Judgment:
C.K. Thakker, C.J.
1. This petition is filed by the petitioners for quashing and setting aside a demand notice dated 23rd December, 2003 for an amount of Rs. 2,09,64,344/- (Exh. K). A prayer is also sought directing respondent No. 1 to accept Building Completion Certificate dated 11th April, 1989 issued by the Area Manager of respondent No. 1 - Corporation.
2. The case of the petitioners is that petitioner No. 1 is a public limited company having its registered office at Plot No. F-4, Maharashtra Industrial Development Corporation, Badlapxir, Dist. Thane. Petitioner No. 2 is the Executive Director of petitioner No. 1. Respondent No. 1 is Maharashtra Industrial Development Corporation ('M.I.D.C,' for short), a Government of Maharashtra undertaking constituted under the Maharashtra Industrial Development Act, 1961 (hereinafter referred to as 'the Act'). Respondent No. 2 is the State of Maharashtra.
3. The grievance of the petitioners is that the Deputy Engineer of the first respondent illegally refused to accept the Building Completion Certificate ('B.C.C.' for short) issued by the Area Manager of respondent No. 1. Consequently a demand was made for payment of more than rupees two crores as difference between normal rate and penal rate of water charges. According to the petitioners, they had regularly paid water charges at normal rates. The action of the first respondent in demanding water charges at penal rate of 1.5 times is illegal, contrary to law and unlawful. Since the first respondent-Corporation is insisting for penal rate of water charges, the petitioner is constrained to approach this Court.
4. The first respondent - Corporation formulated a scheme under which every industrial unit was required to submit B.C.C. for its factory building and construction. If B.C.C. is not submitted, the first respondent used to levy water charges at the penal rate of 1.5 times of normal water charges. According to the petitioners, first respondent is neither authorised nor entitled to levy water charges at penal rate. Several representations were, therefore, made to respondent No. 1 to waive or relax condition as to payment of water charges at penal rate. Respondent No. 1 accordingly issued a circular dated 31st July, 1998 confirming that those plot holders who had not obtained B.C.C. would not be required to pay water charges at penal rate of 1.5 times of normal water charges provided conditions laid down in the said circular would be satisfied. It is asserted by the petitioners that since they had complied with and fulfilled all the conditions of circular dated 31st July, 1998, they were not required to pay water charges at penal rate.
5. It is also the case of the petitioners that the construction of the factory of petitioner No. 1 was complete and the construction was in accordance with law, A prayer was, therefore, made to issue B.C.C. The Area Manager, D-VIII of the first respondent issued the certificate on 11th April, 1989. Thus, even that requirement was complied with. The petitioners have stated that the first respondent issued a circular on February 1, 2002, purportedly withdrawing the earlier circular dated 31st July, 1998. By the said circular Le. circular of 1st February, 2002, the first respondent intimated the petitioners that the circular dated 31st July, 1998 was cancelled and as per M.I.D.C. Rules, penal rate of 1.5 times water charges are applicable to plot holders who have not obtained B.C.C. It is contended that the first respondent is wrongfully implementing the circular dated February 1, 2002 with retrospective effect by asking the petitioners to pay water charges from 1998. The said action is illegal and improper. It is also contended that in total disregard to the certificate dated 11th April, 1989, on 1st April, 2002, respondent No. 1 issued a revised bill of Rs. 86,89,006/- on account of rate difference of water charges from August, 1998 to January, 2002. The said action was taken on the ground that the petitioners had not obtained B.C.C. The petitioners vide their letter dated 5th April, 2002 informed the Deputy Engineer of the first respondent that B.C.C. had already been granted in their favour in 1989 and the demand was, hence, illegal and unjust. No action, however, was taken by the respondent-Corporation. The Chartered Architects vide his letter dated 9th May, 2002 addressed to the Executive Engineer of the first respondent also confirmed that the structure put up by the petitioners was found to be strictly in accordance with the specifications but the Executive Engineer, Ambernath Civil Division, vide his letter dated 11th June, 2002 addressed to the Area Manager of respondent No. 1 stated that some structure was made in open marginal space which was required to be kept vacant and thus the construction was not in conformity with law. But it was also stated that the petitioners had agreed to remove such construction. Respondent No. 1 vide its letter dated 23rd September, 2003 informed the petitioners that their application for B.C.C. was kept pending for documentary compliance and requested them to submit revised plan. The petitioners, however, stated that they had already complied with all the requirements of the respondents and B.C.C. had already been issued in their favour as early as in 1989. Unfortunately, however, the first respondent proceeded on the basis that there was no B.C.C. in favour of the petitioners and accordingly a demand notice was issued on December 23, 2003 for an amount of rupees two crores calculating water charges at. a penal rate.
6. It is also the case of the petitioners that reference was made to the Board for Industrial and Financial Reconstruction ('B.I.F.R.' for short) and the provisions of Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter referred to as 'S.I.C.A.') would apply and no recovery can be effected. It was also stated that the plot was governed by the Rules of M.I.D.C. There is no provision in the Rules for recovery of water charges at a penal rate. The action taken by the respondent-Corporation is punitive and since there is no authority of law either under the Act or under the Rules or Regulations, no penalty can be imposed. The said action, therefore, deserves to be quashed and set aside.
