K. Balakrishnan Nair, J.

1. The point that arises for consideration in this case in whether a Grama Panchayat can cancel the licence of a factory manufacturing non-alcoholic beverages on the ground of excessive exploitation of ground water. The brief facts of the case are the following:- .

2. The petitioner is Perumatty Grama Panchayat. The 2nd respondent Company is running a factory at Moolathara in Perumatty Grama Panchayat. Its main products are soft drinks and bottled drinking water. The said factory was established after obtaining permission from the Panchayat. It started commercial production in March, 2000 after obtaining license from the petitioner Panchayat. The main raw material used in the manufacture of beverages is water. Substantial portion of the need for water is met by exploiting ground water through bore-wells. The people in the locality raised objection against the exploitation of ground water by the Company. Therefore, the Panchayat passed Ext.P.1 resolution on 7-4-2003, deciding not to renew the licence of the factory. The translation of that resolution reads as follows:

"As the excessive exploitation of ground water by the Coca-Cola Company in Plachimada is causing acute drinking water scarcity in Perumatty Panchayat and nearby places, it is resolved in public interest, not to renew the licence of the said Company. It is also resolved to inform about this decision to the Hon'ble Chief Minister of Kerala and the Hon'ble Minister for lndustries, Kerala".

In the light of the said decision, Ext.P2 notice was issued by the Panchayat to the 2nd respondent Company on 9.4.2003, the translation of which reads as follows:

"To

The Human Resource Manager,

Hindustan Coca-Cola Beverages (Pvt.) Ltd.,

Plachimada, Kannimari,

Perumatty Grama Panchayat,

ChittoorTaluk, Palakkad District.

Notice issued under S.240 of the Kerala Panchayat Raj Act, 1994 and the Rules, by the Special Grade Secretary of Perumatty Grama Panchayat.

As ground water is excessively exploited for the use of Hindustan Coca-Cola Beverages Bottling Plant run in Plachimada and as a result, acute drinking water scarcity is felt in Perumatty Grama Panchayat and nearby places, it was resolved by the Panchayat Committee on 7.4.2003, not to renew the licence of the said Company.

Allegations have been raised that the excessive exploitation of ground water for the functioning of the said unit is causing drinking water scarcity and other severe environmental problems. In connection with this, political and mass organizations are holding agitations. The agitation by the Adivasis opposite to the gate of the Company is continuing for more than one year. Taking into account the above circumstances, to prevent the excessive use of ground water and also the consequential environmental problems, the Panchayat has taken this decision.

So, if you have anything to say, why the licence of the Company should not be cancelled, the same may be informed in writing to the Panchayat Secretary within 15 days from the dated receipt of this notice. You are hereby informed that if you fail to show cause, it shall be presumes that you have nothing to state and further action will be taken in the matter. Any loss or damage on account of this would be entirely within your responsibility."

Upon receipt of the said notice, the Company submitted Ext.P3 reply on 30.4.2003.1 the said reply, it was pointed out that the factory is run with all necessary statutory clearances. The allegations of depletion of ground water and causing of environmental problems by the functioning of the unit were denied by file Compass Thereafter, after hearing the 2nd respondent, the Panchayat, by Resolution dated 12-5-2003, decided to cancel the licence of the Company. The translation of the said resolution reads as follows: -

"The Panchayat is satisfied that the Hindustan Coca-Cola Beverages Pvt. Ltd. at Plachimada is doing excessive exploitation of water and as a result, the water sources in the wells and pon in