THE CHIEF ENGINEER, WATER RESOURCES DEPARTMENT & ORS.versusRATTAN INDIA POWER LIMITED THROUGH ITS DIRECTOR & ORS.

                          [2023] 1 S.C.R. 507                              507


         THE CHIEF ENGINEER, WATER RESOURCES                               A
                   DEPARTMENT & ORS.
                               v.
       RATTAN INDIA POWER LIMITED THROUGH ITS
                     DIRECTOR & ORS.
                (Civil Appeal No. 8550 of 2022)                            B

                         JANUARY 13, 2023
                [S. RAVINDRA BHAT AND
          PAMIDIGHANTAM SRI NARASIMHA, JJ.]
      Contract: Rights and liabilities of the parties stand crystallized   C
on the date of entering into the agreement – In the instant case,
appellant and respondent No.1 entered into agreement dated
22.05.2012 which categorically stated that respondent No.1 would
pay a sum of Rs.1,00,000 per hectare towards irrigation restoration
charge – On the same day, respondent No.1 also gave an                     D
undertaking that it would pay the stipulated sum within a specific
period of time – Thus, right from the very beginning i.e., in the
sanction order, the demand notice and in all its letters, the appellant
had stipulated a sum of Rs.1,00,000 per hectare as irrigation
restoration charges – In fact, all these communications get subsumed       E
in the agreement dated 22.05.2012 – Thus, respondent No.1 was
not justified in challenging the levy of Rs.1,00,000 when it itself
had agreed to the same – Signing the agreement and issuing an
undertaking would restrain Respondent No.1 from challenging the
levy of Rs.1,00,000 as irrigation restoration charges – Also on the
aspect of differential treatment alleged, government gave reasonable       F
and sufficient explanation.
      Allowing the appeal, the Court
     HELD : 1. The argument that it is the rate prevailing on
the date of grant of in-principle approval which would govern              G
Respondent No.1 is not acceptable. The rights and liabilities of
the parties stand crystallized on the date of entering into the
agreement, which is 22.05.2012. Therefore, the rate prevailing
on 22.05.2012 would govern the parties. [Para 18][514-H; 515-
A]                                                                         H
                              507
508            SUPREME COURT REPORTS                      [2023] 1 S.C.R.


A           2. On the aspect of differential treatment, Respondent No.1
      alleges that it has been discriminated when compared to eight
      other companies. This allegation is denied by the Government
      and they have explained this aspect in their rejoinder filed before
      this Court and also in the counter and sur-rejoinder filed before
B     the High Court. By referring to these records, in as many as four
      power generators are concerned, the in-principle approval
      granted in their favor has itself been cancelled as they had failed
      to execute an agreement with the Appellant. A Central
      Government undertaking was given an exemption since the
      power produced by the said company was to be used for public
C     benefit. One company was charged Rs.50,000 since the
      agreement was entered into on 22.09.2008, and as on that date,
      the prevalent rate was Rs. 50,000 per hectare. Further, one other
      power generator was given an exemption because there was no
      loss of irrigation potential due to diversion of water. Another
D     company was charged Rs. 50,000 per hectare since the water to
      be diverted in favor of the said company was minimal and more
      importantly, that particular area was not a water deficit area. In
      comparison, Respondent No.1 is drawing a high amount of water
      from an area where water is a scarce resource. This is a
E     reasonable and sufficient explanation. [Para 19][515-B-E]
            3.1 The relief claimed in this Writ Petition is similar to the
      prayer in the Writ Petition which was disposed of on 22.11.2012.
      Even in that proceeding, Respondent No.1 had raised similar
      arguments. They were countered by the State by contending that
F     there existed an agreement between the parties which stipulated
      a sum of Rs.1,00,000 as irrigation restoration charges, and
      pursuant to this agreement, Respondent No.1 had even issued
      an undertaking. [Para 20][515-F-G]