7. The petition was filed on 15th January, 2004. On 19th January, 2004, we had issued notice. By way of ad interim relief, respondent No. 1-Corporation was restrained from discontinuing water supply to the petitioners' factory.
8. Pursuant to the notice issued by this Court, the respondents appeared. An affidavit-in-reply was filed by the Executive Engineer of respondent No. 1. In the affidavit, it was stated that the Corporation is established under the Act with the avowed object of ensuring a planned and accelerated development of industries in the State. Upon allotment of each plot to an entrepreneur/industrialist, the construction of the factory/ structures had to be carried out in accordance with the sanctioned plans. It was necessary because marginal spaces as required were to be left open. Completion certificate could be granted to an entrepreneur only if it is found that the construction is in conformity with sanctioned plans. B.C.C. is thereafter issued by the Executive Engineer on completion of the building in favour of an allottee in accordance with the terms and conditions contained in the deed. It is the case of the first respondent that since construction made by petitioner No. 1 was not in conformity with sanctioned plans and there was unauthorised structure and breach of terms of agreement, B.C.C. was not issued to the first petitioner. Regarding certificate of April 11, 1989 by the then Area Manager of the Division, it was stated that he had issued a letter stating therein that 'it has been treated that the building has been completed in 1976.' According to the deponent, it would not amount to a Building Completion Certificate (B.C.C.). B.C.C. can only be issued by Executive Engineer of respondent No. 1.
9. It is also the case of the first respondent that the Chief Executive Officer of the first respondent issued circulars dated November 5, 1997 and November 25, 1997 whereby first respondent used to levy water charges at penal rate at 1.5 times of normal water charges on allottees who had failed to obtain B.C.C. It was emphatically stated by the deponent that those circulars had never been revoked, cancelled nor withdrawn. The affidavit further states that the Executive Engineer of Ambernath Sub-Division had unauthorisedly issued a circular dated July 31, 1998 in contradiction of earlier circulars of November 5, 1997 and November 25, 1997 issued by the Chief Executive Officer of M.I.B.C. The said fact came to the notice of the Chief Executive Officer, M.I.B.C., only after the issue was brought to light during the course of audit by the Accountant General. It was then stated:
The Executive Engineer of the Sub-Division was issued show cause notice seeking his explanation in that regard.
It is also stated that the Executive Engineer was never delegated any power by the Chief Executive Officer of M.I. D.C. in respect of water charges. It is asserted that circulars dated 5th November, 1997 and 25th November, 1997 were in operation in the entire State of Maharashtra except Ambernath Sub-Division wherein due to unauthorised act on the part of the Executive Engineer, the circulars remained inoperative. The deponent has stated that the construction made by the petitioners was illegal and no B.C.C. had been granted in their favour. In the Ambernath Sub-Division, contrary to the circulars issued by the Chief Executive Officer, about 106 consumers had been charged normal rate of water charges though they had failed to obtain B.C.C. and were required to pay water charges at a higher rate. An amount of Rs. 34.37 lakhs was illegally refunded to defaulting consumers. It is also stated that the petitioners were liable to pay water charges at 1.5 times normal charges and they had paid such charges in past. The said material fact, however, has been suppressed by the petitioners from this Court. It was, therefore, submitted that the action of demanding an amount of rupees two crores from the petitioners is legal, valid and in accordance with the policy of the Corporation.
10. Regarding levy of charges at the rate of 1.5 times normal water charges, it was stated that considering the menace of encroachment and the apathy on the part of the allottees in obtaining B.C.C. in compliance with statutory provisions as also lease agreement, M.I.D.C. had issued circulars dated November 5, 1997 and November 25, 1997 and no objection could be raised against such a decision. The petitioners were, therefore, bound to pay the charges and petition is liable to be dismissed.
11. An affidavit-in-rejoinder is filed by Executive Director of petitioner No. 1 reiterating the contentions raised in the petition and also alleging that the respondent-Corporation was adopting discriminatory attitude in levying water charges; In this connection, reliance was placed on a plot of land bearing No. C-12 situated at Wagle Industrial Estate, Thane, initially allotted to Maharashtra Rajya Machchimar Sahakari Sangh Limited and now with M/s. Jayant Industrial and Scientific Research.
12. It is also stated that the Executive Engineer, Ambernath and in-charge of Badlapur Industrial Estate had put up a note dated 22nd August, 2003 to the Superintending Engineer (M.M.R.), Dombivli. According to the deponent, complete facts had been recorded in the said note and a recommendation was made that the case of the petitioners be considered as having B.C.C. and notice issued to the petitioners be cancelled. The affidavit proceeded to state that the Superintending Engineer 'has accepted the said recommendation of the Executive Engineer and forwarded the same to the Chief Engineer at the Headquarters of M.I.D.C.' It is also stated that on 17th September, 2002, 'the Chief Engineer of the M.I.D.C. has accepted the recommendation of the Superintending Engineer as proposed by the Executive Engineer.' Inspite of the above decision, a wrongful demand has been made by the first respondent. The petitioners have, therefore, called upon M.I.D.C. to produce noting dated 22nd August, 2002 in this Court.
