IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 29TH DAY OF JUNE 2017 BEFORE THE HON’BLE MR. JUSTICE A S BOPANNA WRIT PETITION No.9251/2009 (GM-BWSSB) c/w WRIT PETITION No.9252/2009 (GM-BWSSB) W.P.No.9251/2009 BETWEEN:
IBC KNOWLEDGE PARK PRIVATE LIMITED OFFICE AT CORPORATE TOWER B (B9) DIAMOND DISTRICT, 150, AIRPORT ROAD, BANGALORE -560008 REP. B Y ITS MANAGING DIRECTOR MR. YUNUS ZIA. ... PETITIONER (BY SRI. M G S KAMAL, ADV. FOR M/S. KAMAL & BHANU) AND:
1. BANGALORE WATER SUPPLY AND SEWERAGE BOARD CAUVERY BAHVAN, K.G.ROAD, BANGALORE-560009, REP. HEREIN BY ITS CHAIRMAN.
2. THE CHIEF ENGINEER BANGALORE WATER SUPPLY AND SEWERAGE BOARD, CAUVERY BHAVAN K.G.ROAD, BANGALORE-560009.
3. ASST. EXECUTIVE ENGINEER NO.8, WATER SUPPLY AND SANITARY SUB DIVISION (SOUTH), BANGALORE WATER SUPPLY AND SEWERAGE BOARD, BTM 2ND STAGE, BANGALOER- 81.
4. BANGALORE HOUSING DEVELOPMENT AND INVESTMENTS, A PARTNERSHIP FIRM HAVING ITS OFFICE AT NO.10/1, LAKSHMINARAYANA COMPLEX, PALACE ROAD, BANGALORE- 52 REP.BY ITS PARTNER. ... RESPONDENTS (BY SRI UDAYA HOLLA, SR.COUNSEL FOR SRI VIVEK HOLLA, ADV. FOR M/S. HOLLA & HOLLA FOR R1-3 SRI H SRINIVASA RAO, ADV. FOR R4) THIS PETITION IS FILED UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA, WITH A PRAYER TO CALL FOR THE RECORDS IN RESPECT OF THE IMPUGNED DEMAND NOTE DT. 27.11.2008 CALLING UPON THE PETITIONER TO PAY RS. 1,97,18,440/- (RUPEES ONE CRORE NINETY SEVEN LAKHS EIGHTEEN THOUSAND FOUR HUNDRED FORTY ONLY) TOWARDS INTEREST ON PRO RATA CHARGES FILED AS ANNEX-N AND SET ASIDE THE SAME AND ETC.
W.P.No.9252/2009 BETWEEN:
IBC KNOWLEDGE PARK PRIVATE LIMITED OFFICE AT CORPORATE TOWER B (B9) DIAMOND DISTRICT, 150, AIRPORT ROAD, BANGALORE -560008 REP. B Y ITS MANAGING DIRECTOR MR. YUNUS ZIA. ... PETITIONER (BY SRI. M G S KAMAL, ADV. FOR M/S. KAMAL & BHANU) AND:
1. BANGALORE WATER SUPPLY AND SEWERAGE BOARD CAUVERY BAHVAN, K.G.ROAD, BANGALORE-560009, REP. HEREIN BY ITS CHAIRMAN.
2. THE CHIEF ENGINEER BANGALORE WATER SUPPLY AND SEWERAGE BOARD, CAUVERY BHAVAN K.G.ROAD, BANGALORE-560009.
3. ASST. EXECUTIVE ENGINEER NO.8, WATER SUPPLY AND SANITARY SUB DIVISION (SOUTH), BANGALORE WATER SUPPLY AND SEWERAGE BOARD, BTM 2ND STAGE, BANGALORE- 81.
4. BANGALORE HOUSING DEVELOPMENT AND INVESTMENTS, A PARTNERSHIP FIRM HAVING ITS OFFICE AT NO.10/1, LAKSHMINARAYANA COMPLEX, PALACE ROAD, BANGALORE- 52 REP.BY ITS PARTNER.
