Madrasdated High Court · 2011

1. Harshad V.Doshi2. Pravin Jain3. Manju Jain4. Yogira Jain5. Hetal M.Doshi6. Yashmathi H.Doshi All rep by their Power Agent Mr.Mehul J.Doshi...Petitioners in W.P.17291 of 2005S.Sathishkumar...Petitioner in W.P.20969 of 2005Kishorkumar Gokaldas...Petitioner in W.P.24805 of 2005Cosmo Foundations Ltdthro its DirectorVimallammaChennai..Petitioner in W.P.28785 of 2005A. Nirmal Gadhiya ..Petitioner in W.P.33279/051. Rafiqua Asroph Ali2. Minor Riyasudeen3. Minor sirasudeenPetitinoers 2 & 3 rep by Motor& next friend 1st petitioner 4. Nirmal Gadhiya.. Petitioners in W.P.6471/06M/s. Espee Engineering worksRep. by its proprietorMr.S. Periyannan.. Petitioner in W.P.30290/06R. Ravindran..Petitioner in W.P.34741/06S. Venkatasubramaniyan.. Petitioner in W.P.19839/09M/s. Buhari Hotels & Resorts Pvt. Ltd,Rep. by its power of AgentM/s. Chaitanya Builders and Leasing Pvt. Ltd., Chennai... Petitioners W.P.11632/09K. Ramakrishnan..Petitioner in W.P.24002/09M. Arivazhagan..Petitioner in W.P.19744/2010Pradeep Bhandari.. Petitioner in W.P.3782/2010, 3783/2010 https://hcservices.ecourts.gov.in/hcservices/ M. Krishnasamy..Petitioner in W.P.14670/10Rajendra R.Mehta..Petitioner in W.P.14201/2010, 14202/2010, 7884/2011M/s.Sri Kousalya Construction Ltd,Rep. by its DirectorMr.Y.Meera Reddy. ..Petitioner in W.P.24153/2010M/s. Mittulaul Lalah & SonsChennai.. Petitioner in W.P.16464/2010 16465/2010.vs State of Tamilnadu rep. by its Secretary to Government, Ministry of Housing and Urban Development Fort St. George, Chennai ..Ist Respondent in WP 20434, 20435/09, 10682/02, 755/2003, 33680/03, 17291/05, 19839/09, 11632/09, 17436/09, 21751/09, 24002/09, 24590/09, 19744/10 3782/10, 3783/10, 14201/10, 14202/10, 24153/10, 16464/10, 16465/10, 7884/2011 R2 in WP 7459/03, 24805/05 The Member Secretary Chennai MetropolitanDevelopment Authority, Thalamuthu Natarajan Building, No.8, GandhiIrwin Road, Chennai-600 008 ..2nd Respondent in WP 20434, 20435/09, 10682/02, 755/2003, 33680/03, 17291/05, 19839/09, 11632/09, 17436/09, 21751/09, 24002/09, 24590/09, 19744/10 3782/10, 3783/10, 14201/10, 14202/10, 24153/10, 16464/10, 16465/10, 7884/2011 R1 in WP 304/02, 7459/03, 8433/03, 6006/04, 6256/04, 6926/04, 10440/04, 29434/05, 30602/04, 2636/05, 4409/05, 11821/05, 11822/05, 16683/05, 20949/05, 24805/05, 28785/05, https://hcservices.ecourts.gov.in/hcservices/ 6471/06, 7824/06, 30290/06, 34741/06, 34702/06, 14670/10 Respondent in WP 33278/05, 33279/05, 33505/05 The Commissioner, Corporation of Chennai, Chennai ..2nd Respondent in WP 14670/10 The Chairman Cum Managing Director, Chennai Metro Water andSewerage Board, Chennai-600 002 ..3rd Respondent in WP 20434, 20435/09, 10682/02, 755/2003, 7459/03, 33680/03, 24805/05, 19839/09, 11632/09, 17436/09, 21751/09, 24002/09, 24590/09, 19744/10, 3783/10, 14202/2010, 24153/10, 16464/10,7884/2011 R2 in WP 304/02, 8433/03, 6256/04, 6926/04, 10440/04, 29434/05, 30602/04, 2036/05, 4409/05, 11821/05, 11822/05, 16683/05, 20949/05, 28785/05, 6471/06, 7824/06, 30290/06, 34741/06, 34702/06, Prayer in W.P.No.20434/09, 20435/09,21751/09, 24002/09, 19744/10,3783/10, 14202/10, 24153/10, 16464/10: Writ petition filed underArticle 226 of the Constitution of India praying to issue a writof Declaration to delcare that the amended Section 6(2)(xii-a) 81(2)(jj) of Chennai Metropolitan Water Supply and Sewerage Board Actare ultra vires, unconstitutional, arbitrary and colourableexercise of power and forbearing the second respondent frominsisting the payment of infrastrure and development charges onbehalf of the third respondent for issuing planning permissionwhich are not permissible in law.W.P.No.304/02, 8433/03:Praying to issue a 'writ of CertiorarifiedMandamus' to call for the records relating to the impugned letterof the First Respondent vide letter No.B1/28661/2001 dated20.12.2001 (W.P.304/02) Lr.No.C3/13607/2002 dated 7.3.2003(W.P.No.8433/03) and quash the same and directing the FirstRespondent to release the planning permission approval to thepetitioner forthwith. https://hcservices.ecourts.gov.in/hcservices/ W.P.No.10682 of 2002Praying to issue a 'writ of Certiorarified mandamus' callingfor the records of the second Respondent dated 14.3.2002 inLr.No.C3/23233/2001 and quash the same in so far as it relates topayment of Infrastructural improvement charges and consequentlydirect the respondents to grant planning permission forconstruction of dwelling units at Door Nos.54 to 56, Wallajah Road,Chennai without insisting on Infrastructural Improvement charges.W.P.No.755 of 2003:Praying to issue a 'Writ of Certiorarified Mandamus' callingfor the records of the 2nd Respondent dated 16.12.2002 inLr.No.C3/21501/2002 received on 17.12.2002 and quash the same in sofar as it relates to payment of Infrastructural Improvement chargesand consequently direct the grant of planning permission forconstruction of dwelling units at No.117/1, L.B.Road, Adyar,Chennai-600 020, without insisting on payment of Rs.6,12,000/-towards Infrastructural Improvement charges or any other levy.W.P.No.7459 of 2003:Praying to issue a 'writ of Mandamus' forbearing theRespondents from collecting a sum of Rs.2,92,000/- asInfrastructure development charge payable to CMWSSB in the FirstRespondent's letter dated 7.11.2002 in C3/29560/2001.W.P.No.33680 of 2003:Praying to 'writ of declaration' declaring that section 6(Xii-a) and Section 81(2)(ii) of Madras Metropolitan Water SupplySewerage Board Act, 1978 as amended by Act 49/1998 prescribingdemand of infrastructure development charges is arbitrary, illegal,unconstitutional, unenforceable in law in so far as the petitioneris concerned and consequently forbearing the Respondents fromenforcing the letter No.C3/54769/2000 dated 27.5.2002 