ORAL JUDGMENT: (R.M. SAVANT, J.)

1 The above Petition filed under Article 226 of the Constitution of India, inter alia, seeks the relief that the Respondent Nos.1, 2 & 3 be directed not to recover the Water Tax and Water Benefit Tax from the Petitioners as the reverse date as per the letter dated 9-2-2000 (Exhibit A to the Petition) and/or on the basis that the area/industry falls in non conforming zone. The Petitioners further seek the relief that the Respondent Nos.1,2 & 3 be directed to forthwith withdraw and cancel the letter dated 9-2-2000 (Exhibit A to the Petition).

2 The facts involved in the above Petition in brief can be stated thus:

The Petitioner No.1 runs an ice factory at Mazgaon. The said factory is situated in a residential / commercial zone in the Development Plan of Greater Mumbai as prepared by the Respondent No.1 and as sanctioned by the Respondent No.4. The Petitioner No.1 in view of its factory is subjected to property tax under Section 140 of the Mumbai Municipal Corporation Act 1888, which includes the WaterTax and Water Benefit Tax. The Respondent No.2 vide letter dated 9-2-2000 informed the Petitioner No.1 that its industry was located in non conforming zone as per Water Charges Rule (Revised) w.e.f. 1-4-1996 and the Petitioners was therefore, liable to pay water charges at Rs.44 per 1000 litres.

3 After the said letter dated 9-2-2000, some correspondence ensued between the Petitioners and the Respondent No.1. Thereafter bills were issued to the Petitioners for the water charges. The said bills were for the months of January, February and March, 2000, in which the rate charged in respect of one meter was Rs.22 per 1000 litres, though in respect of the other meters of the Petitioner No.1 the rate charged was Rs.15 per 1000 litres. In view of the said bills, the Petitioner No.1 addressed a letter dated 26-5-2000, wherein the Petitioner No.1 stated that there was a mistake in the said bills and hence requested the Respondent No.2 to correct the said bills and return the same to the petitioners. The Petitioners thereafter by letter dated 11-8-2000 informed the Respondent No.2 that they were willing to pay the bills in which water charges were correctly levied. The Petitioners paid an amount of Rs.70,043/- and by letter dated 16-8-2000 informed the Respondent No.2 that though they have paid the said amount, the same was under protest. In response to the said letter dated 16-8-2000, the Respondent No.2 by his letter dated 17-8-2000 informed the Petitioners that the bills were correct and stated that if the payment was not made within 24 hours the water supply will be cut. Thereafter, it is the case of the Petitioners that certain threats came to be issued by the officers of the Respondent No. 1 Corporation threatening the Petitioners that the water supply would be cut resulting in the filing of the present Petition. As indicated above, the letter dated 9-2-2000 issued by the Respondent No.1 is the letter under challenge in the above Petition by which letter; the Petitioners have been informed that the rate charged would be at Rs.44 per 1000 litres.

4 In so far as, the charges for water supplied to a consumer are concerned, the same are governed by what are known as Water Charges Rule (as amended in 1996) they have been framed by virtue of the power conferred by the said Act, for the purpose of levying water charges, a classification is made in respect of the industries which are situated in the conforming zone and those that are in the non conforming zone. The Rule in question is Rule No.1.5 of the said Water Charges Rule. The said Rule at the relevant time postulated that the industries located in non conforming zone would be charged at twice the rate applicable to the industries in conforming zone. Since the petitioners ice factory was situated in the non conforming zone that the Petitioners were informed that they would have to pay at twice the rate that is applicable to the industries in conforming zone i.e. Rs.44 per 1000 litres. The said issue of classification of industries for the purpose of levying water charges on the basis as to whether they were in the conforming zone or non conforming zone, had come up for consideration before a Division Bench of this Court in Writ Petition No. 1922 of 1999 wherein the factual position was almost identical to the factual position in the instant case. The Division Bench comprising of their Lordships F.I.Rebello, J.(as his Lordship then was) and A.A.Sayed, J. by its Judgment and Order dated 19-3-2010 held that the classification of the industries on the basis whether they were situated in conforming zone or non conforming zone for the purpose of levying of water charges, was not based on any reasonable classification and since the differential treatment was sought to be meted out to the industries situated in non conforming zone and since the said differential treatment was not reasonably explained and justified, the Division Bench found that the treatment of levying water charges at double rate for the industries situated in non conforming zone, was discriminatory. The Division Bench concluded that the distinction sought to be made on the basis of whether the industry was in the conforming zone and or non conforming zone would be irrelevant as the consumption of water, and the purpose for which it was consumed would be the same namely industrial use. The relevant paragraphs of the said Judgment are paragraph Nos. 17 and 20, which can be gainfully reproduced herein under:

