M/s.Reckitt Benckiser (India) Ltd. v. M/s.State Industries Promotion Corporation of Tamil Nadu Limited

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED : 4-3-2008CORAMTHE HON'BLE MR.JUSTICE N.PAUL VASANTHAKUMARW.P.No.23924 of 2006M.P.No.2 of 2006M/s.Reckitt Benckiser (India) Ltd.,Plot No.176, SIPCOT Industrial Complex,Hosur - 635 126rep.by its Authorised signatory..PetitionerVs.M/s.State Industries Promotion Corporation ofTamil Nadu Limited,No.19-A, Rukmani Lakshmipathi Road,Egmore,Chennai - 600 008....RespondentPrayer:This writ petition is filed under Article 226 ofConstitution of India, praying this Court to issue a writ ofCertiorarified mandamus calling for the records of the respondentcomprised in impugned communication dated 13.5.2004 bearingreference No.P-11/ICH-1/Reckitt/161/80 and consequentialcommunication dated 15.6.2004 bearing reference No.P-11/ICH-1/Reckitt/161/80 and quash the same as being arbitrary and illegaland direct refund of the excess water charges collected by therespondent of an amount of Rs.26,53,874/- together with interest @18% on the said sum from the date of payment by the petitioner tothe date of refund.For Petitioner: Mr.Sathish ParasaranFor Respondent :Mr.M. DevarajO R D E RBy consent of both sides, the writ petition itself was takenup for final disposal.2.Prayer in the writ petition is to quash the order dated13.5.2004 and the consequential communication issued by therespondent dated 15.6.2004 and direct the respondent to refund theexcess water charges collected from the petitioner amounting to https://hcservices.ecourts.gov.in/hcservices/ Rs.26,53,874/- together with interest at 18% per annum on the saidsum from the date of payment to the date of refund.3.The brief facts necessary for disposal of the writpetition are as follows:(a)Petitioner, a Multi-National Corporation has amanufacturing Unit at SIPCOT Industrial Complex in Hosur.Petitioner was originally carrying on the business in the name andstyle of 'Reckitt & Colman of India Ltd.' and after restructuringit is renamed as 'Reckitt Benckiser India Ltd.'.(b)Petitioner entered into a lease-cum-sale agreement on30.4.1980, which was executed for an extent of 30.08 acres. Theland had been leased for putting up the manufacturing unit, whichis essentially a chemical manufacturing plant for manufacturingbulk drugs. The requirement of water for its units is to beprovided at the Industrial Estate by the respondent.(c)Petitioner sought for water supply from the respondent on9.2.1995 and an agreement to that effect was executed between thepetitioner and the respondent. The said agreement sets out themanner of supply of water and payments to be made therein. Thewater charges have to be paid by the petitioner to the respondentbased on the actual consumption as per clause 10 of the WaterSupply agreement. The water charges are to be paid based on themeasurement recorded in the water meter that is to be installed inthe pipeline connecting the water supply. The readings wererequired to be done monthly or at convenient intervals and thecharges were to be paid accordingly. The agreed quantity of waterto be supplied was one lakh gallons per day. The respondent isthe sole provider of water in the Industrial Estate. (d)According to the petitioner, right from the beginningthere was difficulty in getting required water supply as thesupply was deficient. In spite of repeated requests therespondent was not in a position to supply the agreed quantity ofwater, because of which there was imminent risk of closure of thepetitioner unit. Therefore, the petitioner had to arrange foralternative source of water supply.(e)In June, 2002, the respondent raised a demand allegingunauthorised drawal of water on the ground that the respondent hadspent huge amount for arranging water supply and since some of theunits were not drawing full requirement of water from SIPCOT, butgetting water from the private sources. The demand for watercharges was raised for the period from April, 1996 to April, 2002based on the difference between the average consumption for theperiod and the actual quantity of water purchased. On 11.10.2002,a further demand was made for the period from May, 2002 toSeptember, 2002 on the above basis. The first demand was for asum of Rs.4,33,894/- through letter dated 10.6.2002 and the seconddemand was for a sum of Rs.12,38,750/- by letter dated 11.10.2002. https://hcservices.ecourts.gov.in/hcservices/ A further demand was raised for the subsequent months by anotherletter dated 13.11.2002 for a sum of Rs.2,45,097/-.