on the fileof the 2nd Respondent demanding Rs.25,37,500/- towardsInfrastructure development charges.W.P.No.6006/04, 6256/04, 6926/04, 10440/04, 29434/04, 30602/04,4409/05,11821/05, 11822/05, 16683/05, 28785/05, 7824/06, 19839/09,11632/09, 17436/09, 24590/09:Praying to issue a 'Writ of Declaration declaring that theamended section 6(2)(Xii-a) 81(2)(ii) of Chennai Metropolitan WaterSupply and Sewerages Board Act are ultravires, unconstitutional,Arbitrary and colourable exercise of power and forbearing the 2ndrespondent from insisting the payment of infrastructure and https://hcservices.ecourts.gov.in/hcservices/ development charges on behalf of 1st Respondent for issuing planningpermission which are not permissible to law so far as thepetitioner is concerned.W.P.No.2636/05, 6471/06, 34741/06, 34702/06: praying to issue awrit of declaration to declare that the amended section 6(2) (xii-a) 81(2)(jj) of Chennai Metropolitan Water Supply and SewerageBoard Act are ultra wires un constitutional arbitrary andcolourable exercise of power and consequently forbearing the firstrespondent from insisting the payment of infrastructure anddevelopment charges in favour of the second respondent for issuingplanning permission which is against law.W.P.No.17291 of 2005:- praying to issue a writ of declarationdeclaring rule 19(b) III B of Development Control Rules as ultra-vires the Tamil Nadu Town and Country Planning Act and condition(vi) of the letter dated 28.4.2005 as illegal unconstitutional andunenforceable so fas as it relates to the demand of securitydeposit and Infrastructure charges for the proposed development andconsequently direct the 2nd respondent to issue planning permissionof the petitioner without insisting on payment of security depositof Rs.18,44,000/- and Infrastructure Development charges to CMWSSBof Rs.11,80,000/- as per letter dated 28.4.2005 No. C3/16340/2004on the file of the 2nd respondent.W.P.No.20969/05:- praying to issue a writ of declaration todeclare that amendment Sections 6(2) (xii-a) 81 (2) (jj) ofChennai Metropolitan Water Supply and Sewerage Board Act areultravirus unconstitutional arbitrry and colourable exercise ofpower and forbearing the respondent from insisting the payment ofinfrastructure improvement and development charges through thefirst respondent for issuing planning permission which are notpermissible in law.W.P.No.24805 of 2005:- praying to issue a writ of mandamusforbearing the respondents from collecting a sum of Rs.4 21 000/-asInfrastructure Development charge payable to CMWSSB the thirdrespondent herein in the first respondents letter dated 22.7.2005in letter No. C3/13752/2004W.P.No.33278/05, 33279/05, 33505/05 praying to issue a writ ofdeclaration to declare that the amended section 6(2) (xii-a) 81 (2)(jj) of Chennai Metropoliton Water supply and sewerages Board Actare ultravirus unconstitutional Arbitrary and colourable exerciseof power and forbearing the respondent from insisting the paymentof infrastructure and development charges on behalf of CMWSSB forissuing planning permission which are not permissible in law. https://hcservices.ecourts.gov.in/hcservices/ W.P.30290/06:Praying to issue a 'writ of Declaration' to declare that theamended section 6 (2) (xii-a) 81(2)(jj) of Chennai MetropolitanWater Supply and Sewerage Board Act are ultravirus,unconstitutional, arbitrary and colourable exercise of power andforbearing the 1st respondent from insisting the payment ofinfrastructure and development charges on behalf of the 2ndrespondent for issuing planning permission for the proposedconstructions of BF + stilt floor + 6 floors + 7th floor part ofI.T. Building at plot No.5(NP), Jawaharlal Nehru road, Thiru-vi-kaindustrial Estate, Guindy, Chennai-97 which are not permissible inlaw.W.P.3782/2010: Praying to issue a 'Writ of Certiorarified Mandamus' Calling forthe records of the 2nd respondent dated 19.02.2010 inLr.No.C3/18372/2009 with respect to the demand of security depositof Rs.3,40,000/- (Rupees Three Lakhs and Forty Thousand only) forproposed development, and Rs.1,79,60,000/- (Rupees One CroreSeventy Nine Lakhs and Sixty Thousand only) towards caution depositas contained in the column No.IV & VII of the impugned order of the2nd respondent with respect to the building to be put up at PlotNo.9 & 10, Door No.15, Whites Road, Chennai-14 comprised inR.S.No.343/14, Block No.11 of Triplicane Village by quashing thesame and consequently direct the 2nd respondent to grant planningpermission as sought for in respect of the Information Technologypark Building in the aforesaid property without insisting upon thedemand of security deposit and caution deposit.W.P.14670/2010:Praying to issue a 'Writ of Certiorari Calling for the recordsrelating to the first respondent vide Letter No.C3/22148/08 dated25.6.10 and to quash the same.W.P.14201/2010, 16465/2010:Praying to issue a 'Writ of Declaration' to declare that theprovisions contained in Regulation 26 (24), 27 (25), 28 (14) ofDevelopment Regulations to Tamilnadu and Country Planning Act areultra vires, unconstitutional, arbitrary and colourable exercise ofpower and forbearing the 2nd respondent from insisting on thepayment of security deposit for putting up any construction whichare not recognized in law. https://hcservices.ecourts.gov.in/hcservices/ W.P.7884/2011.: Praying to issue a 'Writ of Declaration' declaringthat the amended Section 6 (2) (xii-a) 81 (2) (jj) of ChennaiMetropolitan Water Supply and Sewerage Board Act(T.N.Act.28)of 1978are ultravires, unconstitutional, arbitrary and colourable exerciseof power and forbearing the 2nd respondent from insisting thepayment of infrastructure and development charges on behalf of the3rd respondent for issuing planning permission which are notpermissible in law.