Vasant Chemicals Limited vs The Managing Director, Hyderabad Metropolitian Water Supply and Sewerage Board and Others

1.2 As per the agreement entered into with the Board, the management of the JETL pays the amount to the Board towards surcharge for discharging partially treated effluents from JETL into Board sewer and also for maintenance of the sewerage system. After the industrial effluents are partly treated at JETL, the industrial effluents are let into the dedicated pipeline belonging to the Board system at Balanagar and from there, the sewage is let into 1000 mm diameter sewage trunk main belonging to the Board through which the effluents are carried to Sewerage Treatment Plant (STP) at Amberpet. [Para 13][762-G-H; 763-A]

1.3 The appellant being an occupier of a “non-domestic premise” having bulk water supply connection from the Board and “a consumer of water” and eventually discharging sewage effluents into the sewer line of the Board, the essential ingredients of Section 55 are thus satisfied. The levy of sewage cess by the respondent is a statutory levy which the appellant is liable to pay under Section 55 of HMWS&S Act. Clause 16 of the agreement provides for payment of sewerage cess in terms of Section 55 of the Act which inter alia stipulates that the appellant is required to pay sewerage cess in accordance with Section 55 of the Act. The sewerage cess of 35% levied by the Board for carrying the sewage of the acceptable quality through its transmission system is thus, both statutory and in terms of the agreement between the appellant and JETL. [Para 16][764-B-C]

1.4 As per Section 54 of the Act, sewage which is likely to damage or interfere with the free maintenance of the sewerage system of the Board cannot be passed into the Board sewer and sewage treatment works. In terms of Section 54 of HMWS&S Act, Clause 19 is also incorporated in the agreement between the appellant industry and HMWS&SB, whereby no effluents shall be discharged into the Board’s sewerage system unless such effluents are treated in accordance with the provisions of the Water Act, 1974. Admittedly, JETL is neither a consumer of bulk water supply nor generating any sewage/industrial effluents of its own. The effluents of the appellant industry are not of acceptable standards for transmission system of the Board. Before the effluents of the appellant industry are to be let into the sewer line of the Board, the appellant industry has to get the effluents treated at its own cost to bring the quality of the effluents to an acceptable level. After getting partial treatment from JETL, the effluents are let into the said dedicated pipeline which belongs to the Board at Kukutpally/Balanagar and then they are let into 1000 mm diameter sewage trunk belonging to the Board through which the effluents are carried to Sewerage Treatment Plant (STP) at Amberpet measuring a distance of 18.90 kilo meters. The length of the pipeline from JETL to Amberpet is 29.28 kilo meters. Though the appellant’s unit is not directly connected with the Board sewer line, the industrial effluents of the appellant unit partially treated at JETL are ultimately let into the Board sewer line which is finally carried to STP at Amberpet. Thus, the appellant is liable to pay sewerage cess under Section 55 of the Act. Proviso to Section 55 of the Act contemplates that the sewerage cess shall not be levied on the occupier of the premises if such premises is stated to be in an area which is not served by the sewerage system of the Board. The proviso implies that the occupier of such premises cannot use the Board sewer by any means whatsoever. Therefore, the submission of the appellant that it is not liable to pay sewerage cess to the Board as it is not directly letting out sewage effluents into the sewage line of the Board and that it is carrying its effluents in the tanker, lorries and letting out in the effluent treatment plant of JETL and thus not connected with the sewage system of the Board, is wholly untenable. Since the sewage of the appellant is ultimately let into the sewer line of the Board, the appellant cannot contend that it is not covered under Section 55 of the Act and that it is covered under proviso to Section 55 of the Act. [Para 19][765-C-D, F-H; 766-A-D]