13. We have heard the learned Counsel for the parties.
14. The learned Counsel for the petitioners raised several contentions. He submitted that the action of the respondent-Corporation of demanding water charges at 1,5 times normal water charges was penal in nature and since neither the provisions of the Act nor Regulations provided for such penal charges, no penalty could be levied. Moreover, B.C.C. was issued in favour of petitioners and hence, the first respondent was not entitled to levy water charges at penal rate. So far as Ambernath Sub-Division is concerned, all entrepreneurs were granted such benefits and it was not open to the Chief Executive Officer to withdraw and/or cancel the said circular, that too, without hearing the persons likely to be affected and without observing principles of natural justice and fair play. The action has been taken on the basis of audit objection without there being anything on record and without application of mind by the Corporation. Virtually, thus the decision was at the dictation of the Accountant General. Other persons were granted similar benefits and the action taken against the petitioners is arbitrary and discriminatory. Even the Chief Executive Officer has no right to issue a circular as the power to issue circulars is with M.I.D.C. alone. Again, the circular of 2002 is sought to be enforced retrospectively by asking the petitioners to pay water charges from 1998, Such action could not have been taken. Though it is the case of the Corporation that Executive Engineer in-charge of Ambernath Sub-Division had no authority to issue circular and allowing the persons who did not have B.C.C. to pay normal water charges, nothing has been shown by the first respondent as to how he was not authorised. According to the petitioners, the impugned notice is sought to be supported on a 'specious' ground that a show cause notice had been issued against the Executive Engineer concerned as his act was unlawful. On the basis of the circular issued by the Executive Engineer, the petitioners have acted to their detriment. It was not their fault in paying normal water charges. Hence, even if it is assumed that the action of the Executive Engineer was not within four corners of law or strictly legal, the petitioners should not suffer and the doctrine of equitable estoppel would apply. Again, petitioner No. 1 is a sick unit and the proceedings are pending before B.I.F.R. and no recovery can be effected as such recovery would be contrary to Section 22 of the S.I.C.A. It was, therefore, submitted that the demand notice deserves to be quashed and set aside by permanently restraining the respondent-Corporation from recovering any amount mentioned in the demand notice nor by taking any action pursuant to such illegal notice.
15. The learned Counsel for the respondent-Corporation, on the other hand, submitted that no case has been made out by the petitioners for exercise of extraordinary jurisdiction of this Court under Article 226 of the Constitution. There is suppression of material facts by the petitioners. The petitioners have never obtained B.C.C. In view of that, as per the circulars dated November 5, 1997 and November 25, 1997, the petitioners were required to pay water charges at the rate of 1.5 times of normal water charges and such an action cannot be termed as unlawful, illegal or otherwise unreasonable. It is on the basis of the Maharashtra Industrial Development Corporation Water Supply Regulations, 1973 as also in consonance with the agreement executed by and between the Corporation and plot holders/units/consumers. All throughout the State of Maharashtra, circulars of 1997 operated and are still operative. All the units in the entire State of Maharashtra are paying water charges as per the Regulations of 1973 and both the above circulars. Both circulars were issued by the M.I.D.C. through Chief Executive Officer and Secretary of the Corporation, who has the authority to issue them. At no point of time, concession was given to any area and the petitioners were also bound to pay water charges as per the policy of the Corporation. Even the petitioners have paid water charges as per the circulars of November 5, 1997 and November 25, 1997. Moreover, the policy is based on sound principle that all entrepreneurs must get B.C.C. because only on the basis of B.C.C., the Corporation would be satisfied that the construction/structure made by the applicant-entrepreneur is in accordance with the sanctioned plans and only thereafter production can be started. Thus, classification between two categories of entrepreneurs; those who possess B.C.C. and those who do not possess B.C.C. is reasonable and based on intelligible differentia and cannot be objected. Again, it has rationale and reasonable nexus to the object sought to be achieved thereby, namely that water can be supplied at normal water charges to those entrepreneurs who had completed construction/structure in accordance with law and having B.C.C. in their favour for the purpose of production/manufacture. For them normal water charges at the rate of one time would be proper. For others, in absence of B.C.C., no production is permissible and hence a different charge is levied. Such an action, therefore, cannot be objected on the ground that it is arbitrary, discriminatory or violative of Article 14 of the Constitution or unreasonable and ultra vires Article 19 of the Constitution. There is no retrospective operation of the Circular of 2002. Both the circulars of 1997 were and are operative in force. The Executive Engineer, Ambernath Sub-Division, was never authorised to issue circular of 1998 and the said action was totally illegal and without any authority on his part. The first respondent-Corporation came to know about the issuance of such unauthorised circular by Executive Engineer, Ambernath Sub-Division, only when audit objection came to be raised. Immediately, therefore, a corrective step had been taken. It, therefore, cannot be said that there was violation of principles of natural justice or fair play nor the doctrine of equitable or promissory estoppel would apply to such cases. The first respondent also took an action of issuing show cause notice to the Executive Engineer of the Sub-Division. The doctrine of 'acting under dictation' has no application since the action has not been taken at the dictation or direction Accountant General but because the Chief Executive Officer came to know about issuance of circular by Executive Engineer, Ambernath, on the basis of audit report. The case referred to by the petitioners in the affidavit-in-rejoinder was a totally different and distinct. In that case, the structure was regularised and thus the case was not comparable to the case of the petitioners. The provisions of S.I.C.A. would not apply as no proceedings under Section 22 of the S.I.C.A. have been taken by the first respondent against the petitioners. On all these grounds, it was submitted that the petition deserved to be dismissed.