            3.2 The High Court merely directed the concerned authority
G     to take a decision on the representations made by Respondent
      No.1 within a period of eight weeks, and if the same came to be
      decided in the favor of Respondent No.1, then Respondent No.1
      could take such measures in law to seek a refund. The High
      Court refrained from granting a stay on the payment of the second
H
 THE CHIEF ENGINEER, WRD v. RATTAN INDIA POWER LTD.THROUGH                      509
                       ITS DIRECTOR


instalment. In compliance with the direction of the High Court,                 A
the Government considered the matter and it rejected the
representation on 29.01.2013. In that view of the matter, the High
Court committed an error in entertaining a fresh writ petition,
which effectively claimed the same reliefs as of the previous one.
The High Court committed a mistake in not only entertaining                     B
the writ petition, but also in supplanting its view over that of the
contract. [Para 20][517-A-C]
      CIVIL APPELLATE JURISDICTION : Civil Appeal No. 8550
of 2022.
                                                                                C
      From the Judgment and Order dated 05.05.2016 of the High Court
of Judicature at Bombay at Nagpur in WP No.4968 of 2015.
       Chander Uday Singh, Sr. Adv., Rajat Sehgal, Nitin Mishra, Ms.
Mitali Gupta, Amjad Maqbool, Advs. for the Appellants.
                                                                                D
      Gopal Jain, Sr. Adv., Mahesh Agarwal, Rishi Agrawala, Ankur
Saigal, Ms. Parul Shukla, Chirag Nayak, E. C. Agrawala, Siddharth
Dharmadhikari, Aaditya Aniruddha Pande, Bharat Bagla, Ms. Kirti
Dadheech, Advs. for the Respondents.
      The Judgment of the Court was delivered by                                E
      PAMIDIGHANTAM SRI NARASIMHA, J.
       1. The short question which arises for our consideration in the
present case relates to whether a party to a contract is entitled to question
the amount of consideration after signing the contract. By adverting to         F
the facts of the case, we have held that Respondent No.1 is estopped
from doing so because the Appellant, in all its communications, had
soughtfor an amount of Rs.1,00,000 as irrigation restoration charges i.e.,
consideration for diversion of water for industrial use, which was earlier
reserved for irrigational purposes. Even the contract entered into between
the parties prescribed the same amount. In fact, Respondent No.1 agreed         G
to the pay the considerationby issuing an undertaking on the date of
signing of the contract. In any case, thiscontractual dispute concerning
the reduction of irrigation restoration charges,was contested by the parties
in an earlier Writ Petition before the High Court of Judicature at Bombay,
                                                                                H
510                SUPREME COURT REPORTS                         [2023] 1 S.C.R.


A     and the High Courtby its order dated 22.11.2012 had dismissed the
      challenge. This is the second round of litigation on the same issue.
             2. This appeal by the State of Maharashtra is against the judgment
      of the Division Bench of the High Court of Judicature at Bombay at
      Nagpur1, whereby the High Court has reduced the ‘irrigation restoration
B     charges’ which the Respondent herein has contracted to pay, from
      Rs.1,00,000 per hectare to Rs.50,000 per hectare. This has the effect of
      reducing the total liability of the Respondent towards irrigation restoration
      charges from Rs. 232.18 Crores to Rs.116.09 Crores.

             3. The matter before us concerns the levy of ‘irrigation restoration
C
      charge’ by the Appellant as per Government Resolution dated 01.03.2009.
      The Respondent and other similarly placed companies use water for
      industrial purposes, which is otherwise reserved for irrigation of
      agricultural land. The usage of water for industrial purposes is seen as
      loss of water for irrigation, and in order to compensate for the same, the
D     said charge is levied and collected by the Appellant. These charges are
      levied after taking into account the total number of hectares which will
      be deprived of irrigation due to the diversion of water for industrial use.
            4. The other cost levied by the Appellant is the ‘capital expenditure
      charge’. This charge is used towards the construction and maintenance
E
      of dams. The payment of this charge is optional. Therefore,in the present
      case, we are not concerned with the levy and payment of the ‘capital
      expenditure charge’.
                Facts:
F            5. On 21.02.2004, the Irrigation Department of the State of
      Maharashtra came up with a circular wherein it was prescribed that
      when water is diverted for non-irrigation purposes, then the entity using
      such water shall pay a sum of Rs.50,000 per hectare as irrigation
      restoration charges. The circular stated that no water shall be diverted
G     unless an agreement is entered into between the concerned industry and
      the government.
            6. Sophia Power Company Ltd.2, the predecessor of Respondent
      No.1 herein, intended to set up a 2640MW thermal power plant. For that
      1
          In WP No. 4968 of 2015 dated 05.05.2016.
H     2
           hereinafter referred to as ‘SPCL’.
 THE CHIEF ENGINEER, WRD v. RATTAN INDIA POWER LTD.THROUGH                     511
      ITS DIRECTOR [PAMIDIGHANTAM SRI NARASIMHA, J. ]


