recover water charges at normal rates.
E         (ii) Respondent-Corporation may tender revised bills
          taking into consideration the distinction made above.

          (iii) Respective petitioners may make suitable
          representations to the Respondents in respect of revision
F         of water rates effective from 2002 onwards and on receipt
          of the representations, Respondents shall take appropriate
          decision on considering grievances raised by respective
          petitioners."

G     24. Appellant in the year 2005 filed a writ petition before
  the High Court of Bombay which was registered as WP No.
  5834 of 2005 challenging the Govt. Resolutions passed by
  Respondent no. 4 dated 12.09.2001, 24.10.2001 and
  28.11.2002 along with letters issued by Respondent Nos. 2 &
H 3 dated 6.6.2005 and 24.6.2005 and prayed for quashing the
 PEPSICO INDIA HOLDING PVT. LTD. v. STATE OF 695
 MAHARASHTRA [DR. MUKUNDAKAM SHARMA, J.)
same by issuance of writ of certiorari or such other writ and to     A
direct the respondents to refrain from severing any water
connections with respect to industrial units of t~e appellant. The
High Court vide its order dated 6.9.2005 stayed the operation
of the notices dated 6.6.2005 and 24.6.2005 and allowed the
appellant to continue to pay the bills at the pre-revised/earlier    B
rates and charges. Consequently, however, vide order dated
4.09.2009 High Court dismissed the Writ Petition of the
appellant in terms of the decision of the coordinate ben<;:h of
the said. High Court in Writ Petition No. 4263/2005. The High
Court held in,the following manher: -                      '         c
     "(i) It will be open to the petitioners to submit documentary
     evidence before the respondents showing the water which
     they were using as a raw-material and the water which they
     were using for allied activities. The respondents thereafter
     to complete the entire exercise within 16 weeks from            D
     today.

     (ii) On the petitioners providing such information supported
     by documentary evidence, the respondents to charge the
     petitioners in terms of the directions issued by this court     E
     in writ petition no. 4263 of 2005.

     (iii) Considering direction no. 3 in paragraph 19 of the
     Judgment in Waluj Industries Association, it will be open
     to the petitioners to make suitable representation in
     respect of revision of water rates effected from 2002
                                                                     F
     onwards and on receipt of the represd1tation, the
     respondents shall take appropriate decision after
     considering the grievances raised by the respective
     petitioners."
                                                                     G
     25. Against the said decision of the High Court, appellant
has filed the present appeal, on which, we heard the learned
counsel appearing for the parties. Counsel appearing for the
parties have taken us meticulously through the entire relevant



                                  ,
materials on record.                                                 H
    696    SUPREME COURT REPORTS [2011] 15 (ADDL.) S.C.R.


A       26. Learned counsel appearing for the appellant
  contended that the High Court erred in ignoring that inter se
   classification of jndustrial users on the basis of their usage
   without any reasonable differentia is discnminato1; and that
   respondents are not allowed to categorize industrial users into
B consumers of ·water as raw materials" and consumers for other
  purposes without any reasonable classification. It was
  submitted by him that the notification dated 18.05.2005 being
  prospective in operation and that there being no specific
  stipulation that it would be retrospective in operation, the
c respondent could not demand tax at the revised rate from a
  retrospective date. It was also submitted by him that in view of
  clause 27 of the agreement there could not have been any
  demand from a retrospective date. Counsel also relied upon
  clause 5 of Circular di. 27 .5.2003 and submitted that the rate
  of water supply to the consumers under the industrial area using
0
  water as raw material should be the same as that of the rates
  in industrial area.

       27. Counsel appearing for the respondents, however, not
  only refuted the contentions put forth by the counsel appearing
E for the appellant but also submitted that the demand for
  payment of water tax with arrear, payable by the appellant is
  just and proper, as there wa~ a continuing liability to pay at
  increased rate from the year 2001 itself on the part of the
  appellant but not paid pursuant to the representations filed by
F him. He also submitted that the irrigation department vide its
  circular dated 25th October, 2001 initially increased the rate
  of royalty by 10 times and the same was not altered even upon
  representations submitted by the aggrieved persons including
  the appellant and therefore the demand made, which is a
G subject matter of the appeal, cannot be said to be a
  retrospective demand made by the respondent. It was also
  submitted that industries using water as raw material stands
  clearly on an independent footing than the other industries not
  using water as raw material and, therefore, there is an
H
PEPSICO INDIA HOLDING PVT. LTD. v. STATE OF.                 697
MAHARASHTRA [DR. MUKUNDAKAM SHARMA, J.]
intelligible criteria in making a clear distinction between two      A
categories of industries.