(f)According to the petitioner, even 1/4th of the requiredwater was not supplied by the respondent through its water source.The conditions of lease-cum-sale agreement in respect of the landshaving been complied with, petitioner requested the respondent toexecute the sale deed. Since the petitioner faced demand withalleged water charges of a total sum of about Rs.19,00,000/-, aprotest letter was also made by the petitioner on 8.11.2002 and18.11.2002 and sought for execution of the sale deed. Therespondent informed the petitioner that to execute the sale deedit was mandatory that no due certificate is to be obtained fromthe Project Officer of the respondent, which would be a conditionprecedent and the execution would be done only on payment.(g)In view of the urgent requirement for execution of thesale deed, the petitioner requested to waive the water chargesdemanded and the said request having not been acceded and therespondent having insisted for the payment of dues for theexecution of the sale deed, petitioner made the payment of a sumof Rs.2,61,156/- with a covering letter dated 4.3.2003 and paidthe same under protest. Petitioner received other communicationson 5.12.2002 and 5.1.2003 for a total sum of Rs.5,12,904/- forwhich the petitioner issued two cheques for the sum ofRs.2,52,248/- and Rs.2,60,656/- which were paid also under protestfor execution of the sale deed.(h)The respondent constituted a three member committee toconsider the constant request for the settlement of vexed issue ofpayment of water charges on 21.3.2003 and the committee resolvedto recommend for waiver of the payment of water charges. Sincethe petitioner paid the water charges under protest as statedsupra, it has requested for refund of the said sum by sending arepresentation dated 21.8.2003, followed with reminder dated3.11.2003. The respondent issued a reply on 14.4.2004 andrequested the petitioner to submit the details of payment, whichwas also furnished.(i)The respondent in its Board meeting held on 26.4.2003,resolved not to accept the request for refund and the same wascommunicated to the petitioner by letter dated 13.5.2004. Bycommunication dated 25.5.2004 petitioner sought for reasons forsuch rejection of refund, for which reply was given on 4.6.2004 bystating that the request had been rejected as the decision takenwas to waive the collection of arrears of water charges and thepetitioner having remitted Rs.26,53,874/- prior to the Boarddecision, it is not entitled to get refund.(j)The said orders are challenged in this writ petitioncontending that the respondent having admitted that it was notable to supply the agreed quantity of water and due to the saidreason took a decision to waive the water charges, it is notjustified in ordering refund of the payment already paid by the https://hcservices.ecourts.gov.in/hcservices/ petitioner under protest and it is violative of Articles 14 and300A of the constitution of India. The demand itself having beenfound erroneous and the payment made under protest will not enurethe respondent to retain the amount and the payment made by thepetitioner under protest is only to comply with a pre-conditionfor the execution of the sale deed, the same cannot be put againstthe petitioner, particularly when the amount was paid underprotest. Therefore, the petitioner is seeking refund with 18%interest from the date of payment to the date of refund.4.The respondent filed counter affidavit wherein it is contendedthat the petitioner Company requested for the execution of thesale deed and the sale deed was executed after the petitionerCompany complied with all the requirements of the lease-cum-saleagreement. One of the condition for execution of the sale deedwas to get a no due certificate from the Project Officer of therespondent. Since the petitioner was having arrears of watercharges amounting to Rs.26.54 lakhs, no due certificate was notissued and on payment, the sale deed was executed on 11.3.2003.The amount having been paid to comply with a pre-condition for theexecution of the sale deed, petitioner is not entitled to seekrefund of the amount and the request of the petitioner to refundthe amount was placed before the Managing Director, who in turnplaced the same before the Board and the Board, after detaileddiscussion decided not to consider the request. For the shortsupply of water it is stated that due to continuous monsoonfailure the respondent made alternate arrangement by drawingsurplus water from the nearby KPRP dam, but the petitioner companyfailed to