16. Having heard the learned Counsel for the parties, in our opinion, no case has been made out by the petitioners for exercise of extraordinary jurisdiction of this Court under Article 226 of the Constitution. The first respondent-Corporation was established under the Act of 1961. As the Preamble of the Act shows it has been enacted with a view 'to make a special provision for securing the orderly establishment in industrial areas and industrial estates of industries in the State of Maharashtra, and to assist generally in the organisation thereof, and for the purpose to establish an Industrial Development Corporation and for purposes connected with such matters'. Clause (d) of Section 2 defines Corporation as 'Maharashtra Industrial Corporation established under Section 3. 'Industrial area' is defined in Clause (g) as 'any area declared to be an industrial area by the State Government by notification in the Official Gazette, which is to be developed and where industries are to be accommodated'. 'Prescribed' is defined as 'prescribed by rules made under this Act' (cl. k.)'. Chapter II provides for establishment and constitution of the Corporation and Chapter 111 deals with functions and powers of the Corporation, Section 63 enables the State Government to make Rules. Likewise, Section 64 empowers the Corporation to make Regulations consistent with the provisions of the Act and the Rules made thereunder with the previous approval of the State Government.
17. Our attention has been invited by the learned Counsel to Maharashtra Industrial Development Corporation Water Supply Regulations, 1973. Regulation 2(1) defines 'consumer' as 'any person or persons applied for/ applying for supply of water from any works of the Corporation or any person or persons otherwise liable to payment of water charges'. Regulation 3 requires a consumer to apply for application for supply of water in the prescribed form in Sch. A attached to the Regulations. Regulation 27 deals with water rates and reads thus :
The charges for water shall be fixed by the Corporation from time to time. The Corporation shall increase or decrease the water charges in its direction 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 24 contains provision regarding 'penalty of unlettered water'. Regulation 28 authorises the Corporation to recover water charges as arrears of land revenue. Regulation 39 enables the Corporation to recover penal charges for excess consumption of water over and above the quota fixed. Regulation 42 deals with disputes arising out of the interpretation of the Regulations and declares that the decision of the Chief Engineer, M.I.D.C. 'shall be final and binding on the consumer'.
18. The petitioners had made an application for water supply for the plot, in question. The agreement, inter alia, included a clause that the consumer would abide by all terms and conditions of the M.I.D.C. Water Supply Regulations, 1973 as amended from time to time. It is, therefore, clear that the petitioners were bound to comply with Water Supply Regulations and to pay water charges as fixed by the Corporation. The petitioners were actually paying such charges.
19. It is not in dispute between the parties that a circular came to be issued by the Chief Executive Officer of respondent No. 1 on 5th November, 1997 relating to water charges for supply of water to the plot holders. The relevant part of the said circular allowing the Corporation to levy 1.5 times water charges reads as under :
It is necessary for the plot holders to obtain the Building Completion Certificate and for that purpose it is necessary that the Corporation should take some concrete steps. If Building Completion Certificate is not, obtained, it is against the Development Control Regulations and it becomes difficult for M.I.D.C. to implement the Development Control norms. Considering these difficulties, by this Circular M.I.D.C. notifies that, when the water connection is being granted to the plot holder for the construction of the Building at that juncture, rate of water charges should be charged 1.5 times more than existing rates of that area and such rate of water charges should be charged till the time Building Completion Certificate is obtained to ensure that plot holders obtain Building Completion Certificate within the prescribed time limit and strictly in consonance with the provisions of Development Control Regulations.
The said circular was amended by a subsequent circular of the Corporation dated 25th November, 1997.
20. Reliance was placed by the petitioners on a circular dated 31st July, 1998 (Exhibit-A) issued by the Executive Engineer of Ambernath Sub-Division of the first respondent. In the said circular it was stated that in case of plot holders/consumers who had not obtained B.C.C. were required to pay water charges at 1.5 times normal water charges. In view of several representations/suggestions received at various levels, the Corporation had decided to relax the condition of charging water rates at 1.5 times normal water rate to the industries who had not obtained B.C.C. on fulfilment of conditions laid down therein. On the basis of the above circular, it was submitted by the petitioners that so far as Ambernath Sub-Division was concerned, the petitioners and all other similarly situated plot holders/consumers were required to pay normal water charges of 1 instead of 1.5 limes even if they had not obtained B.C.C. It is also their contention that in view of the above circular, no demand notice could have been issued to the petitioners arid the said notice deserves to be quashed and set aside.