purpose, a communication dated 12.12.2007 was sent by SPCL to the              A
Maharashtra Industrial Development Corporation to confirm the
availability of 240 million liters of water per day to facilitate the smooth
running of the thermal power plant. Pursuant to the application made by
SPCL, a high-powered committee constituted by the State of
Maharashtra in its meeting held on 21.02.2008, granted in-principle            B
approval for the usage of water by SPCL. This in-principle approval
was subject to SPCL paying capital contribution and irrigation restoration
charges. The high-powered committee named the Appellant herein as
the implementing agency.
       7. On 25.07.2008, the Vidarbha Irrigation Development                   C
Corporation granted final approval for the usage of water by SPCL’s
thermal power plant, subject to SPCL paying a sum of Rs.549.98 Crores
comprising of Rs.317.8 Crores as capital costs and Rs.232.18 Crores as
irrigation restoration charge. Irrigation restoration charge stood at
Rs.232.18 Crores since the total number of hectares which would be             D
deprived of irrigation due to the diversion of water to SPCL’s thermal
power plant was 23219 hectares. This essentially meant that SPCL was
directed to pay Rs.1,00,000 per hectare as irrigation restoration charge,
as against the prevalent rate of Rs.50,000 per hectare. Be that as it may,
on 16.08.2008, the Appellant informed SPCL that it would be reserving
the required quantity of water, subject to SPCL paying a sum of Rs.549.98      E
Crores. A demand letter to that effect was also issued by the Appellant
on 26.09.2008.

       8. Notably, on 01.03.2009, the Water Resources Department of
the Government of Maharashtra increased the irrigation restoration
                                                                               F
charges from Rs.50,000 to Rs.1,00,000 per hectare. This circular came
into effect from 01.04.2009.
       9.1 On 25.01.2011, Respondent No.1 for the first time issued a
letter to the Minister, Water Resources Department, Government of
Maharashtra, in protest against the levy of Rs.1,00,000 as irrigation          G
restoration charges. It was of the view that since many other power
manufacturers were given exemption from paying the capital contribution
charge and the irrigation restoration charge, it may also be exempted
from paying the said charges. Pending consideration of this request,
Respondent No.1 requested that they may be allowed to enter into an
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512             SUPREME COURT REPORTS                           [2023] 1 S.C.R.


A     agreement for supply of water as mandated by the circular dated
      21.02.2004. Without entering into an agreement, they could not have
      drawn water from the dam.

