IMPORTANT POINT
A party to a contract is not entitled to question amount of consideration after signing contract.

JUDGMENT :

PAMIDIGHANTAM SRI NARASIMHA, J.

1. The short question which arises for our consideration in the present case relates to whether a party to a contract is entitled to question the amount of consideration after signing the contract. By adverting to the facts of the case, we have held that Respondent No.1 is estopped from doing so because the Appellant, in all its communications, had sought for an amount of Rs.1,00,000 as irrigation restoration charges i.e., consideration for diversion of water for industrial use, which was earlier reserved for irrigational purposes. Even the contract entered into between the parties prescribed the same amount. In fact, Respondent No.1 agreed to the pay the consideration by issuing an undertaking on the date of signing of the contract. In any case, this contractual dispute concerning the reduction of irrigation restoration charges, was contested by the parties in an earlier Writ Petition before the High Court of Judicature at Bombay, and the High Court by its order dated 22.11.2012 had dismissed the challenge. This is the second round of litigation on the same issue.

2. This appeal by the State of Maharashtra is against the judgment of the Division Bench of the High Court of Judicature at Bombay at Nagpur¹[In WP No. 4968 of 2015 dated 05.05.2016], whereby the High Court has reduced the ‘irrigation restoration charges’ which the Respondent herein has contracted to pay, from Rs.1,00,000 per hectare to Rs.50,000 per hectare. This has the effect of reducing the total liability of the Respondent towards irrigation restoration charges from Rs. 232.18 Crores to Rs.116.09 Crores.

3. The matter before us concerns the levy of ‘irrigation restoration charge’ by the Appellant as per Government Resolution dated 01.03.2009. The Respondent and other similarly placed companies use water for industrial purposes, which is otherwise reserved for irrigation of agricultural land. The usage of water for industrial purposes is seen as loss of water for irrigation, and in order to compensate for the same, the said charge is levied and collected by the Appellant. These charges are levied after taking into account the total number of hectares which will be deprived of irrigation due to the diversion of water for industrial use.

4. The other cost levied by the Appellant is the ‘capital expenditure charge’. This charge is used towards the construction and maintenance of dams. The payment of this charge is optional. Therefore, in the present case, we are not concerned with the levy and payment of the ‘capital expenditure charge’.

Facts:

5. On 21.02.2004, the Irrigation Department of the State of Maharashtra came up with a circular wherein it was prescribed that when water is diverted for non-irrigation purposes, then the entity using such water shall pay a sum of Rs.50,000 per hectare as irrigation restoration charges. The circular stated that no water shall be diverted unless an agreement is entered into between the concerned industry and the government.

6. Sophia Power Company Ltd.²[hereinafter referred to as ‘SPCL’], the predecessor of Respondent No.1 herein, intended to set up a 2640MW thermal power plant. For that purpose, a communication dated 12.12.2007 was sent by SPCL to the Maharashtra Industrial Development Corporation to confirm the availability of 240 million liters of water per day to facilitate the smooth running of the thermal power plant. Pursuant to the application made by SPCL, a high-powered committee constituted by the State of Maharashtra in its meeting held on 21.02.2008, granted in-principle approval for the usage of water by SPCL. This in-principle approval was subject to SPCL paying capital contribution and irrigation restoration charges. The high-powered committee named the Appellant herein as the implementing agency.

7. On 25.07.2008, the Vidarbha Irrigation Development Corporation granted f