21. The case of the respondent-Corporation, on the other hand, is that no such circular was issued by the Corporation. Circulars were issued on 5th November, 1997 and 25th November, 1997 by the Corporation through Chief Executive Officer. The Executive Engineer of Ambernath Sub-Division had no authority or power to issue such circular/communication and the action was unlawful and totally unauthorised. It is also their case in the counter that a show cause notice had been issued to the Executive Engineer. As the action of issuing circular was without authority of law, neither the respondent-Corporation can be prevented from levying water charges at the rate of 1.5 times normal water charges in accordance with the circulars of November, 1997 nor the petitioners could claim any benefit under the circular dated 31st July, 1 998 issued by an unauthorised Officer.
22. The question for our consideration, therefore, is whether the action of the respondent No. 1 -Corporation in demanding water charges at the rate of 1.5 normal charges is illegal or unlawful and whether the petitioners can claim benefit under the circular purported to have been issued by Executive Engineer of Ambernath Sub-Division. As is clear, both the circulars of 1997 have been issued by the Corporation through Chief Executive Officer of the Corporation. It is a common ground that under the said circulars, plot holders/consumers not having B.C.C. were to pay 1.5 times water charges. It is the specific case of the respondent-Corporation in the affidavit-in-reply that Executive Engineer of a Sub-Division has no power or authority to issue a circular for a particular division. Water Supply Regulations, 1973, to which reference have already been made hereinabove, do not authorise Executive Engineer of a Sub-Division to issue such a circular for that Sub-Division. No other provision has been shown to us by the learned Counsel for the petitioners under which Executive Engineer can issue such a circular. Not only that, but. according to the respondent -Corporation, since the action of Executive Engineer of the Sub-Division in issuing circular was unlawful and illegal, a show cause notice had been issued to him. It is, therefore, abundantly clear that the action of issuance of Circular by Executive Engineer, Ambernath Sub-Division was unauthorised and without authority of law. If it is so, obviously the petitioners cannot claim benefit under the said circular. In our considered opinion, a ground put forward by the respondent-Corporation that the action of Executive Engineer was unlawful is indeed a relevant and germane ground and cancellation of such circular cannot be said to be illegal or ill-founded. We are also unable to uphold the contention of the petitioners that the said circular could not have been cancelled on a 'specious' plea that the Executive Engineer of a Sub-Division had no authority to issue the circular. In our view, it was indeed a good ground as also a relevant circumstance and as the first respondent-Corporation was satisfied that the Executive Engineer could not have taken the action and granted the benefit to which plot holders/ consumers were not entitled, an action had been taken against an erring officer by asking him to explain what he wanted to say about issuance of such circular. In our judgment, in the circumstances, the doctrine of promissory or equitable estoppel cannot be pressed in service by the petitioners.
23. We are also not impressed by the argument of the learned Counsel for the petitioners that the action has been taken at the dictation of other authority i.e. at the instance of the Accountant General. Nor it can be said that Circular of 2002 was retrospectively applied. In the affidavit, it was clearly and explicitly stated that circular was issued in 1998 by the Executive Engineer of Ambernath Sub-Division without authority of law. The first respondent-Corporation was not aware of issuance of such circular. No doubt, the circular recites that the copies were submitted to Chief Engineer (HQ), M.I.D.C. Superintending Engineer (MMR), M.l.D.C., Dombivli and Superintending Engineer (Commercial), M.l.D.C., Mumbai-93 but, as stated in the counter, the first respondent-Corporation came to know about the said circular in the light of irregularities pointed out in the audit report. A corrective action, therefore, had been taken by canceling/ withdrawing the said circular of 1998, which must be held to be legal, valid and in consonance with law. The circular of 2002 cannot be held to be retrospectively applied.
24. It was then submitted that the circular dated 1st February, 2002 (Exhibit D) was also issued by Executive Engineer, M.l.D.C,, Ambernath Civil Division by which earlier circular dated 31st July, 1998 was cancelled. It was also stated in the said circular that as per prevailing M.I.D.C. Rules, 1.5 time water charges would be levied from all plot owners who had not obtained B.C.C.
25. It may, however, be stated that after the show cause notice was issued to the Executive Engineer and after his reply, the Chief Executive Officer addressed a letter on 29th January, 2002, which had been produced on record by the learned Counsel for the Corporation wherein he was directed by the Chief Executive Officer to take corrective action and was ordered to issue revised circular immediately and initiate action to recover due and unpaid amount (defaulted amount).
26. It is, therefore, amply clear that the action which has been taken by the Executive Engineer, Ambernath Sub-Division of issuance of circular dated July 31, 1998 was illegal and of no consequence. No rights flowed in favour of petitioners or any other person which can be enforced nor it created any liability on the Corporation. An action of the respondent-Corporation of following the earlier circulars of November, 1997 must, therefore, be held legal, valid and in consonance with law.