              9.2 Respondent No.1 again sent a letter on 25.02.2011, where it
      stated that they may be allowed to pay irrigation restoration charge at
B     Rs.50,000 per hectare in five equal instalments because,when the
      in-principle allocation was made and when the final approval was given,
      the prevalent rate of irrigation restoration charge was Rs.50,000. A similar
      letter was again sent by Respondent No.1 to the Appellant on 01.06.2011,
      whereby in addition to the aforesaid request, Respondent No.1 also asked
C     for an extension to enter into an agreement.In response, through its letter
      dated 08.06.2011, the Appellant granted extension till 31.05.2012 to
      execute an agreement. However, the Appellant made no commitments
      on the other request raised by Respondent No.1 – waiver/reduction of
      the irrigation restoration charge.
D            10. Since Respondent No.1 did not receive any reply on the request
      concerning waiver/reduction of the irrigation restoration cost, it sent a
      fresh communication on 10.05.2012 seeking reduction of the said charge
      and also seeking permission to pay the same in 5 equal instalments. The
      Appellant responded to this request on 17.05.2012, by stating that there
E     shall be no reduction in the irrigation restoration charge. That said, the
      option of paying the said charge in 5 equal instalments was granted.
             11. Ultimately, on 22.05.2012, the Appellant and Respondent No.1
      entered into a water supply agreement. Notably, this agreement states
      that Respondent No.1 shall pay a sum of Rs.1,00,000 as irrigation
F     restoration charge. This agreement indicates consensus ad idem on the
      amount to be paid towards irrigation restoration. In fact, on the same
      day, Respondent No.1 also issued an undertaking to deposit the irrigation
      restoration charge at the rate of Rs.1,00,000 per hectare in 5 equal
      instalments.
G
            12. Six months after signing the water supply agreement,
      Respondent No.1 initiated writ proceedings before the High Court of
      Judicature of Bombay challenging the communicated dated 16.08.2008
      and the demand letter dated 26.09.2008. By its order dated 22.11.2012,
      a division bench of the Bombay High Court refused to quash the
H     communications on the ground that the Respondent No.1 had accepted
 THE CHIEF ENGINEER, WRD v. RATTAN INDIA POWER LTD.THROUGH                      513
      ITS DIRECTOR [PAMIDIGHANTAM SRI NARASIMHA, J. ]


its liability to pay irrigation restoration charge at the rate of Rs.1,00,000   A
per hectare by signing the agreement dated 22.05.2012. The High Court
was of the view that it could not pass any order which would obviate
compliance of the agreement. However, the High Court held that
Respondent No.1’s plea for reduction of the irrigation restoration charge
shall be decided within a period of 8 weeks, and if the same is decided         B
favorably, then it would be open for Respondent No.1 to pursue
appropriate remedies in law – to seek a refund or adjust the excess
amount paid.

       13. In compliance of the order passed by the High Court, the
Water Resources Department of the State of Maharashtra considered               C
the request of Respondent No.1 for reduction of the irrigation restoration
charge,and through its order dated 29.01.2013, rejected the said request.
The reason given by the Department was that the State had never
committed to any reduction and also that Respondent No.1 itself had
signed the agreement dated 22.05.2012, which stipulated Rs.1,00,000             D
per hectare as the irrigation restoration charge. Immediately thereafter,
the Appellant also issued a demand letter.

       14. Aggrieved by the rejection of its representation, Respondent
No.1 preferred a writ petition before the High Court of Judicature of
Bombay at Nagpur challenging the decision dated 29.01.2013. The High            E
Court by the impugned order, allowed the writ and directed Respondent
No.1 to pay irrigation restoration charges at Rs.50,000 per hectare. The
High Courtcame to this conclusion by holding that the rate prevailing on
the date on which the in-principle approval was granted by the high-
powered committee would determine the cost of irrigation restoration
                                                                                F
charge.The High Court was of the view that since the total quantity of
water used and total loss of water for irrigation was calculated on the
date of grant of in-principle approval, it would be appropriate for the rate
prevailing as on that date to govern the irrigation restoration charge. It is
this order which is impugned before this Court.
                                                                                G
      Submissions of the parties:
       15. Shri Chander Uday Singh, learned Senior Counsel appearing
for the Appellant contended that the impugned order is in the teeth of the
agreement dated 22.05.2012 entered into between the Appellant and
Respondent No.1. It is his case that the after accepting Rs.1,00,000 as         H
514             SUPREME COURT REPORTS                            [2023] 1 S.C.R.


A     irrigation restoration charges, Respondent No.1 is not entitled to challenge
      it. The substance of his argument was that a contract is sacrosanct and
      it must be respected.