5. STATE OF KARNATAKA BY ITS PRINCIPAL SECRETARY DEPARTMENT OF URBAN DEVELOPMENT VIDHANA SOUDHA BANGALORE-01. ... RESPONDENTS (BY SRI UDAYA HOLLA, SR.COUNSEL FOR SRI VIVEK HOLLA, ADV. FOR M/S. HOLLA & HOLLA FOR R1-3 SRI H SRINIVASA RAO, ADV. FOR R4) THIS PETITION IS FILED UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA, WITH A PRAYER TO DECLARE THAT THE DEMAND AND COLLECTION OF PRO RATA CHARGES BY RESPONDENT NOS. 1 TO 3 IS WITHOUT AUTHORITY OF LAW, BEYOND JURISDICTION AND HENCE ILLEGAL AND UNCONSTITUTIONAL AND AT ANY RATE, EXCESSIVE AND UNREASONABLE AND ETC.
THESE WRIT PETITIONS HAVING BEEN RESERVED FOR ORDERS ON 09.06.2017, COMING ON FOR PRONOUNCEMENT THIS DAY, THE COURT PRONOUNCED THE FOLLOWING :
O R D E R The parties to these two writ petitions are the same and the issue essentially is also the same as arising against the demand made by respondents 1 to 3 against the petitioner.
2. The petitioner and respondent No.4 entered into a development agreement whereunder the petitioner was to develop the property belonging to respondent No.4. In the said process, amongst others the petitioner was to construct four towers (blocks) which were indicated as ‘A’ to ‘D’. Insofar as the construction of the blocks ‘A’ & ‘B’ and provision of water and sewerage connection, there is no serious dispute inasmuch as the amount payable in that regard was demanded by the respondents through the note dated 29.10.2003 and the revised demand dated 24.11.2003. In respect of the same, the amount required to be paid by the petitioner to respondents No.1 to 3 was also paid. Subsequently when the issue relating to providing water and sewerage connections to ‘C’ & ‘D’ blocks constructed by the petitioner arose, the prorata charges and the interest on the amount towards prorata charges was included in the notice dated 27.11.2008. Through another notice dated 27.11.2008 the penalty on the prorata charges was demanded from the petitioner. It is in that light the petitioner claiming to be aggrieved by such action of respondents No.1 to 3 have preferred the writ petition in W.P.No.9251/2009. By such time, though the petitioner had paid the prorata charges as demanded, the petitioner contends that the same was paid under protest and in that direction the petitioner claiming to be aggrieved by the demand for prorata charges has assailed the same by filing the writ petition in W.P. No.9252/2009. In the said petition the provisions as contained in the Bangalore Water Supply and Sewerage Act, 1964 (‘the Act, 1964 for short) and also the Water Supply Regulations (‘the Regulations’ for short) have been called in question.
3. Thus the composite contentions as urged in both these petitions put together is to the effect that the respondents No.1 to 3 have no power under the Act to collect prorata charges and even if such prorata charges could have been collected by respondents No.1 and 2, the demand for interest and penalty is not justified nor is authorized in law. That apart the amount which was to be paid towards prorata charges has been paid by the petitioner immediately after the demand was made and therefore, the question of collecting either interest or penalty on the said amount would not arise. In that view, the petitioner contends that the demand as made would not be justified and the amount as collected is required to be returned to the petitioner.
4. Respondents No.1 to 3 having filed their objection statement to the petitions have opposed the prayer made in the petitions. It is contended that the very manner in which Blocks ‘C’ & ‘D’ have been constructed is without the approval from the competent authority which is also an issue which has been raised for consideration in the appropriate forum. With regard to the demand for prorata charges, it is contended that in any event when the petitioners have sought for water supply and sewerage connection for ‘C’ and ‘D’ blocks, the requisite prorata charges is required to be paid. In that regard it is contended that Section 16 of the Act, 1964 provides the power to the Board to levy rates, fees, rents and other charges so that adequate revenue is generated to effectively discharge its statutory obligation. In that view, it is contended that exercising the power available under the Act the demand has been made and in any event the petitioner having paid the prorata charges cannot raise any contentions at this point in time. Insofar as the demand for penalty and interest on the prorata charges, it is contended that though the request for providing water and sewerage connection was made, subsequently on inspection it was noticed that the petitioners have been unauthorisedly and illegally obtaining the water to Blocks ‘C’ and ‘D’ from the authorized connection which had been provided to Blocks ‘A’ and ‘B’. In that light, the demand for the interest and penalty from January 2006 to November 2008 is justified, is their contention. Hence, it is contended that the writ petitions are liable to be dismissed.