    28. In the light of the aforesaid submissions and the
materials on record, we proceed to dispose of this appeal by
recording our reasons.                                               8
     29. The specific stand of the respondents in respect of
their liability to supply water in lieu of water charges emanates
from their responsibility of making water available to the
residential houses, industries, factories and entrepreneurs and
also to those industries where water is. used as raw material        C
and the corporation does not by itself generates water and
instead of it procure water from the respondent nos. 1 [State
of Maharashtra) and 4 [Department of Irrigation] and provides
the same to the residential houses, industries, factories and
entrepreneurs etc.                                                   D

     30. It is also a specific stand of the respondent that water
is made available by corporation to its allottees at no profit no
loss basis. The corporation obtains water from the Irrigation
Department for which it is obliged to pay royalty and the            E
charges as fixed by the State Government. The Corporation
also has to revise water charges to cover the expenditure of
water, particularly, taking into consideration the increase in
royalty and water charges by the State Government as well as
other factors like increase in price of water purification,
                                                                     F
chemicals, energy charges, laying down pipelines, overhead
tanks and other factors.

    31. There is no dispute with regard to the fact that the State
Government with effect from 1st September, 2001 upon
consideration of the recommendation of the Finance                   G
Commission, Irrigation Commission and National Water Policy
as well as the deficit arising due to the then prevalent low rates
of water supply revised the water rates. Consequent upon the
said revision, the Corporation also had to revise water rates
to put in parity with the charges towards water supply by the        H
    698   SUPREME COURT REPORTS [2011] 15 (ADDL) S.C.R


A State Government. Consequent, there upon in the year 2001
  itself the appellant was intimated the revision of water rates by
  the circular issued by the Corporation on 31.10.2001. A number
  of representations came to be filed from various aggrieved
  persons due to which a Circular dated 6.12.2001 was issued
B permitting the industries to pay at the pre revised/earlier rates
  in order to reconsider old rates in view of the fact that several
  representations were pending and were being considered by
  the State Government. The appellant himself submitted such a
  representation intimating that they are not paying al the
c increased rate in view of the pendency of the issue before the
  State Government. The appellant also in the present
  proceedings has admitted that they had knowledge about the
  increase of water charges in the year 2001 itself.

        32. Another communication dated 28.11.2002 was issued
D by the State Government and in the said communication it was
  stated that there is recession world over in the field of industry
  and taking sympathetic view on the representation submitted
  by the industrialists with the Government, a decision has been
  taken to make some revisions in the rates of water cess of
E industrial use of water. It was, however, made clear in the said
  communication that no change has been made for the use of
  water by the industry producing drinking water and cold drinks/
  breweries where water is being used as raw material. The
  Government resolution communicated by the said resolution
F stated that rates of the industrial use are being doubled but so
  far industries where water is being used as raw material, for
  such industries the rates are being made 10 times.

       33. A communication, however, came to be issued on
G 27.05.2003 by the Maharashtra Industrial Development
  Corporation referring to circular dated 24.10.2001 and
  28.11.2002 issued by the Irrigation Department. By referring
  to Circular dated 28.11.2002, it was stated that _water rate for
  industrial use has been decreased from 200 percent to 100
  percent but the increase in residential use of water as raw
H maierial is confirmed.
  PEPSICO INDIA HOLDING PVT. LTD. v. STATE OF 699
  MAHARASHTRA [DR. MUKUNDAKAM SHARMA, J.]
      34. Consequent upon issuance of the Circulars by the              A
 Government regarding increase in the rate of water charges the
 matter of taking a policy decision in respect of water supply was
 put up before the Board of Directors of the Maharashtra
 Industrial Development Corporation, who had taken a decision
 that the rate of water supply of the consumets under the               B
 industrial area using water as raw material, will be same as of
 the rates in industrial area. It was also intimated therein that the
 representation seeking reduction of water charges is under the
 consideration of the Government and therefore though the bills
 are sent to the consumers at increased rate, a concession was          c
 given to pay the same at the earlier rate.

      35. The Corporation issued yet another circular on
 18.05.2005 and in this Circular reference was made to the
 Government resolution dated 28.11.2002 stating further that
 pursuant to the State Government resolution a circular dated           D
 11.06.2003 was issued stating therein as to how the rates fixed
 by the Government resolution should be implemented. It was
 also stated that by the aforesaid circular dated 11.06.2003
 equal rates are fixed for the water supply to all industries
 including the industries using water as raw material in industrial     E
 area but while implementing the said policy it was found that
 in some industrial areas, the use of water by industries which
 are using water as raw material is in huge extent and that as
 the rates of water use as raw material are more than five tirpe
 of the water tax rate of general industrial use, the financial         F
 burden of amount of difference is falling on the corporation. It
 was also intimated that with a view not to put financial burden
 on the corporation, decision of amending the rates of water
 supply under industrial area has been taken. The rates of water
 supply of such consumers who use water a raw material was              G
 revised by extending the rates by Rs. 34.60 per cm of water
_supply of respective industrial area issued vide circular no. GI
 7 dated 27.05.12003, the rates of water supply was amended
 from 01.11.2001. As to how water bills relating to the period
                                                                        H
    700     SUPREME COURT REPORTS [2011] 15 (ADDL.J S.C.R.