(Prayer amended as per order dated 30.3.2011 by RSJ inM.P.No.2/2011 in W.P.7884/2011) Mr. R. ThiagarajanSenior Counselfor Mr.S. Sundaresan: For petitioners in W.P.Nos.20434, 20435 of 2009, 304 of 2002, 8433 of 2003, 6006, 6256, 6926, 10440, 29434, 30602 of 2004, 4409, 11821, 11822, 33278 33279, 33505 of 2005, 6471, 7824, 30290, 34741, 34702 of 2006, 19839, 11632, 17436, 21751, 24002, 24590 of 2009, 19744, 14201, 14202, 24153, 16464, 16465 of 2010. Mr.Krishnappan Senior Counsel for Mr.R. Mohan : For petitioners in W.P.Nos.3782, 3783 of 2010, 28785 of 2005, 7884 of 2011. K.Venkatasubramanian : For Petitioner in W.P.No. 10682 of 2002 and 755 of 2003 Mr.K.V.Babu : For Petitioner in W.P.No. 7459 of 2003 Mr.P.B. Ramanujam : For Petitioner in W.P.No. 33680 of 2003 Mr. M.L.Joseph : For Petitioner in W.P.No. 2636 of 2005. Mr.G. Durairaj : For Petitioner in W.P.No. 16683 of 2005 https://hcservices.ecourts.gov.in/hcservices/ Mr.A.R.Karunakaran : For Petitioner in W.P.No. 17291 of 2005 Mr.K.Dharanidharan : For Petitioner in W.P.No. 20969 of 2005 Dr.P. Vasudevan : For Petitioner in W.P.No. 24805 of 2005 Mr.S.Vijayakumar : For Petitioner in W,.P.No.14670 of 2010 Mr.A. Navaneethakrishnan Advocate General Assisted by Mr. R. Ravichandran : For Respondent No.1 WPs. AGP20434, 20435 of 2009, 10682 of 2002, 755, 33680 of 2003, 17291/05, 19839, 11632, 17436, 21751, 24002, 24590 of 2009, 19744, 3782, 3783, 14201, 14202, 24153, 16464, 16465 of 2010, 7884 of 2011 For R2 in WP.7459/03, 24805/05 Mr.L.P.Shanmugasundaram : For respondent No.3 (CMWSSB) R3 in WPs20434, 20435 of 2009, 10682 of 2002, 755,7459 33680/2003, 24805 19839, 11632, 17436, 21751, 24002, 24590 of 2009, 19744, 3783, 14202, 24153, 16464 /2010, 7884/2011 R2 in WP 304/02, 8433/03, 6006/04, 6256/04, 6926/04, 10440/04, 29434/04, 30602/04, 2036/05, 4409/05, 11821/05, 11822/05, 16683/05, 20949/05, 28785/05, 6471/06, 7824/06, 30290/06, 34741/06, 34702/06. Mr.Raja Srinivas : For CMDA in W.P.Nos.755, 7459, 8433, 33680 of 2003 19744, 3782 , 3783 of 2010 7884 of 2011Mr.A.Kumar : For CMDA in W.P.Nos.20434 & 20435 of 2009, 304 & 10682 of https://hcservices.ecourts.gov.in/hcservices/ 2002, 19839, 11632, 17436, 21751, 24002, 24590 of 2009, 14670, 14201,14202, 24153, 16464, 16465 of 2010. Mr.M.Kathikeyan : For CMDA in W.P.Nos. 6006, 6256, 6926, 10440, 29434, 30602 of 2004, 2636, 4409, 11821, 11822, 16683, 17291, 20969, 24805, 28785, 33278, 33279, 33505 of 2005, 6471, 7824, 30290, 34741, 34702 of 2006. Mr.V.Bharathidasan: For Corporation in W.P.No.14670of 2010------------ COMMON ORDERK.K.SASIDHARAN, JThe central question that arises in these writ petitions iswhether the levy of infrastructure development charges by theChennai Metropolitan Water Supply and Sewerage Board is bad in lawon account of the absence of necessary co-relation between the feecollected and the service intended to be rendered or in other words"quid pro quo".2. Since common questions of fact and law arises in thesebatch of writ petitions, the same are disposed of by this commonorder. 3. For the sake of convenience, we quote hereinbelow the factsin W.P.No.34702 of 2006 treating it as the lead case.The facts: 4. The petitioner is a builder. He is stated to be the ownerof the property situated at Door No.18/1, East Coast Road in SurveyNo.205/3 Part, 4A, 5A, 8 and 10, T.S.No.26, Block No.42 ofThiruvanmiyur Village, Chennai-600 041. The petitioner made anapplication before the Chennai Metropolitan Water Supply andSewerage Board (hereinafter referred to as "CMWSSB") for planningpermission for the purpose of construction of Additional Block ofStilt Floor plus Eleven Floors residential building with Sixty FourDwelling Units. The application was submitted on 8 November, 2005.The Chennai Metropolitan Development Authority (hereinafterreferred to as "CMDA") by their letter dated 8 September, 2006directed the petitioner to pay infrastructure development chargesdue to CMWSSB besides other charges payable to the CMDA. https://hcservices.ecourts.gov.in/hcservices/

5. Since the demand for payment of development charges were onaccount of the amended provisions of the Chennai Metropolitan WaterSupply and Sewerage Board Act, the petitioner challenged thevalidity of Section 6(2)(xii-a) and 81(2)(jj) of the said Act.6. The amended Act was challenged mainly on the ground thatthe infrastructure development has nothing to do with theindividual promoters. It was the further contention of thepetitioners that the levy was essentially in the nature of a taxthough styled as a "fee". According to the petitioners, there isno quid pro quo for the demand of infrastructure developmentcharges and as such, the levy is arbitrary and is nothing but acolourable exercise of power.7. The CMWSSB in their counter affidavit filed originallyjustified the collection of infrastructure development charges.According to CMWSSB, the Board has spent considerable amount forproviding infrastructural facilities required by the developers andas such the development charges were rightly levied. It was theirfurther contention that multistoried and special buildings are thestructures responsible for the discharge of sewerage at singlepoint to public sewer system in huge quantity and are not inproportion to the capacity of designed sewers. At the same time,the demand for supply of water to such premises at single point hassuddenly increased. The Board cannot anticipate any suchdevelopment so as to provide the infrastructure facilities inadvance leading to dead investments. Therefore, considering thetotal expenditure required for providing infrastructural facilitiesand to maintain the water supply and sewage system, the Act wasamended authorising the Board to