5. In the light of the above, I have heard Sri M.G.S.Kamal, learned counsel for the petitioner, Sri Udaya Holla, learned Senior Counsel along with Sri Vivek Holla, learned counsel Sri H.Srinivasa Rao, learned counsel and Sri Lakshmi Narayana, learned Government Advocate for the respective respondents in these petitions. In that background, I have perused the petition papers.
6. Learned counsel for the petitioner while contending that the demand for prorata charges as also the penalty and interest would not be justified, has at the outset contended that the very demand for prorata charges made in the case of the petitioners is in the year 2008. In that light, it is contended that by introduction of Sub-Section (17A) to Section 2 of the Act and also the incorporation of the words ‘prorata charges’ in Section 16 of the Act was by way of amendment with effect from 16.04.2010. In that view, it is contended that as on the date when the demand was made for prorata charges, the Act did not contain a provision relating to prorata charges and therefore, the demand as made is not justified as it is without authority of law. In that direction, it is contended that the amendment as made to the Act is not with retrospective effect and therefore, the same could not be made applicable to the case of the petitioner. It is further contended that Regulation 5.3 as contained in the Bangalore Water Supply and Sewarage (Amendment) Regulations 1998 though relates to the prorata charges, it further provides that it is as per Section 44(3-A) of the Act, 1964. In that regard, it is pointed out that there is no provision in the Act as Section 44(3-A) and as such the very Regulation relied upon also cannot be pressed into service for the purpose of charging the prorata charges in the manner it has been done presently. Learned counsel for the petitioner has also referred to the decision in the case of Collector of Central Excise, Ahmedabad V/s. Orient Fabrics Pvt. Ltd.,(AIR 2004 SC 956) to contend that it has been held therein that the provision as inserted in the Act by amendment cannot be given retrospective effect.
7. Learned Senior counsel for the respondent on the other hand has relied on the decision of the Hon’ble Division Bench of this Court in the case of Muniswamy vs. BWSSB (W.A. No.3657/2000 and connected appeals disposed of on 02.07.2004) to contend that the power relating to collection of prorata charges has already been considered and upheld. In that regard, it is seen in the said appeals, the issue which arose for consideration is also relating to the validity or otherwise of the collection of prorata charges by respondents No.1 to 3 herein. The Hon’ble Division Bench with reference to the pre-amended Section 16 of the Act itself has categorically arrived at the conclusion that the said provision empowers the Board not only to levy fees but other charges and in that light has held that the collection of the prorata charges for carrying out the improvement would be justified. It has been further held that merely because no regulations are made, it will not denude the power of the Board under Section 16 of the Act to levy and demand such fee or other charges. Therefore, insofar as the power to collect the prorata charges, the Hon’ble Division Bench has also held that the collection of prorata charges is for the expenses incurred or likely to be incurred by the Board in rendering any actual or intended service to the residents of the metropolitan area. Hence, it is held that the levy of prorata charges which is in the nature of a fee, in the background of the power available under Section 16 of the Act, 1964 would be justified.
8. If that be the position, when the Hon’ble Division Bench of this Court had adverted to that aspect of the matter and has made a detailed consideration on that aspect, the issue is no more res integra for the purpose of raising a challenge in the instant petition. It is no doubt true that learned counsel for the petitioner has contended that the provision as incorporated and the definition relating to prorata charges has been incorporated subsequently. Even if that be the position, when in the absence of the said provision itself the Hon’ble Division Bench of this Court has arrived at the conclusion that the same could be charged and collected, the amendment which has been made subsequently can only be considered as a further clarification introduced into the Act to make it specific and to remove the ambiguity, if any, and also to avoid the challenge being raised in that regard.
9. Therefore, in that circumstance, when the Hon’ble Division Bench has interpreted the existing provision in the Act prior to amendment and the demand raised in the instant case is based on the provision that was existing as on the date of demand, the decision relied on by the learned counsel for the petitioner in the case of Central Excise (supra) to contend that the amendment as made should not be applied retrospectively would also not be of any assistance. That apart, the decision in the case of Common Cause Vs. Union of India and others [(2008)5 SCC 511] relied on by the learned counsel for the petitioner to contend that the Court cannot legislate and it is for the Legislature to do so also would not be relevant in the instant case. I am of the said opinion for the reason that the Hon’ble Division Bench of this Court has not legislated nor introduced any provision into the Act, but while taking note of the existing provision in the Act and interpreting the power available under such provision has arrived at the conclusion that the provision as contained would also provide for imposition and demand of prorata charges.