A from 01.11.2001 to 30.11.2002 should be recovered was also
  spelt out in the said notification.

       36. Consequent thereto a letter was written to the appellant
  herein by Deputy Engineer, Maharashtra Industrial Development
8 Corporation, on 06.06.2005 intimating him that he is required
  to pay water bills for the period from 01.11.2001 to 30.11.2005
  as per revised rates.

         37. It is, therefore, established from all the aforesaid policy
   decisions of the Government for increasing the rates of water
C supply charges and also from the resolution of the Corporation
   taking a policy decision and also from the circulars issued for
   raising the water charges to 10 times that the decision was
   taken by the Corporation to increase the water charges based
   on the decision of the State Government to increase such rat
D s of water charges. The Corporation supplies water to all ne
  dy persons be it residential houses, industrial units or to those
  industries where water is used as raw material on "no profit no
  loss basis". Consequent upon revision of the rates by the Govern
  men! at which rate the Corporation is to make payment to the
E Government, the Corporation has no other alternative but to
  revise the same and follow the increase rates as demanded
  by the State Government itself. The State Government has
  increased the water charges so far those industries where
  water is used as raw material to 10 times and t~.e said rates
F were circulated by the Government to the Corporation in 2001
  itself. The fact of such increase was intimated to all the persons
  to whom water was supplied by the Corporation including the
  appellant who was fully aware about the aforesaid increase of
  water charges from 2001.
G      38. There cannot be any dispute to the fact that in the
  industries like that of the appellant, consumption of water is
  much more than all other types of industries as they use water
  as raw materials. Requirement and use of water in these
  industries is huge and therefore they are placed as one distinct
H category or class of their own. These industries stand apart
 PEPSICO INDIA HOLDING PVT. LTD. v. STATE OF 701
 MAHARASHTRA [DR. MUKUNDAKAM SHARMA, J.]
from other industries and also differently situated from              A
residential houses. Therefore, there is an intelligible differentia
between these three categories so there is no discrimination.

      39. However, a demand for payment of water charges at
the aforesaid increased rates was for some time kept in               B
abeyance in view of the several representations pending at the
level of the Government from the aggrieved and affected
persons including that of the appellant. But since the
Government did not change its position and informed the
Corporation to make payment at the revised rate which was             C
increased in 2001 itself, the Corporation has no other
alternative but to release the payment of water tax/bill at the
increased rate demanded by the State Government. Although
in 2003 a policy decision was taken to charge half the rate of
the increased rate i.e. five times instead of ten times, at par
with the industrial uses, but later on it was found that half the     D
rate is not feasible and that what is being charged at the earlier
point of time is required to be paid as Corporation's financial
loss was continuously increasing. That policy decision of 2003
was also a stop gap arrangement which is indicated from
paragraph 6 thereof and the said decrease finally came to be          E
amended in the notification of 2005.

     40. The appellant is receiving the facility of water supply
from the Corporation and is obliged to pay at such rates which
are demanded by the Corporation as the same rate is being             F
charged by the Government. The Corporation cannot be asked
to suffer a loss for extensive user of water by the appellant using
water as raw material for its business as it is discharging its
public and welfare duty for supplying water to help and assist
industries like the appellant. The stand of the appellant that the    G
increased rate of water charges is being demanded from them
on a retrospective basis is erroneous and fallacious and not
proper because it is established from the record that the
appellant had the knowledge about the aforesaid increase in
2001 itself when the Government issued the notification               H
intimating such increase which fact is an admitted position.
   702      SUPREME COURT REPORTS (2011) 15 (ADDL.) S.C.R.

A Therefore. there is no violation of clause 27 nor is there any
  question of giving any retrospective effect to the aforesaid
  increase. It was also submitted that appellant was not paying
  increased water charges as the matter was pending for final
  consideration in view of several pending representations. In the
B pleadings before us, the said fact is clearly proved by the
  statement of the appellant in the affidavit filed.

       41. We have gone through the judgment and order passed
  by the High Court in the coordinate Bench which was followed
  by the High Court in the present case. From the judgment it is
C distinctly indicated that while rejecting the contentions of the
  counsel appearing for the appellant the High Court has
  recorded cogent reasons for rejecting such contentions. We find
  no infirmity in the said reasons. We however make it clear that
  a representation of the nature as suggested by the High Court
D could still be made by the appellant on all the grounds
  specifically mentioned therein and any other valid ground, which
  when filed would be disposed of expeditiously.

       42. Consequently, we find no merit in this appeal and the
E same is dismissed with the aforesaid liberty and leaving the
  parties to bear their own costs.

   B.B.B.                                     Appeal dismissed.