Gujarat High Court sets aside Rs 146.79 lakh bill to RIL for ‘unpaid water charges’

The court said, “It is not open for the respondent (state government) to ask the petitioner to pay arrears since the petitioner cannot pass on the burden to the consumers. It was a clear and unequivalent contract knowing and intending that it would be acted upon by the petitioner on the price charged…”

Rejecting the submission of the state that the arrears have been sought based on the Government Resolution dated September 24, 2002, the HC quashed and set aside the July 2005 order of the state government as well as the bills raised by the state.

The court order further said, “…it would be unfair now to demand from the petitioner the arrears of charges on the basis of the Resolution which was not acted upon…. This court is inclined to interfere with the said communication issued by the respondent State Government (July 2005). The contract entered into between the parties has been executed, concluded and the benefit has been passed on to the consumers by the petitioner…”

The dispute arose from a demand notice issued on July 21, 2005, seeking recovery of Rs 146.79 lakh (Rs 1.4 crore) towards reassessed water charges for drinking purposes, calculated retrospectively from 1997 to 2005. Reliance Industries challenged the demand, arguing that they had already paid all dues as per earlier government resolutions and had even received a “No Due Certificate” up to October 2003. RIL also contended that the retrospective reassessment violated both contractual terms and settled billing practices.

The petition contended that RIL required water supply for various purposes and thus, entered into an agreement with the state government on November 9, 1993, “reciprocating the rights and obligations related to the project”. The state appointed a governing body to oversee and coordinate the construction of Singanpur Weir, which was built at a cost of Rs 33 crore entirely borne by Hazira Industries and a formal agreement was executed between Surat Municipal Corporation (SMC) and Hazira Industries for rights and obligations. As per the petition, the state government cancelled the tripartite agreement and directed RIL and other companies to pay water charges at exorbitant rates prescribed in the resolution dated May 1, 1997.

The petition states that when Hazira Industries moved the HC in 1998, the government came out with a clarification through a new resolution “directing the industries to pay the charges in terms of clarification dated January 27, 1999 and the rates as prescribed in the revised G.R. dated January 30, 2001 at concessional rate of interest without penalty.” RIL, therefore, paid Rs 1,065.10 lakh for the period of April 1997 and October 2003 and received the ‘No Due Certificate’.

In the submissions before the court, the counsel for the petitioner submitted that the water being supplied for domestic purpose has also been charged in the bill at industrial consumption rate. The order notes that the counsel for RIL also submitted that the state had been “estopped” from raising fresh demands after accepting payments and issuing a no-dues certificate. RIL submitted that any revision in charges could only operate prospectively, not retrospectively.

RIL also submitted that a portion of water was supplied free of cost to the nearby Mora village “without any charge whatsoever… such supply is made solely by way of a social gesture and a social obligation that the petitioner corporation believes it owes to the villages which are its neighbours and which lack basic infrastructure of portable water.” RIL submitted that the entire 0.34 MGD litres of water per day could not be billed at the industrial rate.

The state government submitted that the demand was made following a reassessment carried out “strictly in accordance with applicable Government Resolutions” and stated that the earlier billing omission was “owing to inadvertence”, and the State was entitled to recover the legally due amount once detected.