27. It may also be necessary to note at this stage that ordinarily a Corporation established under an Act of State Legislature and a Government Undertaking is expected to act fairly, equitably and reasonably. All their actions must be informed by reason and justice. It is expected of an instrumentality of 'Slate' to act in consonance with the principle of equality enshrined in Article 14 of the Constitution. If it confers an additional benefit in favour of a person or class of persons which has not been granted to other person or class of persons or deprives a person or class of persons of the benefit or benefits which has or have been granted in favour of a person or class of persons, the said action must be based on reason or principle. If the object of the Act is to make special provision for securing the orderly establishment in industrial areas and industrial estates of industries in the State of Maharashtra, there is no good or valid reason to treat Ambernath Sub-Division differently. It is not even the case of the petitioners that because of special reasons or exceptional circumstances such a benefit was granted to Ambernath Sub-Division. If the Corporation is insisting for B.C.C, from all plot holders/consumers in other Divisions and Sub-Divisions of the State, there is no justifiable reason why the said requirement should not be insisted in Ambernath Sub-Division. Unless special circumstances are brought to the notice of the Court which the Court would consider relevant, the action cannot be held legal and lawful. The normal rule, therefore, would be that a policy decision formulated by the Corporation would apply equally to all persons similarly situated. We are, therefore, of the view that the respondent-Corporation is right in contending that the action of issuance of circular by the Executive Engineer of Ambernath Sub-Division was illegal and unauthorised. Keeping in view the said fact, a show cause notice was issued against the said Officer. An illegal action of an unauthorised officer, therefore, cannot take the case of the petitioners anywhere if the petitioners have been treated equally with all other plot holders/consumers in the State of Maharashtra.
28. It was then contended that the action is penal and punitive in nature. Since penalty has been imposed, there must be express power to impose such penalty. Moreover, before imposing penalty on the petitioners, a show cause notice ought to have been issued, explanation called for and hearing afforded before making demand of payment of huge amount of rupees two crores. It was also contended that there must be application of mind, adjudication by the authorities and exercise of discretion as to why such penalty was called for and imposed.
29. We must frankly admit that we are unable to uphold the contention. It is no doubt true that the expression used by the respondent-Corporation Is 'penal' charges or rates. We are, however, not impressed that it is 'penalty' imposed by the Corporation on the petitioners. 'Penalty' as understood in legal parlance is in the nature of punitive action imposed on a defaulting party and must precede by presence of power, application of mind, adjudicatory process and exercise of discretion. In the instant case, however, what has been done by circulars of November, 1997 is that the plot holders/consumers have been classified into two categories : (i) plot holders/consumers having B.C.C.; and (ii) plot holders/consumers not having B.C.C. Whereas plot holders/consumers falling under the former category having B.C.C. are required to pay normal water charges, plot holders/consumers covered by the second category of not having B.C.C. were required to pay penal (additional) charges. To us, therefore, it is clear that levy of 1.5 times water charges of normal water charges of 1 cannot be termed as 'penalty'. It is in nature of additional charge which those plot holders/consumers were required to pay who had not obtained B.C.C. Classification of these two categories of plot holders/consumers, in our opinion, is reasonable and rationale classification based on intelligible differentia and such a classification cannot be termed as arbitrary, artificial or irrational.
30. It is no doubt true that fulfilment of the above condition alone would not make levy at the different rate legal, valid and lawful unless the second test is satisfied and the differentia has nexus to the object sought to be achieved. In our judgment, however, it is in consonance with and fulfilment of the object for which such a classification has been made. As stated in the affidavit-in-reply, upon allotment of a plot to an entrepreneur/industrialist, the construction of the factory/structure has to be carried out in accordance with the sanctioned plans. It was insisted to ensure that marginal spaces as required are left open by each allottee and the allottee adheres to sanctioned plan. Upon completion of construction in conformity with the sanctioned plans and demolition of temporary structures, if any, B.C.C. is issued by the Executive Engineer on completion of building by the allottee in accordance with the terms and conditions contained in the deed. It is only on the basis of B.C.C. that the Corporation would be satisfied that the construction/structure made by the allottee is legal, lawful and in accordance with the sanctioned plans and thus in conformity with law and that thereafter now he can start production. In absence of B.C.C,, the construction said to have been made by the allottee is either incomplete or not in conformity with the plans sanctioned by the Corporation. Different charges, therefore, for two categories of plot holders/consumers cannot be held arbitrary, unreasonable or ultra vires Article 14 or Article 19 of the Constitution.
31. Since there was unauthorised structure/construction made by the petitioners, B.C.C. was not granted and hence the petitioners were not entitled to water on normal charges of one time.
32. In view of the above position, in our considered opinion, reliance placed by the learned Counsel for the petitioners on the decisions in (i) Hindustan Steel Limited v. State of Orissa : [1972]83ITR26(SC) ; (ii) Khemka & Co. Pvt. Ltd. v. State of Maharashtra : [1975]3SCR753 ; (iii) Shree Digvijay Cement Company Limited and Anr. v. Union of India and Anr. : [2003]259ITR705(SC) ; (iv) Ahmedabad Urban Development Authority v. Sharadkumar Jayantikumar Pasawalla and Ors. : [1992]3SCR595 and (iv) Delux Land Organisers v. State of Gujarat and Ors. : AIR1992Guj75 is of no avail and the ratio laid down therein would not apply to the facts of the case. In all those cases, the question was of imposition of penalty which is not the case here.