1.5 The agreement between the appellant and JETL for partial treatment of appellant’s industrial effluents is the internal contractual agreement between JETL and the appellant. The appellant unit is to treat and process the industrial effluents and bring them down to permissible standard limits in accordance with the provisions of Water Act, 1974 and Environment Act, 1986 relating to discharge and disposal of industrial effluents and other objectionable effluents into sewers before discharging of the effluents into the Board sewer. The treated effluents should also have to conform to the IS specification laid down from time to time for disposal of effluent into the domestic sewer of the Board. To discharge their contractual obligation in bringing the industrial effluents to permissible standard limits, the appellant unit entered into an agreement with JETL engaging it to treat its industrial effluents in accordance with the environmental laws in force. The appellant instead of treating the effluents at its premises at its own cost engaged JETL for treating its effluents. Thus, for its convenience, the appellant unit has entered into an agreement with JETL for treating its effluents and the charges paid by them to JETL are towards the treatment of effluents and bring it to permissible standards. Therefore, the function of JETL is that of an intermediary with whose assistance, the appellant is discharging its statutory obligation. [Para 23][767-F-H; 768-A-C]

1.6 The sewerage cess aims to recover the cost of treating the effluents of strength stronger than domestic sewage and to make the effluents of acceptable quality. In addition to partial treatment at JETL, the effluents require further treatment and their transmission to Sewer Treatment Plant (STP) at Amberpet situated at 18.90 kms from Bala Nagar which requires huge finance. The maintenance of sewer line is highly essential for proper transmission of the effluents from JETL to Board’s sewer system at Amperpet where the Board brings down the industrial effluents to the tolerance limits. It requires huge amount to maintain the STP treatment of industrial effluents. It also requires high demand of energy, STP personnel to operate and maintain the system, skilled and unskilled workers for proper maintenance of the plant. The respondent-Board unless it collects sewerage cess and other charges cannot meet the heavy expenditure on the operation and maintenance of sewerage system. The liability of the appellant to pay sewerage cess to the Board arises from the Statute and also by way of an agreement which was agreed upon by the appellant. There is no merit in the contention of the appellant unit that its liability has ended upon transferring the industrial effluents to JETL and that it is not connected to the Board’s sewer line. [Para 25][768-E-H; 769-A-B]

1.7 The sewerage cess levied under Section 55 is a statutory levy on the appellant as it satisfies the essential requirements of Section 55 of the Act. The agreement/contract between the appellant’s unit and JETL does not take away the appellant from the network of the Board’s sewer line and its “use and treatment of sewerage” of the Board’s sewerage system. Where the appellant’s effluents are being eventually sent to the Board’s sewer, the contention of the appellant that its premises are not served with a sewer line by the Board defies logic and runs contrary to the object of the Act. Appellant cannot escape from the statutory levy by taking a technical approach and interpreting the proviso as a general rule where it is merely a qualifying one. [Para 27][770-A-C]

1.8 The plea of double levy was rightly rejected by the High Court inter alia holding that “even assuming for a moment that the petitioner-company is paying some amounts to the JETL, it cannot be said that it is towards sewerage cess”. [Para 30][771-D]

1.9 So far as the payment by the appellant unit to the Board, it is the statutory liability of payment of sewerage cess in terms of Section 55 of HMWS&S Act and Clause 16 of the agreement which obligates the appellant unit to pay the sewerage cess in terms of Section 55 of the HMWS&S Act. The appellant having bulk water supply connection from the Board and being “consumer of water” and discharging sewage/effluents into the sewer line of the Board, the payment of sewerage cess by the appellant unit is the statutory liability under Section 55 of the HMWS&S Act and Clause 16 of the agreement. Insofar as the charges paid by the appellant to JETL for the treatment and processing of its effluents, it is purely contractual pursuant to the agreement entered into between the appellant unit and JETL and the earlier agreement. The same cannot be considered to be in deference to the statutory cess/statutory charge which can only be levied by the Board. [Paras 33, 34][772-E-G; 773-B]

1.10 Subject to the provisions of Water Act, 1974 and Environment Act, 1986 and subject to the restrictions of Section

54 of HMWS&S Act and in terms of Rule 4 and other terms and conditions, Board has the right to permit the ‘applicants’ seeking to discharge their trade or industrial effluents into the Board’s sewer system and Sewerage Treatment Plant subject to the imposition of costs. The treatment for letting the trade or industrial effluents into the Board’s sewer shall be subject to such terms and conditions and in such form of agreement as may be prescribed in the regulations made by the Board in accordance with these rules. Having entered into the agreement with the Board on 31.08.2000 and on prior dates, JETL cannot turn around and challenge the terms and conditions imposed upon it by virtue of the agreement. [Para 36][774-E-G]