collect infrastructure developmentcharges.8. The Division Bench speaking through His Lordship Mr.JusticeP.Sathasivam, (as His Lordship then was), opined that CMWSSB ischarging the infrastructure development charges only for theservice rendered and to strengthen and maintain the water supplyand sewerage infrastructure and as such, the levy is fullyjustified. Accordingly, the writ petitions were dismissed.9. The unsuccessful writ petitioners challenged the orderbefore the Supreme Court in Civil Appeal Nos.1079 of 2009 etc.batch. The Supreme Court negatived the contentions raised by thepetitioners regarding delegation of power and upheld the validityof Section 81(2)(jj) of the Chennai Metropolitan Water Supply andSewerage Board Act, though for different reasons.10. The Supreme Court thereafter considered the question ofquid pro quo. The Supreme Court found that State or the CMWSSB didnot state on what basis the rate of Rs.64/- per square meter was https://hcservices.ecourts.gov.in/hcservices/ fixed. There were no records to indicate the amount spent towardsservices to be rendered to the multistoried and special buildings.The only contention originally taken was to the effect that theBoard has to spend considerable amount for over all development ofthe water supply and sewerage system. The Supreme Court observedthat in case it is a fee, the principle of quid pro quo wouldapply. The Supreme Court after extracting the leading decisions onthe point including the judgement reported in 2006 (7) SCC 241(Jindal Stainless Ltd., (2) & Another v. State of Haryana & Ors.,)remitted the matter to this Court with a direction to implead theState of Tamil Nadu as a party. The parties were given liberty toproduce materials before this Court to substantiate theirrespective contentions.11. Subsequent to the remand, the CMWSSB and the State ofTamil Nadu filed separate counter affidavits justifying theimposition of infrastructure development charges. The Board aswell as the State in their respective counter affidavits throughfacts and figures explained the total expenditure incurred towardsimprovement of the existing water supply and sewage system and tomaintain the system. The details of percentage of collection ofinfrastructure development charges were also given. The Statejustified the levy by pointing out that less than 2.5% of theactual amount spent by the CMWSSB for providing these facilitiesalone were collected from the builders.12. The petitioners filed a reply affidavit wherein it isstated that the details given by the Board indicates only the overall expenditure and it has nothing to do with the special servicesrendered to the builders of multistoried and special buildings.Submissions: 13. The learned Senior Counsel for the petitioners inW.P.No.20434 of 2009 and other connected writ petitions contendedthat the levy is illegal and unjust, as it is against only a classof builders. The CMWSSB is responsible for providing water andsewage facilities. These facilities are provided generally forcommon benefit and as such the decision to collect fee from thepromoters of special and multistoried buildings is liable to bequashed as violative of Article 14 of the Constitution of India.The respondents miserably failed to prove the special benefits tothose class of builders. Therefore they are not entitled tocollect the infrastructure development charges. The learned SeniorCounsel for the petitioners in W.P.No.3782 of 2010 etc., batch ofcases advanced similar contentions. According to the learnedSenior Counsel, the fee is per se discriminatory and the collectionlacks the element of quid pro quo.. The learned Advocate General byplacing reliance on the audited accounts of the CMWSSB contendedthat the special and multistoried buildings account for the majordevelopment and as such CMWSSB has been spending considerable https://hcservices.ecourts.gov.in/hcservices/ amount to provide infrastructural facilities to these buildings.The CMWSSB has also been spending substantial amount formaintaining the water and sewage system and the major buildingslike the petitioners are the actual beneficiaries. ThereforeCMWSSB has rightly made a provision to collect a percentage of thecost from these builders. According to the learned AdvocateGeneral, the collection of fee when compared to the benefitsappears to be very negligible.Concept of fee:14. The fee unlike a tax rests on the principle ofequivalence. The levy of fee must have a corresponding relationwith the service provided by the statutory or other authorities.This distinguishing or rather essential feature differentiates feefrom tax. Though providing service is a condition precedent forlevy of fee, the failure on the part of the authority to extendequal service matching the collection would not make the fee bad.15. The petitioners have no case that the impugned Act andthe Regulations made there under are ultravires the powers of theLegislature of the State of Tamil Nadu. The challenge is confinedto the question regarding absence of special benefits to thepetitioners.Analysis:16. The question raised by the petitioners should beconsidered in the light of the observation made by the SupremeCourt in the order of remand. 17. The counter affidavit earlier filed by the CMWSSB does notcontain materials justifying the levy of fee. This made by theHonourable Supreme Court to remit the matter so as to enable theState and CMWSSB to produce materials to meet the challenge on levyof fee.18. The counter affidavit filed by the State of Tamil Naducontains details of the amount spent for providing the water supplyand sewage facilities to the builders and the actual amount spentfor maintaining the very system. According to the State, theburden of liability of the expenditure totally incurred by theCMWSSB is shared by the promoters/developers of special andmultistoried buildings and it represents only 2.5% on an averageof total expenditure. 