33. The Counsel drew our attention to a decision of the House of Lords in J, & F. Stone Lighting & Ratio Ltd. v. Haygarth 1966 (3) All E.R. 539. There Lord Pearson observed that the Factories Act, 1961 should be regarded as a beneficial rather than a penal statute. Its object is to secure proper working conditions for persons employed to do manual labour in certain operations and the penalties for failure to provide such conditions are merely incidental to that object.
34. In our opinion, the observations of Lord Pearson will not carry the case of the petitioners anywhere. As already observed by us, legal, proper and equitable action has been taken by the first respondent-Corporation of issuance of two circulars in 1997 treating all plot holders/consumers equal and by permitting levy of water charges at normal rates of 1 time and penal (additional) rate of 1.5 times of plot holders/consumers who had obtained B.C.C. and had not obtained B.C.C. respectively. Such an act, by no stretch of Imagination, can be termed arbitrary, unreasonable, improper or inequitable.
35. Regarding so-called discrimination, in our view, all the persons similarly situated have been treated similarly and equally and thus the action is not violative of Article 14 of the Constitution. Regarding M/s. Jayant Industrial and Scientific Research, it has been specifically stated that the case was not similar to the petitioners and hence the petitioners cannot rely on that instance. Again, it is well settled law that if any illegal action has been taken or unlawful benefit has been granted in favour of one person, other person cannot claim such or similar benefit illegally. In our considered opinion, that is not the sweep of Article 14 of the Constitution.
36. As to protection claimed by the petitioners under S.I.C.A., the learned Counsel submitted that since the petitioners had made reference to the B.I.F.R. and the proceedings are pending which has been confirmed by the Registrar of B.I.F.R. vide his letter dated 31st July, 2002 (Exhibit-N), no action can be initiated against the petitioners in view of Section 22 of the S.I.C.A.
37. Reference was made in this connection to a decision of the Supreme Court in Tata Davy Ltd. v. State of Orissa and Ors : (1997)IILLJ989SC . In that case the Apex Court observed that Sub-section (1) of Section 22 of the S.I.C.A. would apply to legal proceedings initiated against a sick company and the words 'any other law' would include not only Central Act but also to a State Act. The recovery of sales tax arrears under the relevant State Act, therefore, could not be effected against a sick company without the consent of B.I.F.R.
38. In our opinion, however, submission of the learned Counsel for the first respondent-Corporation has substance that the respondent-Corporation is not enforcing compliance under any decree or order but merely obligation under the agreement and Regulations relating to supply of water which would not be covered by the above provision.
39. It may be profitable in this connection to refer to a decision of the Supreme Court in Indian Maize and Chemicals Limited v. State of U.P. and Ors. : [1997]1SCR217 . In that case, there was default in payment of electricity charges by the consumer company. The company was a sick unit and proceedings were pending before B.I.F.R. In the light of pendency of proceedings before B.I.F.R., protection under Sub-section (1) of Section 22 of the S.I.C.A. was sought. A prayer was also made directing the Electricity Company for uninterrupted supply of electrical energy without compliance of the corresponding obligation of payment under Regulations or contract under the Electricity (Supply) Act, 1948.
40. Negativing the contention and interpreting the provisions of Section 22(1) of the S.I.C.A. the Supreme Court held that the said sub-section would apply to pre-existing decree of a competent Court and steps taken by the decree holder for its execution. Enforcement of compliance of obligation under the contract or regulation of electricity energy would not be covered by Section 22(1) as it would not be in execution of a decree or order.
41. The Court observed :
A reading of the above section would indicate that when the proceedings are pending before the B.I.F.R. in respect of any matter referred to therein for inquiry by the Board, the proceedings or order of execution, distress or the like would be stayed until the proceedings get concluded before the B.I.F.R. or would not be proceeded without the leave of the Board or appellate authority. It is seen that under the Indian Electricity (Supply) Act, 1948 one of the conditions is that continued payment of the price of electrical energy supplied by the Board is a condition for the continued supply and the default committed in the payment thereof entails disconnection of the supply of electrical energy, except in accordance with the procedure prescribed under the contract or the regulation issued under the Indian Electricity (Supply) Act, 1948. Execution connotes preexisting decree. It is true that any action for realisation etc. pending decision by B.I.F.R. or without its permission is prohibited. Enforcement of compliance of the obligation under the contract or regulation for supply of electrical energy by ordering payment of electrical energy is not and cannot be considered to be execution of a decree.
(emphasis supplied)
42. It was also submitted by the petitioners that the construction made by the petitioners was legal, in conformity with law and as per sanctioned plans and was, therefore, regularised. It is the case of the Executive Director of petitioner No. 1 in the affidavit-in-rejoinder that Executive Engineer, Ambernath and in-charge of Badlapur Industrial Estate put up a note dated 22nd August, 2002 to the Superintending Engineer (MMR), Dombivli and recommended to consider the case of the petitioners as having B.C.C. The Superintending Engineer had accepted the said recommendation and forwarded the same to the Chief Engineer at the Headquarters of M.I.D.C. The Chief Engineer of Headquarters of M.I.D.C. had accepted the recommendation on 17th September, 2002. Hence, even on that ground, no action can be taken against the petitioners.