Hence, if all these aspects of the matter are kept in view, the demand for prorata charges which in any event has already been paid by the petitioner cannot be sustained in these petitions. Accordingly, the challenge to the demand impugned insofar as the prorata charges would not call for interference.
10. Learned counsel for the petitioner no doubt has made specific reference to Section 44 (3A) of the Act being referred in Regulation No. 5.3 relating to prorata charges so as to derive the power thereunder. In that regard, it is pointed out that there is no provision such as Section 44(3A) in the Act and as such the imposition is without power and is therefore liable to be set aside. The decision in the case of India Carbon Ltd. –vs- State of Assam (Air 1997 SC 3054) is relied to contend that when there is no substantive provision in the Act, there is no liability. Learned senior counsel for the respondents would however contend that the Act in any event would authorise the collection of prorata charges which has already been upheld and as such the mere mentioning of a wrong provision will not take away the right. The decision in the case of Vikram Singh Junior High School –vs- District Magistrate (Fin. & Rev.) and others (2002) 9 SCC 509 is relied on to contend that the mentioning of wrong provision is not fatal. On a perusal of Regulation 5.3 even in the Gazette notification would indicate that what is contained therein is Section 44(3A) and there is no such corresponding provision in the Act. Though that may be the factual position and may require the attention of the respondents to secure appropriate correction in accordance with law, that by itself cannot be considered
reason that as already noticed, even before the amendments were made to the Act and Regulations, the existing provisions itself empowered the levy of prorata charges as held by the Hon’ble Division Bench of this Court in the decision referred to supra.
11. Though the provision contained in Section 31 and 61 of the Act are assailed, the said provisions are to enable for the water to be supplied and to provide for regulations regarding water supply. The same is not shown to be ultra vires so as to call for interference. The contention of the learned counsel for the petitioner is also that the quantum of prorata charges as imposed is also not justified. The circular at Annexure–P is relied to contend that the prorata charge provided therein for commercial building is at Rs.120/- per sq.mtr. for water supply as well as sanitary connection. The circular dated 13.02.2008 at Annexure–Q is referred to point out that the rate of Rs.300/- per sq.mtr. is with effect from that date. In that view, it is contended that since the petitioner had applied on 19.06.2007 seeking water and sanitary connection, the rate of prorata charge which applied on that date should have been charged.
12. The said contention on consideration cannot be accepted by this Court. This is for the reason that though the application was made on 19.06.2007, in the instant case it cannot be considered as a file received on that date to be treated as received prior to 01.02.2008 as provided in the circular dated 13.02.2008. As on the date of application the occupancy certificate was not enclosed but the petitioner insisted on having completed the construction and occupied due to which inspection was conducted on 19.11.2008 during which time the discrepancies were noticed and the demand was raised on 27.11.2008. That being the position, the prorata charges applicable subsequent to 01.02.2008 will be applicable to the case of the petitioner. Hence, no grievance in that regard can be entertained.
13. The next question that arises for consideration is with regard to the demand for payment of interest and penalty on the amount of prorata charges that was levied on the petitioner. In this regard though a challenge is raised to the Circular dated 23.12.2008 at Annexure-T, a perusal of the same would indicate that the Circular only indicates the circumstances under which such penal interest and penalty could be imposed by the respondents. Therefore, when such provision is made in the circumstances as indicated therein more particularly with regard to the unauthorized water and sanitary connection, the same cannot be set aside.
However, in specific circumstances where the imposition is made, it would be appropriate to examine in such cases as to whether the levy of penal interest or any other penalty in that regard would be justified. In the instant facts, learned counsel for the petitioner would contend that insofar as the demand for prorata charges, it was made on 27.11.2008 and the petitioner has paid the amount on 03.12.2008. Hence, it is contended that there is absolutely no delay whatsoever in payment of the demand of prorata charges even if such prorata charges is payable and therefore, the question of levying interest or penalty to be recovered from the petitioner would not arise. That apart it is contended that the prorata charges as demanded presently is in respect of the water and sanitary connection to be provided to the ‘C’ and ‘D’ blocks which has been developed by the petitioner. In that regard, it is contended that even as on today the water and sanitary connection has not been provided to the ‘C’ and ‘D’ blocks and to that extent the learned counsel would also submit that if an inspection is held as on today it will establish that no such connection is available. In that view, it is contended that the question of drawing unauthorized water or providing unauthorized sanitary connection would not arise and as such the demand for penalty would not be justified.