17. The power to classify must be capable of being reasonably explained. In other words difference in treatment must be capable of being reasonably explained in the light of the object for which the particular legislation is undertaken. This must be based on some reasonable distinction between the cases differentially treated. When differential treatment is not reasonably explained and justified the treatment is discriminatory. To be able to succeed on the charge of discrimination, a person must establish conclusively that persons equally circumstanced have been treated unequally and vice versa. In the application of this principle the Courts in view the inherent complexity of fiscal adjustment of diverse elements, must permit a larger discretion to the legislature in the matter of classification, so long as it adheres to the fundamental principles underlying the said doctrine.

20. If we now examine the reasons which have been placed by the Respondent No.2 and which we have set out earlier in justifying levying of higher water charges to industry in non-conforming zone, in our opinion the reasons given are arbitrary and/or unreasonable and/or totally extraneous. Firstly merely because an industry is located in a conforming zone and another industry in a nonconforming area would be irrelevant as the consumption of water and the purpose for which it was consumed would be the same namely industrial use. The Second contention that the petitioners which are textile industries are large concerns and the tax and charges imposed upon them are transferred by them to consumers and that the Industries have a capacity to pay water charges than the other categories using the water, in our opinion is also unsustainable. Passing on the burden as cost of production which includes the inputs and taxes which it cannot pass on is true of every industry. Therefore, on this basis there can be no valid classification. Capacity to pay would depend on the profits made by the industry and not the size. At any rate the water charges are not based on the percentage of profits or gross revenue, if there could be valid reasons in the instant case. The respondents have also contended that they are charging domestic consumers of water at a minimum rate and higher rate for water supplied for non-essential and luxurious use. In the first instance industries whether in conforming zone or non-conforming zone are not domestic users. The differentiation is not between those who consume less quantity of water and those who consume more water and/or those who have lesser capacity to pay or those who are more affluent. This reason is also irrelevant to constitute reasonable classification. The other reason that water consumed can be charged at higher rate in non-essential and luxurious use is not germane. All industries whether in conforming zone or non-conforming zone use water as an input for production. In our opinion the reasons given being not reasonable the classification must be held to be not reasonable. Apart from that the purported classification even if it is reasonable, has no nexus with the object and consequently the Resolution and the consequent demands must be quashed and set aside.

5 Though the Learned Counsel appearing for the Respondent No.1 Corporation sought to oppose the Petition, and justify the classification, the same was not done with any deal of conviction in the light of the Division Bench Judgment in Morarjee Gokuldas Spinning & Weaving Company Ltd. (supra). The Division Bench of this Court having gone into the aspect of the said classification of industries situated in conforming zone and non conforming zone and having arrived at a conclusion that the treatment meted out to the industries on the said basis was discriminatory, we have no reason to take a different view, than the one taken by the Division Bench. In our view, in the light of the said Judgment, the above petition would have to be allowed and is accordingly allowed. Rule is accordingly made absolute in terms of prayer clauses (a) and (c)

6 The Learned Senior Counsel appearing for the Petitioners is agreeable to the said amount of Rs.55,506/- which the Petitioners are entitled to be refunded in terms of this Judgment, to be adjusted against the future bills of the Petitioners.

7 Order accordingly.