19. The following table appended to the counter affidavitgives the details of the amount spent by the Board and the amountcollected by way of infrastructure development charges. https://hcservices.ecourts.gov.in/hcservices/ Sl.No.YearAnnualexpenditureincurredtowardsimprovementsto existingwater supplyand sewerageinfrastructurefacilities(Rs. incrores)Infrastructuredevelopmentchargescollectedfrom thedevelopersofMultistoried buildingand specialbuilding(Rs. incorres)Balanceamount ofexpenditureincurred(lessinfrastructureDevelopmentChargescollected )(Rs.incrores)Sourceof fundsto meetout thebalanceincurredexpendi-turePercentage oncollection ofinfrastruc-tureDevelopmentchargestoincurredexpenditure onschemes(in %)11997-1998142.090.21141.88WorldBank,Commer-cialBanks,L.I.C.,HudcoOECF.Govern-ment,TNUDF,JNNURM,etc. 0.1521998-1999257.173.38253.791.3231999-2000278.082.92275.161.0642000-2001258.575.14253.431.9952001-2002154.254.29149.962.7962002-2003126.118.21117.96.5272003-2004703.538.97694.561.2882004-2005445.47.27438.131.6492005-2006154.085.92148.163.85 https://hcservices.ecourts.gov.in/hcservices/ Sl.No.YearAnnualexpenditureincurredtowardsimprovementsto existingwater supplyand sewerageinfrastructurefacilities(Rs. incrores)Infrastructuredevelopmentchargescollectedfrom thedevelopersofMultistoried buildingand specialbuilding(Rs. incorres)Balanceamount ofexpenditureincurred(lessinfrastructureDevelopmentChargescollected )(Rs.incrores)Sourceof fundsto meetout thebalanceincurredexpendi-turePercentage oncollection ofinfrastruc-tureDevelopmentchargestoincurredexpenditure onschemes(in %)102006-2007136.296.08130.214.47112007-2008156.716.61150.14.22122008-2009173.618.62164.994.97132009-2010118.539.9108.638.36Total3104.4277.523026.92.520. The Government as well as CMWSSB in their respectivecounter affidavits dealt with in extenso the amount spent forkeeping the system in order for the purpose of providing waterconnection to the multistoried and special buildings and tomaintain the service system. The Board had set up two desalinationplants of 100 MLD capacity each to augment and meet the everincreasing demand for water supply. The maintenance of water andsewerage projects would involve considerable expenditure.Therefore on a consideration of the actual expenditure required forproviding the facilities as well as to maintain the same, a flatrate of Rs.64/- per square metre was fixed as infrastructureDevelopment charges to be collected from the builders ofMultistoried and Special buildings.21. Before considering the issue of quid pro quo, thebackground facts culminated in making the amendment to the ChennaiMetropolitan Water Supply and Sewerage Board Act authorising theBoard to levy the infrastructure charges should also be taken noteof.22. Earlier there was a requirement to obtain No ObjectionCertificate from the CMWSSB for the purpose of obtaining planning https://hcservices.ecourts.gov.in/hcservices/ permission from the CMDA. The Board on receipt of suchapplications from the builders would assess and evaluate theexpenses necessary for providing water supply and sewerageconnection. The infrastructural facilities already provided wouldnot be sufficient to meet the fresh demand on account ofdevelopments and therefore, naturally the Board has to collect thecharges. This process of calculation and giving no objectioncertificate resulted in considerable delay. Because of this, thebuilders were not in a position to get the plan approved at theearliest point of time. Accordingly, with a view to minimise thedelay in sanctioning the building plan, the system of providing noobjection certificate was dispensed with and alternatively with aview to bear the expenditure uniformly by all the promoters ofMultistoried and Special Buildings proportionate to the area ofconstruction, the Legislature has amended the Act.23. The details furnished by the Government as well as theBoard and referred to in the earlier paragraphs of this order wouldshow that considering the facilities provided to the builders, onlya negligible percentage is collected from them by way of fees.24. The City of Madras is expanding its territorialjurisdiction. There is a proposal to include the neighbouringmunicipalities also with the Chennai Corporation. Mansionsand Bungalows have now given away for apartments. Because ofthe non availability of land for construction of houses and smallapartments, multistoried buildings and special buildings have comeup. But the infrastructural facilities made by the Board remainthe same. In order to cope up with the new demand and with an ideato provide better services to all the apartments, the Board wascompelled to take measures to strengthen the existing system, whiletaking simultaneous measures to expand the system. This involvesheavy expenditure and in fact considerable amount was raised by wayof loan from the World Bank. The Board was expected to giveuninterrupted supply of water to the consumers. The sewage systemshould also be maintained in good condition. The builders have tobear only the proportionate cost in maintaining the system. Thiscost is ultimately borne only by the purchasers of apartments.25. The collection of fee in a matter like this cannot bemeasured by mathematical precision. It is not possible for theBoard to come up with a table to show the actual expenditureincurred for giving water/sewerage connection to a special ormultistoried building in comparison with the amount collected fromthe builder. This can be calculated only by measuring the totalservice rendered to the builders. Co-relation between the demandand the service can only be general in nature in a subject likewater supply and sewerage. https://hcservices.ecourts.gov.in/hcservices/