14. Learned Senior counsel for the respondents would however point out that the demand for interest and penalty is towards the unauthorized drawing of water that has been indulged in by the petitioners. To that extent it is pointed out that the water connection to ‘A’ and ‘B’ blocks developed by the petitioner has been provided by the respondents No.1 to 3. The petitioners having taken the said connection have through the connection which has been provided to Block ‘A’ and ‘B’ have unauthorizedly utilized the water by drawing it to the Blocks ‘C’ and ‘D’. It is in that light the interest and the penalty has been imposed from January 2006 i.e., the period from which the petitioners had drawn the water unauthorisedly from the ‘A’ and ‘B’ blocks to the ‘C’ and ‘D’ blocks though the authorized connection to the Blocks ‘C’ and ‘D’ had not been provided.
15. Having taken note of the rival contentions on this aspect of the matter, a perusal of the impugned demands dated 27.11.2008 would indicate that in addition to the prorata charges levied therein the interest for 35 months for the period between January 2006 to 2008, at 12% p.a. amounting to Rs.1,97,18,440/- has been levied. In the subsequent communication of even date as at Annexure `O’, on the said prorata charges for the same period between January 2006 to November 2008, 50% penalty has been levied claiming a sum of Rs.2,81,69,200/-. Though the contention as put forth is that the said amount is for unauthorisedly drawing water from the water connection that had been provided to Block ‘A’ and ‘B’ for the use in the Blocks ‘C’ and ‘D’, except for making a bare statement in the demand and also contending in the objection statement filed before this Court that such unauthorized connection being drawn and the water being utilized was noticed at the point when the inspection was made, such consideration has not been made by providing opportunity to the petitioner.
16. Insofar as the prorata charges which is required to be paid, the demand is based on the power available to the respondents and the same has been levied as per law. But when the interest and penalty was being levied for an earlier period on the allegation that the petitioners were unauthorizedly utilizing the water, a specific notice in that regard was required to be issued based on the material that is collected during the inspection for arriving at such conclusion and on obtaining an explanation to be put forth by the petitioners, a conclusion was required to be reached and thereafter the demand if sustainable could have been made after indicating details for such conclusion.
17. In that view of the matter, a perusal of the demand notice would not indicate such consideration having been made. Though that be the position, ultimately if the respondents 1 to 3 are able to establish that such unauthorized connection has been taken by the petitioners and the water has been utilized unlawfully in that direction certainly at that stage the respondents 1 to 3 would be entitled to impose and collect the interest and penalty. Therefore, only on the short ground that no such consideration as per law has been made and in order to provide an opportunity to the petitioners and with the liberty to the respondents to issue appropriate notice to arrive at the conclusion and thereafter take a decision in the matter, the demand notices at Annexures-N and O only to the extent of demanding the interest and the penalty will have to be set-aside and an appropriate opportunity is to be granted to the parties to put forth their contentions and a decision to be taken thereafter.
18. Learned counsel for the petitioner has vehemently contended that ‘C’ and ‘D’ blocks have not been provided water connection even as on today, let alone at the point of alleged inspection and therefore the question of unauthorised drawing of the water so as to impose penalty and interest does not arise. It is contended that the water supply is secured from other source for which the expenses have been incurred and details are available. Having taken note of the contention, what is also to be kept in view is that the respondents are also contending that though the petitioners have not been provided connection to the ‘C’ and ‘D’ blocks, they are provided connection to the ‘A’ and ‘B’ blocks. In that light, the case of the respondents is that the petitioners are unauthorizedly drawing and utilizing the water in ‘C’ and ‘D’ blocks through the connection available in ‘A’ and ‘B’ blocks. To that effect they refer to the consumption details. This essentially is a factual dispute which will have to be determined and it is for that reason I have reached the conclusion that the demand for interest and penalty in the manner in which it has been presently imposed is without following the procedure and without regard to all these factual aspects, which will therefore have to be revisited and redone as per the liberty reserved.
19. In the result, for all the aforestated reasons the following:
ORDER (i) The demand of prorata charges made through the impugned notices is upheld.
(ii) The demand for interest and penalty through the notices at Annexure-‘O’ and ‘T’ is set aside.
(iii) Liberty is reserved to respondents No.1 to 3 to reconsider the process relating to demand for interest and penalty as stated supra.
(iv) The petitions are disposed of in the above terms with no order as to costs.
Sd/- JUDGE akc/bms