draw water from the said source. It is further statedthat the petitioner having made the payment, the Board decided notto waive the water charges. As the petitioner has already paidthe amount, nothing is left for waiver and therefore the questionof waiver will not arise. Hence the refund request sought for wasrejected.5.A reply affidavit was filed stating that mere payment ofthe amount by the petitioner cannot be a reason to penalise thepetitioner, that too when the amount was paid under protest. Itis also denied in the reply that the other units are drawing waterthrough the water source of the respondent and the petitionerfailed to avail the said benefit and drew water throughalternative sources are denied. The condition in the lease-cum-sale agreement to get no due certificate will not apply for thepayment of water charges. The waiver of water charges having beengranted to other units for the same period, denial of the saidbenefit to the petitioner is arbitrary.6.I have considered the rival submissions made by thelearned counsel for the petitioner as well as respondent. https://hcservices.ecourts.gov.in/hcservices/

7.The point in issue is whether the respondent is justifiedin denying refund claim made by the petitioner after a decision istaken to waive the water charges to other units for the sameperiod.8.The resolution of the respondent dated 26.4.2004 clearlystates that after examining the representation of the allotteesthe Chairman and Managing Director constituted a committeeconsisting of three General Managers to look into the grievanceand the committee considered the representation of the sixallottees including the petitioner on 28.3.2003 and 29.3.2003 anddiscussed the issues relating to non-drawal of water from SIPCOTsource. The findings and recommendations of the committee wereplaced before the Board meeting held on 30.5.2003. The Boardconsidered the mode for relaxation of collection of arrears ofwater charges as per the contracted quantity in respect of HosurComplex. The Board finally decided to waive the arrears of watercharges as per the contracted quantity in respect of industrialunits located in SIPCOT Industrial Complex, Hosur.9.As per the said resolution of the Board, the ProjectOfficer has not insisted the six units to remit the arrears ofwater charges. Petitioner Company is also one among the sixunits. However, in order to get the sale deed executed, thepetitioner unit was compelled to pay the water charges ofRs.26,53,874/- for the period from April 1999 to January, 2003.The said payment was made under protest. 10.(i)In the Law Dictionary of P.Ramanatha Iyer, 3rdEdition, the word 'under protest' is described as 'payment underprotest'. The phrase signifies payment of money accompanied by adeclaration that the demand is illegal or in excess of what isjustly due and implying the need of a future rectification.(ii)In Black's Law Dictionary, 7th Edition, the word'protest' is described as 'a formal statement in writing,disputing a debt's legality or validity but agreeing to makepayment while reserving the right to recover the amount at a latertime. The disputed debt is described as under protest.'11.The power of the High Court to issue writs for refund isconsidered by the Supreme Court in the case of U.P. PollutionControl Board v. Kanoria Industrial Ltd., (2001) 2 SCC 549 and inparagraphs 17, 26 and 27 held thus, "17 . ................... It is onething to say that the High Court has no powerunder Article 226 of the Constitution to issuea writ of mandamus for making refund of themoney illegally collected. It is yet anotherthing to say that such power can be exercisedsparingly depending on facts and circumstances https://hcservices.ecourts.gov.in/hcservices/ of each case. For instance, in the cases onhand where facts are not in dispute, collectionof money as cess was itself without theauthority of law; no case of undue enrichmentwas made out and the amount of cess was paidunder protest; the writ petitions were filedwithin a reasonable time from the date of thedeclaration that the law under which tax/cesswas collected was unconstitutional. There is nogood reason to deny a relief of refund to thecitizens in such cases on the principles ofpublic interest and equity in the light of thecases cited above. However, it must not beunderstood that in all cases where collectionof cess, levy or tax is held to beunconstitutional or invalid, the refund shouldnecessarily follow. We wish to add that even incases where collection of cess, levy or tax isheld to be unconstitutional or invalid, refundis not an automatic consequence but may berefused on several grounds depending on factsand circumstances of a given case.18..........19..........20..........21..........22..........23..........24..........25.......... 