26. The petitioners cannot be heard to say that the quantum offees should be assessed on mathematical exactitude.27. The Government as well as the Board justified the levy offee with proper materials. The expenditure is shared by all themajor builders. It is common knowledge that the requirement ofwater for residential houses and the residential apartments are notthe same. The petitioners are builders of multi-storied and specialbuildings. Each residential complex would contain large number ofresidential units and all these units would need water connectionas well as sewage facilities. When the requirement of water andsewage facility is increasing day by day, naturally the existingfacilities would not be sufficient. While maintaining the existingservice, simultaneous action must also be taken to provide betterfacilities. Necessarily, the CMWSSB has to spend money to meet therequirements. The petitioners are contributing only a negligibleamount, compared to the facilities which they are enjoying.28. The petitioners have projected a case that the demand isessentially in the nature of a tax. The averments as contained inthe counter affidavit filed originally to the effect that necessaryplanning was done with a view to provide facilities upto the year2021 created an impression that the attempt was to realise thesaid amount by collecting fees from the builders like thepetitioners. The said apprehension has no basis. The detailedexpenditure statement produced by CMWSSB shows that considerableamount has already been spent for providing the facilities as wellas to maintain the same and the same would be the case in the yearsto come on account of the proposal of medium and large scalepromoters in the field of construction to launch more and more newhousing projects.Illustrative cases29. The Constitution Bench of the Supreme Court in JagannathRamanuj Das v. State of Orissa, 1954 SCR 1046 explained theconceptual difference between a tax and fee thus:"9. .....there is no generic differencebetween a tax and a fee and both are differentforms in which the taxing power of a Statemanifests itself. Our Constitution, however, hasmade a distinction between a tax and a fee forlegislative purposes and while there are variousentries in the three lists with regard tovarious forms of taxation, there is an entry atthe end of each one of these lists as regardsfees which could be levied in respect of everyone of the matters that are included therein. Atax is undoubtedly in the nature of a compulsory https://hcservices.ecourts.gov.in/hcservices/ exaction of money by a public authority forpublic purposes, the payment of which isenforced by law. But the essential thing in atax is that the imposition is made for publicpurposes to meet the general expenses of theState without reference to any special benefitto be conferred upon the payers of the tax. Thetaxes collected are all merged in the generalrevenue of the State to be applied for generalpublic purposes. Thus, tax is a common burdenand the only return which the taxpayer gets isthe participation in the common benefits of theState. Fees, on the other hand, are paymentsprimarily in the public interest but for somespecial service rendered or some special workdone for the benefit of those from whom paymentsare demanded. Thus in fees there is always anelement of quid pro quo which is absent in atax. Two elements are thus essential in orderthat a payment may be regarded as a fee. It thefirst place, it must be levied in considerationof certain services which the individualsaccepted either willingly or unwillingly. Butthis by itself is not enough to make theimposition a fee, if the payments demanded forrendering of such services are not set apart orspecifically appropriated for that purpose butare merged in the general revenue of the Stateto be spent for general public purposes....."30. In Ratilal Panachand Gandhi v. State of Bombay, 1954 SCR1055 the Supreme Court while indicating the essential features offee observed that it is not possible to prove in every case thatthe fees collected is approximate to the expenses. "22. .....Fees, on the other hand, arepayments primarily in the public interest, butfor some special service rendered or somespecial work done for the benefit of those fromwhom the payments are demanded. Thus in feesthere is always an element of quid pro quowhich is absent in a tax. It may not bepossible to prove in every case that the feesthat are collected by the Governmentapproximate to the expenses that are incurredby it in rendering any particular kind ofservices or in performing any particular workfor the benefit of certain individuals. But inorder that the collections made by theGovernment can rank as fees, there must be co-relation between the levy imposed and the https://hcservices.ecourts.gov.in/hcservices/ expenses incurred by the State for the purposeof rendering such services. This can be provedby showing that on the face of the legislativeprovision itself, the collections are notmerged in the general revenue but are set apartand appropriated for rendering these services.Thus two elements are essential in order that apayment may be regarded as a fee. In the firstplace, it must be levied in consideration ofcertain services which the individuals acceptedeither willingly or unwillingly and in thesecond place, the amount collected must be ear-marked to meet the expenses of rendering theseservices and must not go to the general revenueof the State to be spent for general publicpurposes....."31. In Hingir-Rampur Coal Co. Ltd. v. State