43. Now, except bald assertions, nothing has been placed on record by the petitioners. There is no material whatsoever to support the above assertions. The learned Counsel for the respondent-Corporation is right in contending that it is surprising that such assertions have been made by the petitioners. She is also right in submitting as to on what basis such assertions have been made by the petitioner and that too in the affidavit-in-rejoinder. Though the petition was filed on 15th January, 2004, nothing has been stated on this point, though it relates to notings of 2002. Moreover, normally all such correspondence would be in the nature of 'inter departmental communications' and one fails to know as to how the petitioners would come to know about such communications or correspondence.
44. In more than one case, the Supreme Court had an occasion to deal with such situations. It was observed in those cases that such internal notes, correspondence and orders are meant for 'official purposes' and should not be produced before the Court in support of the claims of applicants/petitioners,
45. In Amar Singh, in State of Bihar etc. etc. v. Kripalu Shankar etc. etc. : 1987CriLJ1860 . the Apex Court had an opportunity to comment on such a practice. In paragraphs 12 and 18 the Court stated :
It cannot be disputed that the appeal raises an important question of law bearing upon the proper functioning of a democratic Government. A Government functions by taking decisions on the strength of views and suggestions expressed by the various officers at different levels, ultimately getting finality at the hands of the Minister concerned. Till then, conflicting opinions, views and suggestions would have emanated from various officers at the lower level. There should not be any fetter on the fearless and independent expression of opinions by officers on matters coming before them through the files. This is so even when they consider orders of Courts. Officers of the Government are often times confronted with orders of Courts, impossible of immediate compliance for various reasons. They may find it difficult to meekly submit to such orders. On such occasions they will necessarily have to note in the files, the reasons why the orders cannot he complied with and also indicate that the Courts would not have passed those orders if full facts were placed before them. The expression of opinion by the officers in the internal files are for the use of the department and not for outside exposure or for publicity. To find the officers guilty for expression their independent opinion, even against orders of Courts in deserving cases, would cause impediments in the smooth working and functioning of the Government. These internal notings, in fact, are privileged documents. Notings made by the officers in the files cannot, in our view, be made the basis of contempt action against each such officer who makes the notings. If the ultimate action does not constitute contempt, the intermediary suggestions and views expressed in the notings, which may sometimes even amount ex facie disobedience of the Courts orders, will not amount to contempt of Court. These notings are not meant for publication.
'This Court observed in this judgment that business of State is a complicated one and has necessarily to be conducted through the agency of a large number of officials and authorities. Before action is taken by the authority concerned in the name of the Rajpramukh which formality is a constitutional necessity, nothing done would amount to an order creating rights or casting liabilities on third parties. It is possible, observed this Court, that after expressing one opinion about a particular matter at a particular stage a Minister or Council of Ministers may express quite a different opinion which may be opposed to the earlier opinion. In such cases, which of the two opinions can be regarded as the order of the State Government. It was held that an opinion becomes a decision of the Government only when it must be communicated to the person concerned and that this is the essence of the matter. We seek support from these observations for our purpose that notings in a notes file, not only of officers but even that of a Minister will not constitute an order to affect others unless it is done in accordance with Article 166(1) and (2) and communicated to the person concerned.'
46. In M.D., U.P. Land Development Corporation and Anr. v. Amar Singh and Ors. : (2003)IIILLJ220SC while dealing with a question of regularisation of project employees, the Court observed :
Having perused the impugned order in the light of the documents referred to above and keeping in view the rival contentions urged on either side, we are of the view that the impugned judgment and order of the High Court cannot be sustained for reasons more than one. The internal note and order of the Corporation, which is made the basis for the claim that twenty-five posts were available on a regular basis, is itself not correct. At this stage we may observe that the internal note and order dated 2.11.1990 was prepared by the Director of the Corporation for his own purpose, but strangely enough a copy of the same was produced by the respondents in the writ petition. We fail to understand how the copy of this internal note and order came into the hands of the respondents. Apart from the fact whether such an internal note itself could give any right to the respondents, the very reading of the same does not give an impression that it is Indicated to create twenty-five posts on a regular basis.
47. Moreover, the learned Counsel for the first respondent-Corporation has stated that the allegations made by the petitioners is not correct. It was stated that the note prepared by Executive Engineer, Ambermath, was considered by higher authorities and was ultimately rejected.
48. For the foregoing reasons, in our opinion, no ground has been made out by the petitioners to hold the demand notice illegal, unlawful or without authority of law. Since in accordance with the policy of the first respondent Corporation demand has been made and water charges have been levied, the action of the first respondent-Corporation is held legal, valid and in accordance with law. Petition, therefore, deserves to be dismissed and is accordingly dismissed. Ad interim relief granted earlier stands vacated. In the facts and circumstances, however, shall be no order as to costs.
Parties be given copies of this order duly authenticated by the Associate/Sheristedar/Private Secretary.