              16. Shri Gopal Jain, learned Senior Counsel appearing for
      Respondent No.1 contended that – (i) it is the rate prevailing on the date
B     of grant of in-principle approval by the high-powered committee which
      would govern Respondent No.1. It is his case that the irrigation restoration
      charge is directly linked to the date of approval/sanction, and on the
      relevant date, since the circular dated 21.02.2004 was applicable, the
      Appellant could have only levied Rs.50,000 per hectare as irrigation
C     restoration charges; (ii) a few similarly placed companies were given
      the relief which Respondent No.1 was seeking; (iii) the undertaking given
      by Respondent No.1 after signing the agreement was not an unconditional
      one. This undertaking was subject to the outcome of the numerous
      representations made by Respondent No.1 for reduction of the irrigation
D     restoration charge; (iv) the Government Circular dated 01.03.2009 will
      apply prospectively and will not apply to ongoing contracts. Shri Jain
      contended that if the said circular is given retrospective effect, then it
      would undermine certainty.

             Analysis
E
              17. In the present case, the Appellant and Respondent No.1 had
      entered into an agreement on 22.05.2012. This agreement categorically
      stated that Respondent No.1 would pay a sum of Rs.1,00,000 per hectare
      towards irrigation restoration charge. Therefore, the Respondent No.1
      is not justified in challenging the levy of Rs.1,00,000 when it itself had
F     agreed to the same. In fact, on the same day, Respondent No.1 had also
      issued an undertaking that it would pay the stipulated sum within a specific
      period of time. We may note here that right from the very beginning i.e.,
      in the sanction order, the demand notice and in all its letters, the Appellant
      had stipulated a sum of Rs.1,00,000 per hectare as irrigation restoration
G     charges. All these communications get subsumed in the agreement dated
      22.05.2012.Therefore, we are of the view that signing the agreement
      and issuing an undertaking would estop Respondent No.1 from challenging
      the levy of Rs.1,00,000 as irrigation restoration charges.

              18. We are not impressed with the argument of Shri Gopal Jain
H     that it is the rate prevailing on the date of grant of in-principle approval
 THE CHIEF ENGINEER, WRD v. RATTAN INDIA POWER LTD.THROUGH                      515
      ITS DIRECTOR [PAMIDIGHANTAM SRI NARASIMHA, J. ]


which would govern Respondent No.1. The rights and liabilities of the           A
parties stand crystallized on the date of entering into the agreement,
which is 22.05.2012.Therefore, the rate prevailing on 22.05.2012 would
govern the parties.
       19. On the aspect of differential treatment, Respondent No.1
alleges that it has been discriminated when compared to eight other             B
companies.This allegation is denied by the Government and they have
explained this aspect in their rejoinder filed before this Court and also in
the counter and sur-rejoinder filed before the High Court. By referring
to these records, we have noted that in as many as four power generators
are concerned, the in-principle approval granted in their favor hasitself       C
been cancelled as they had failed to execute an agreement with the
Appellant. A Central Government undertaking was given an exemption
since the power produced by the said company was to be used for public
benefit. One company was charged Rs.50,000 since the agreement was
entered into on 22.09.2008, and as on that date, the prevalent rate was
Rs.50,000 per hectare. Further, one other power generator was given             D
an exemption because there was no loss of irrigation potential due to
diversion of water. Another company was charged Rs.50,000 per hectare
since the water to be diverted in favor of the said company was minimal
and more importantly, that particular area was not a water deficit area.
In comparison, Respondent No.1 is drawing a high amount of water                E
from an area where water is a scarce resource. This is a reasonable
and sufficient explanation.
       20. We are not satisfied with the approach adopted by the High
Court when Respondent No.1 itself has willfully and deliberately entered
into an agreement knowing fully well the legal and business                     F
consequences. In fact, the relief claimed in this Writ Petition is similar to
the prayer in the Writ Petition which was disposed of on 22.11.2012.
Even in that proceeding, Respondent No.1 had raised similar arguments.
They were countered by the State by contending that there existed an
agreement between the parties which stipulated a sum of Rs.1,00,000             G
as irrigation restoration charges, and pursuant to this agreement,
Respondent No.1 had even issued an undertaking. After taking note of
the contentions, the High Court held as follows:
      “5. The record before the Court would indicate that even prior
      to the execution of the agreement the Petitioners had by a                H
516     SUPREME COURT REPORTS                       [2023] 1 S.C.R.