of Orissa,(1961) 2 SCR 537 the Supreme Court while indicating the true testto determine the character of levy said: "9. .......... It is true that between atax and a fee there is no generic difference.Both are compulsory exactions of money bypublic authorities; but whereas a tax isimposed for public purposes and is not, andneed not, be supported by any consideration ofservice rendered in return, a fee is leviedessentially for services rendered and as suchthere is an element of quid pro quo between theperson who pays the fee and the publicauthority which imposes it. If specificservices are rendered to a specific area or toa specific class of persons or trade orbusiness in any local area, and as a conditionprecedent for the said services or in returnfor them cess is levied against the said areaor the said class of persons or trade orbusiness the cess is distinguishable from a taxand is described as a fee. Tax recovered bypublic authority invariably goes into theconsolidated fund which ultimately is utilisedfor all public purposes, whereas a cess leviedby way of fee is not intended to be, and doesnot become, a part of the consolidated fund. Itis earmarked and set apart for the purpose ofservices for which it is levied. There is,however, an element of compulsion in theimposition of both tax and fee. When theLegislature decides to render a specificservice to any area or to any class of persons, https://hcservices.ecourts.gov.in/hcservices/ it is not open to the said area or to the saidclass of persons to plead that they do not wantthe service and therefore they should beexempted from the payment of the cess. Thoughthere is an element of quid pro quo between thetax payer and the public authority there is nooption to the tax-payer in the matter ofreceiving the service determined by publicauthority. In regard to fees there is, and mustalways be, co-relation between the feecollected and the service intended to berendered. Cases may arise where under the guiseof levying a fee Legislature may attempt toimpose a tax; and in the case of such acolourable exercise of legislative power courtswould have to scrutinise the scheme of the levyvery carefully and determine whether in factthere is a co-relation between the service andthe levy, or whether the levy is either not co-related with service or is levied to such anexcessive extent as to be a pretence of a feeand not a fee in reality. In other words,whether or not a particular cess levied by astatute amounts to a fee or tax would always bea question of fact to be determined in thecircumstances of each case....." 32. In Sri Krishna Das v. Town Area Committee, (1990) 3 SCC645, the Supreme Court while considering the legislativecompetency of the State to levy the fee and its power to delegatethe same to the local authority observed that quid pro quo betweena tax payer and the authority need not be understood inmathematical equivalence. The relevant observation reads thus:"23. Under the Indian Constitution theState Government's power to levy a tax is notidentical with that of its power to levy a fee.While the powers to levy taxes is conferred onthe State legislatures by the various entries inList II, in it there is Entry 66 relating tofees, empowering the State Government to levyfees “in respect of any of the matters in thislist, but not including fees taken in anycourt”. The result is that each Statelegislature has the power, to levy fees, whichis co-extensive with its powers to legislatewith respect to substantive matters and it maylevy a fee with reference to the services thatwould be rendered by the State under such law.The State may also delegate such a power to a https://hcservices.ecourts.gov.in/hcservices/ local authority. When a levy or an imposition isquestioned, the court has to inquire into itsreal nature inasmuch as though an imposition islabelled as a fee, in reality it may not be afee but a tax, and vice versa. The question tobe determined is whether the power to levy thetax or fee is conferred on that authority and ifit falls beyond, to declare it ultra vires.24. We have seen that a fee is a paymentlevied by an authority in respect of servicesperformed by it for the benefit of the payer,while a tax is payable for the common benefitsconferred by the authority on all tax payers. Afee is a payment made for some special benefitenjoyed by the payer and the payment isproportional to such benefit. Money raised byfee is appropriated for the performance of theservice and does not merge in the generalrevenue. Where, however, the service isindistinguishable from the public services andforms part of the latter it is necessary toinquire what is the primary object of the levyand the essential purpose which it is intendedto achieve. While there is no quid pro quobetween a tax payer and the authority in case ofa tax, there is a necessary co-relation betweenfee collected and the service intended to berendered. Of course the quid pro quo need not beunderstood in mathematical equivalence but onlyin a fair correspondence between the two. Abroad co-relationship is all that is necessary." 