Covenanted Contractual Levies Cannot Be Undone By Govt Through Any Unilaterally Made Notification: Punjab & Haryana High Court

In consequence, the covenanted contractual levies, as occur in the apposite contracts, drawn amongst the concerned, cannot be undone through any unilaterally made notification. In sequel, the validly drawn contracts amongst the concerned qua the relevant purpose, is to be assigned sanctity……..

The bench comprising Justice Sureshwar Thakur and Justice N.S. Shekhawat further added that in order to increase the contractual levies a fresh contract with the petitioners-industrial units is required.

……….and in case the respondent concerned, wishes to increase the contractual levies, it cannot do so, except, upon its drawing a fresh contract with the petitioners-industrial units concerned, as, permitting the respondent, to in any other mode do so would cause breach to the contractual terms, especially when a reading of the contractual terms, does not make any contemplation, that yet the respondent concerned, can in detraction thereof, proceed to make reliance, upon any statutory provisions, which may well authorize the levies rather beyond the contractual terms.

The impugned notification which was subject matter of dispute in the instant petitions was drawn by the competent authority under Section 75 read with Section 36 of the Northern India Canal, and, Drainage Act, 1873 which increased the levies, qua the user(s) of canal water by each industrial unit. The writ petitioners are not consuming the canal water for irrigation but are engaged in industrial activities.

State counsel argued that Section 36 of the Act makes them to be completely covered by the said statutory provisions, but the Court disagreed with the afore submission.

The court noted that Section 36 of the Act empowers the State Government to levy a water cess on the occupiers of the land using canal water for irrigation, and, also authorizes the competent authority to determine the rates such cess from time to time. Court further noted that the water cess so collected under Section 36 of the Act is used by the State Government for the maintenance, and, development of irrigation infrastructure.

In addition, the court also noted that Section 36 of the Act also speaks about the empowerment of the competent authority to prescribe, and, determine persons or classes of persons as 'occupiers' for the purposes of this Section 36.

Therefore, the above statutory provisions appertain only to occupiers of the apposite land, who use the water for cultivating crops as provided under Section 36 of the Act, which ends with the phrase "cultivating occupancy". Hence the entire mandate appertains only to users of canal water for farming purposes.

Therefore, the court noted that the impugned notification, issued by the competent authority in exercise of powers, under Section 36 of the Act, does not become protected by the said provision.

Regarding Section 75 of the Act, the court noted that it only authorizes the Government, to make rules to regulate the matters and not to apposite levies, as made, upon the industrial units concerned.

Consequently, any rule contrary to the substantive provisions (supra), if any, formulated by the competent authority, cannot also validate the impugned notification.

Regarding Section 31 of the Act, the court noted that it authorizes the competent authority to draw contracts for supply of canal water and, if such a contract is entered to increase the levies then it would not become well anchored thereons. In consequence, the covenanted contractual levies, as occur in the apposite contracts cannot be undone through any unilaterally made notification.

Therefore, the validly drawn contracts is to be assigned sanctity, and, in case the respondent wishes to increase the contractual levies, it cannot do so, except, upon its drawing a fresh contract with the petitioners-industrial units.

Accordingly, the court allowed the petitions and quashed the impugned notification.