A     letter dated 12 May 2010 accepted the liability to pay an
      amount of Rs. 232.18 crores in five instalments. However, since
      a representation had been submitted to the Government for
      charging of irrigation restoration charges at the rate of
      50,000/- per hectare instead of Rs.1 lakh per hectare, the
B     Petitioners stated as follows:
         “Without prejudice to IPL’s right made in the representation
         which is pending with the State Government, it is confirmed
         that IPL will be willing to execute the agreement before
         31st May 2012 on the conditions mentioned at 2 a) & 2 b)
C        above. However, we will like to clarify that in the event of
         our representation at 1 is decided in our favour, the amount
         payable towards irrigation restoration charges will stand
         reduced accordingly and the instalments paid/payable by
         us will be suitably adjusted/modified.”
D     6. The agreement which was executed thereafter contemplates
      that the Petitioners would pay irrigation restoration charges
      at the rate of Rs. 1 lakh per hectare to Government together
      with interest and that the decision of the Government on the
      representation dated 25 January 2011 submitted for the
E     reduction of the irrigation restoration charges would bind
      the parties. The Petitioners have besides the representation
      dated 25 January 2011, followed up with subsequent
      representations which are still pending one of which is the
      representation dated 30 June 2011 (Exhibit “I”). The
      Petitioners have moved these proceedings virtually at the end
F
      of the deadline for the payment of the second instalment which
      falls due on 21 November 2012. If this petition were to be
      instituted much before the approaching deadline, directions
      could have been issued for the disposal of the representation
      well in time before the approaching deadline for the second
G     instalment. In these circumstances and particularly in a
      contractual area where the parties are governed by an
      agreement dated 22 May 2012 in support of which the
      Petitioners have also tendered an undertaking, it will not be
      possible for the Court to pass any order which would obviate
H     compliance with the agreement….”
 THE CHIEF ENGINEER, WRD v. RATTAN INDIA POWER LTD.THROUGH                      517
      ITS DIRECTOR [PAMIDIGHANTAM SRI NARASIMHA, J. ]


       The High Court merely directed the concerned authority to take a         A
decision on the representations made by Respondent No.1 within a period
of eight weeks, and if the same came to be decided in the favor of
Respondent No.1, then Respondent No.1 could take such measures in
law to seek a refund. It is evident that the High Court refrained from
granting a stay on the payment of the second instalment.In compliance           B
with the direction of the High Court, the Government considered the
matter and it rejected the representation on 29.01.2013. In that view of
the matter, we are of the opinion that the High Court committed an error
in entertaining a fresh writ petition, which effectively claimed the same
reliefs as of the previous one. The High Court committed a mistake in
not only entertaining the writ petition, but also in supplanting its viewover   C
that of the contract.
       21. As has been noted above, irrigation restoration charges were
to be paid by Respondent No.1 in five installments.
                                                                                D




                                                                                E




                                                                                F

       Clause 4 of the undertaking dated 22.05.2012 which was issued
by Respondent No.1 stated that if there is a delay in making the payment,
then penal interest @12% p.a. shall be levied.The records before us
indicate that that only two instalments have been paid. Therefore, we           G
direct that the balance amountdue and payable towards irrigation
restoration charge shall pe paid by Respondent No.1 on or before
30.06.2023. Further, interest @ 12% p.a. shall be payable from the date
the instalment/payment fell due till the date of the impugned order i.e.,
05.05.2016.
                                                                                H
518              SUPREME COURT REPORTS                     [2023] 1 S.C.R.


A             22. In conclusion, we allow the Civil Appeal No. 8550 of 2022
      arising out of SLP (C) No.28161 of 2016 and set aside the impugned
      final judgement and order dated 05.05.2016 passed by the High Court of
      Judicature of Bombay at Nagpur in W.P. No. 4968 of 2015.

             23. Parties shall bear their own costs.
B
      Devika Gujral                                            Appeal allowed.




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D




E




F




G




H