1.11 So far as the various payments made by JETL to the Board, levy is in terms of Rule 4 of the Sewerage Rules and as per the contract and is purely contractual between JETL and the respondent Board for letting partially treated the industrial effluents of the appellant and other units into the Board’s sewer. Likewise, charges paid by JETL to the Board cannot be said to be in lieu of the sewerage cess that the appellant unit is liable to pay which is a statutory liability. Many industries about fifty units, apart from the appellant unit, discharge their effluents to the CETP/JETL. The agreements between JETL and the Board are purely contractual consciously entered into between the parties. [Para 37][774-H; 775-A-B]

1.12 JETL lets partially treated effluents into the Board’s sewerage system for further treatment. For further treatment of sewerage, the effluents are to be taken to Sewerage Treatment Plant (STP) at Amberpet which is situated at the distance of 08.30 kilometres from Balanagar. It requires huge amount for transmission of the effluents to Board’s sewer system at Amberpet where the Board brings down the industrial effluents to tolerance limits. The treatment of industrial effluents requires high demand of energy, personnel to operate the system and skilled workers for maintenance of the plant. Unless the Board collects sewerage charge/sewerage surcharge, the Board cannot meet the heavy expenditure on the operation and maintenance of sewerage system. Various other members of JETL who discharge sewage into JETL which is ultimately let into Board sewer line, may or may not be consumers of water supply by the Board. That apart, members of JETL may have their own source of water supply or they may supplement the supply of water from the Board through different sources either by extraction of ground water or supply through tankers which cannot be quantified by the Board. In pursuance of the provisions of the HMWS&S Act and the Sewerage Rules and pursuant to the agreement dated 31.08.2000, the charges are levied on JETL who in turn collects the charges from its member industrial units who discharge their effluents into JETL. Therefore, the payments made by JETL to the Board and the charges in turn collected by JETL from the appellant and other member units, cannot absolve the appellant unit from its statutory liability to pay the sewerage cess. There is no double levy of sewerage cess. [Para 38][775-C-F]

1.13 Levy of sewerage cess being a statutory levy in terms of Section 55 of HMWS&S Act and Clause 16 of the agreement which incorporates the statutory levy under Section 55 of HMWS&S Act, the Single Judge and the Division Bench rightly recorded concurrent findings upholding the levy. Observing that the appellant being occupier of the premises, though not directly connected to the sewer line of the Board, is ultimately letting into the sewerage system of the Board after partial treatment at JETL, the High Court was right in holding that the levy of sewerage cess is in accordance with Section 55 of HMWS&S Act. The payment of sewerage surcharges and the other charges by JETL cannot take away the statutory liability of sewerage cess levied on the occupier of the premises who consumes water and lets out the sewage into the Board sewer system. The payment of sewerage surcharge and other charges by JETL to the respondent-Board will not amount to double levy and the High Court rightly dismissed the writ petitions and also the review petitions filed by the appellant. The impugned order does not suffer from any infirmity warranting interference. The arrears of sewerage cess, if any, to be paid by the appellant within the stipulated period with 6% interest with effect from the date cess fell due, else it shall carry interest at the rate of 12% thereafter. [Paras 39-40][775-G-H; 776-A-D]

Indian Council for Enviro Legal Action and others v. Union of India and others (1998) 9 SCC 580; World Saviors v. Union of India and others (1998) 9 SCC 247; Ultra Tech Cement Ltd. v. State of Maharashtra and another (2011) 13 SCC 497 : [2011] 11 SCR 613 ; Romesh Kumar Sharm v. Unon of India and Others (2006) 6 SCC 510 : [2006] 4 Suppl. SCR 227 - referred to.

Environmental & Pollution laws in India by Justice T.S. Doabia (2 nd Edn-2010) LexisNexis Butterworths Wadhwa, Volume 1 p 1054 - referred to.