26 . The stand of the petitioners that therespondents were not entitled for refund on theground that the amount of cess collected waspassed on to the State Government, which inturn gave it to the Central Government and theCentral Government has appropriated the same bypassing on the money back to various StatePollution Control Boards, does not help them.Before the High Court, they only stated thatthey made reference to the Government in regardto the claim made by the respondents for refundand they were waiting for response. It was alsonot made out by the petitioners as to how theyhad difficulties in making the refund to therespondents. It may also be kept in view that https://hcservices.ecourts.gov.in/hcservices/ immediately after the notices were issueddemanding water cess they were challenged. Evenin some cases interim orders were also passedin the High Court; the amount of water cess waspaid under protest. So, in this situation whenfinally this Court held that the verycollection of water cess was without theauthority of law, the claim of the respondentsfor refund cannot be denied merely on theground that the petitioners passed on the moneyto the State Government and in turn the moneywas sent to the Central Government and laterthe Central Government appropriated the same bypassing it back to the various State PollutionControl Boards. 27 . The High Court in our view havingtaken all aspects into consideration was rightin allowing the claims of the respondents madefor refund in the writ petitions. We do not seeany good ground or valid reason to interferewith the judgments and orders of the High Courtimpugned in these petitions. Hence the specialleave petitions are dismissed. The partiesshall bear their own costs."12.In the present case, the payment made already underprotest is not entitled to be retained by the respondent in viewof the decision already taken to give waiver of water charges inrespect of the industrial units located in SIPCOT IndustrialComplex, Hosur. If the petitioner has not paid the amount underprotest, the respondents are not entitled to demand the saidamount. Hence the payment made under protest is to be treatedwithout prejudice to the petitioner's claim to seek refund, ifultimately the Board take a decision to waive the water charges.13.The waiver having been granted to all the IndustrialUnits, it is inequitable on the part of the respondents to denywaiver which was paid under protest. The only difference insofaras the petitioner and to other units is that the petitioner haspaid the same under protest and the other units have not paid anyamount. The waiver having been given to all the Units, merelybecause petitioner Unit paid the amount under protest, it cannotbe denied refund as the denial of the same benefit to thepetitioner is in violation of Article 14 of the Constitution ofIndia.14.The contention of the learned counsel for the respondentthat payments were made without accepting the claim of thepetitioner under protest is contrary to the records. Even the https://hcservices.ecourts.gov.in/hcservices/ Chairman and Managing Director while placing the case of thepetitioner before the Board by his proceeding dated 20.4.2004stated that the petitioner Company remitted an amount ofRs.26,53,874/- for the period from April, 1999 to January, 2003under protest, a copy of which was produced by the petitioner tothe respondent, which was also placed in the Board meeting held on26.4.2004.15.In the light of the above undisputed fact of remittanceof the amount under protest by the petitioner, petitioner isentitled to get waiver of water charges for the above period andthe denial of refund, which was paid by the petitioner underprotest, is irrational.16.The writ petition is allowed with a direction to therespondent to refund the amount of Rs.26,53,874/- with prevailingbank interest rate within a period of eight weeks from the date ofreceipt of copy of this order. No costs. Connected miscellaneouspetition is closed.Sd/-Asst. Registrar./true copy/Sub Asst. Registrar.vrtoM/s.State Industries Promotion Corporation ofTamil Nadu Limited,No.19-A, Rukmani Lakshmipathi Road,Egmore,Chennai - 600 008.1 cc to Mr.Satish Parasaran, Advocate, sr. 120491 cc to Mr.M. Devaraj, Advocate, Sr. 12177W.P.No.23924 of 2006 & connected MP. NG (CO)kk 14/3