33. In Indian Mica Micanite Industries v. State of Bihar,(1971) 2 SCC 236, the Supreme Court observed that in the matter oflevy of fee and the corresponding services, it will be impossibleto have an exact co-relationship. The observation reads thus:"11. ....... before any levy can be upheldas a fee, it must be shown that the levy hasreasonable co-relationship with the servicesrendered by the Government. In other words thelevy must be proved to be a quid pro quo for theservices rendered. But in these matters it willbe impossible to have an exact co-relationship.The co-relationship expected is one of a generalcharacter and not as of arithmeticalexactitude."34. In Sudhindra Thirtha Swamiar v. Commr., Hindu Religiousand Charitable Endowments, [1963 Supp (2) SCR 302 = AIR 1963 SC966] the challenge was to the levy of fee under Section 76(1) of https://hcservices.ecourts.gov.in/hcservices/ the Madras Hindu Religious Endowments Act, 1951. The Supreme Courtheld that the fee does not cease to be a fee merely because therewas no direct relation to the actual service rendered. The SupremeCourt observed:"18. .............A levy in the nature ofa fee does not cease to be of that charactermerely because there is an element ofcompulsion or coerciveness present in it, noris it a postulate of a fee that it must havedirect relation to the actual services renderedby the authority to each individual who obtainsthe benefit of the service. If with a view toprovide a specific service, levy is imposed bylaw and expenses for maintaining the serviceare met out of the amounts collected therebeing a reasonable relation between the levyand the expenses incurred for rendering theservice, the levy would be in the nature of afee and not in the nature of a tax. It is truethat ordinarily a fee is uniform and no accountis taken of the varying abilities of differentrecipients. But absence of uniformity is not acriterion on which alone it can be said that itis of the nature of a tax. A fee being a levyin consideration of rendering service of aparticular type, corelation between theexpenditure incurred by the Government and thelevy must undoubtedly exist, but a levy willnot be regarded as a tax merely because of theabsence of uniformity in its incidence, orbecause of compulsion in the collectionthereof, nor because some of the contributoriesdo not obtain the same degree of service asothers may."35. In D.C. and Gen.Mills Co., Ltd., v. Chief Com., Delhi(1970(2) SCC 172, the Supreme Court having found that 60% of theamount of licence fee which were being realised by the authoritiesunder the Factories Act was actually spent on services rendered tothe factory owners, upheld the validity of levy.36. In Indian Mica Micanite Industries v. State of Bihar,(1971) 2 SCC 236, the Constitutional Bench of the Supreme Court inthe context of levy of fee held that the nature of relationshipexpected is one of general category and it is essentially aquestion of fact.37. In Jindal Stainless Ltd. (2) v. State of Haryana, (2006) 7SCC 241, the Supreme Court observed that the levy of fee has to bebroadly proportional. The observation reads thus:"42. A tax can be progressive. However, afee or a compensatory tax has to be broadlyproportional and not progressive. In the https://hcservices.ecourts.gov.in/hcservices/ principle of equivalence, which is thefoundation of a compensatory tax as well as afee, the value of the quantifiable benefit isrepresented by the costs incurred in procuringthe facility/services, which costs in turnbecome the basis of reimbursement/recompensefor the provider of the services/facilities.Compensatory tax is based on the principle of“pay for the value”. It is a sub-class of “afee”.38. The Supreme Court in Hingir-Rampur Coal Co. Ltd. v. Stateof Orissa, (1961) 2 SCR 537 observed that, "If the special servicerendered is distinctly and primarily meant for the benefit of aspecified class or area, the fact that in benefiting the specifiedclass or area, the State as a whole may ultimately and indirectlybe benefited would not detract from the character of the levy as afee"Conclusion: 39.There is an element of quid pro quo involved in thesubject levy though the assessment was not on the basis ofarithmetical exactitude. It was only for the purpose of providingand maintaining the water and sewage facilities, the Act wasamended resulting in the levy of infrastructure developmentcharges. The levy being proportional to the service rendered,cannot be characterised as a tax in disguise. We do not thereforefind any merit in the contentions raised on behalf of thepetitioners.40. In the upshot, we dismiss the writ petitions and upholdthe levy of infrastructure development charges by CMWSSB.Consequently the connected Mps are closed. No costs.Tr/Sd/-Deputy Registrar//True Copy//Sub Asst. Registrar https://hcservices.ecourts.gov.in/hcservices/ To1. The Secretary to Government State of Tamilnadu, Ministry of Housing and Urban Development Fort St. George Chennai-600 009.2. The Member Secretary Chennai Metropolitan Development Authority Thalamuthu Natarajan Building No.8, Gandhi Irwin Road, Chennai-600 008.3. The Chairman cum Managing Director Chennai Metro Water and Sewerage Board Chennai-600 002.4. The Commissioner, Corporation of Chennai, Chennai.+ 1 cc to Mr. R. Mohan, Advocate SR No.57037+ 1 cc to Mr. P. Vasudevan, Advocate SR No.57036+ 1 cc to Mr. P.B. Ramanujam, Advocate SR No.57221+ 1 cc to Mr. K. Raja, Advocate SR No.57312+ 1 cc to Mr. K.V. Babu, Advocate SR No.57276+ 18 ccs to Mr. S. Sundaresan, Advocate SR No.57592, 57593+ 1 cc to Mr. S. Vijayakumar, Advocate SR No.57020+ 1 cc to Mr. R. Ravichandran, AGP SR No.57083+ 1 cc to Mr. M.L. Joseph, Advocate SR No.57443+ 1 cc to Mr. V. Bharathidasan, Advocate SR No.57430+ 1 cc to Mr. L.P. Shanmuga Sundaram, Advocate SR No.57389+ 1 cc to Government Pleader, SR No.57363 https://hcservices.ecourts.gov.in/hcservices/ order in W.P.Nos.20434, 20435 of 2009, 304 and 10682 of 2002, 755, 7459, 8433, 33680 of 2003, 6006, 6256, 6926, 10440, 29434, 30602 of 2004, 2636, 4409, 11821, 11822,16683, 17291, 20969, 24805,28785, 33278, 33279, 33505 of 2005, 6471, 7824, 30290, 34741, 34702 of 2006, 19839, 11632, 17436, 21751, 24002, 24590 of 2009, 19744, 3782, 3783, 14670, 14201, 14202, 24153, 16464, 16465 of 2010, 7884 of 2011 and connected Mps.CK(CO)SRA, RH, EU, TP,SR, KK, PMK/10.10.2011