Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2017 Supreme(SC) 1226

SUPREME COURT OF INDIA
J. Chelameswar, S. Abdul Nazeer, JJ.
Tata Iron and Steel Co. Ltd. & Another – Appellants
Versus
State of Bihar & Others – Respondents
Civil Appeal No. 5360 of 2005
With
State of Jharkhand & Others – Appellants
Versus
Tata Iron & Steel Co. Ltd. & Another – Respondents
Civil Appeal No.5359 of 2005
Decided On : 15-12-2017

Advocates Appeared:
For the Parties :- Krishnanand Pandeya, Jayesh Gaurav, Mrs. Manik Karanjawala, Advs.

The expression 'fee' is comprehended in the expression 'tax' for the purpose of Article 265 of the Constitution, and legislative support is required for the collection of a fee.

Headnote:
Bihar Land Holdings Act, as amended by another Act of 1972 - The Act vested the lands in the State of Bihar. Bihar Irrigation Act, 1876 - The High Court did not record any conclusion on whether this Act provided the necessary statutory authority for the levy and collection of the impugned demands. Bengal Irrigation Act, 1876 - The High Court did not decide whether this Act covered the use of water for non-irrigation purposes and whether it conferred the power to recover a rate for water used for non-irrigation purposes. Bihar Irrigation Act 1997 (Act 11 of 1998) - The High Court did not examine whether this Act provided the necessary authority of law for the impugned demand.
Fact of the Case:
The Tata Iron & Steel Company Ltd. (TISCO) appealed against a demand notice from the State of Bihar to pay for water drawn from the Subarnrekha River. TISCO claimed riparian and easementary rights over the river water. The High Court declined to examine these claims and held that the State had the power to collect a fee for the water used by TISCO. However, the High Court granted limited relief to TISCO by directing the State to charge a lower rate for water consumed for domestic purposes. The appeals were filed against this judgment.
Finding of the Court:
The Supreme Court held that the expression 'fee' is comprehended in the expression 'tax' for the purpose of Article 265 of the Constitution, and therefore, legislative support is required for the collection of a fee. The Court also noted that there was no clear finding by the High Court on whether there existed any law authorizing the levy and collection of the impugned demand. The Court set aside the judgment and remitted the matter to the High Court for further examination after allowing the parties to file proper pleadings and argue the case.
Ratio Decidendi: The expression 'fee' is comprehended in the expression 'tax' for the purpose of Article 265 of the Constitution, and legislative support is required for the collection of a fee. The existence of a law authorizing the levy and collection of a demand must be established.
Result: The judgment of the High Court was set aside and the matter was remitted to the High Court for further examination after allowing the parties to file proper pleadings and argue the case.

Judgement Key Points

Ratio Decidendi:

The expression "fee" is comprehended within the expression "tax" for the purpose of Article 265 of the Constitution, requiring legislative support (authority of law) for the levy and collection of any fee [opening para] (!) (!) (!) (!) (!) .

No tax or fee can be levied or collected without statutory authority; mere existence of legislative entries (e.g., Entries 17/66 List II) does not suffice without specific enactment (!) (!) (!) (!) (!) (!) (!) (!) .

Claims of riparian or prescriptive/easementary rights require adjudication in a properly instituted civil suit with pleadings and evidence, not in writ proceedings under Article 226 (!) (!) .

The Supreme Court will not examine pure questions of law on local statutes (e.g., irrigation acts) or contractual liability as a court of first instance if not properly pleaded/argued below or lacking High Court findings, absent intertwining with constitutional interpretation (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) (!) .

JUDGMENT

Chelameswar, J. -

CIVIL APPEAL NO.5360/2005

This appeal arises out of the judgment dated 20.8.2004 in CWJC No.3819 of 1993 of the High Court of Jharkhand at Ranchi.

2. The appellants herein are the unsuccessful petitioners before the High Court.

3. A brief factual background of the matter is as follows:

The first appellant-Tata Iron & Steel Company Ltd. (for short "TISCO") is a company registered under the Companies Act having an industrial unit at Jamshedpur in the district of Singhbhum, East Bihar (Now the State of Jharkhand). The industrial unit is primarily engaged in the business of manufacture and sale of iron and steel products. For the purpose of establishing the industry TISCO required considerable extent of land. A huge extent of land admeasuring 15,725 acres was acquired by the Government and conveyed to TISCO by the then Secretary of State of India in Council by two conveyances dated 19.1.1912 and 23.9.1929.

4. The industrial unit and township connected with TISCO came into existence over a period of time on the said parcel of land. [Over a period of time a city came into existence around the industrial unit.]. It is an admitted fact that a river 'Subarnrekha' flows past the said parcel of land. It is also an admitted fact that from time to time, TISCO has been drawing water from Subarnrekha River for various purposes connected with the industry and its employees. It is also an admitted fact that the necessary infrastructure for the use and distribution of water for the above mentioned purposes was established by TISCO. By virtue of an enactment known as Bihar Land Holdings Act, as amended by another Act of 1972, the above mentioned lands came to be vested in the State of Bihar. However, the land was once again conveyed to TISCO by two documents dated 4.8.1984 and 1.8.1985, the details of which may not be necessary for the purposes of this judgment.

5. The State of Bihar undertook the construction of a multipurpose project on Subarnrekha River of which a dam known as Chandil Dam was a part. It enables impounding the water of Subarnrekha River. Chandil Dam is located upstream of Subarnrekha River above the township of TISCO.

6. Respondents issued a demand notice dated 30.9.1993 calling upon TISCO to pay an amount of Rs. 31.351 millions towards bill of water drawn from the river. ["As per the direction given by Water Resources Department and communicated to undersigned by administrator Subernarekha Project. I am enclosing bill of water drawn by Tisco iron Mango river site in duplicate amounting to Rs. 31.351 million for early payment to Executive Engineer Dam Division No. 2, Chandil.]

7. On receipt of the said notice, the appellants filed a writ petition with prayers:

"(a) to issue a Writ or Order or direction under Article 226 of the Constitution against the Respondent authorities to desist from interference with the (sic) petitioners right in any manner whatsoever and more particularly by obstructing the free flow of water in the River Subarnarekha;
b) to issue a writ, order or direction that the respondents be restrained from interfering with or obstructing in any manner the free flow of water from the River Subarnarekha for the needs of the petitioners and Jamshedpur Township and its inhabitants;
c) to declare that the impugned demand notice dated 30.9.1993 and "Bill" is illegal and void and/or issue a writ or order or direction quashing the "Bill of water drawn by Tisco" of Respondent no. 3 vide letter no. Su/Prasha/M/1595 dated 30.9.1993 issued with the approval of respondent nos. 1 & 2 as illegal, ultra-vires of the Indian Constitution and is contrary to law;
d) to declare that the petitioners have absolute and indisputable rights to water from the River Subarnarekha that flows on their own land and to utilize such water for their own use without payment to any State or authority whatsoever;
e) to declare that the petitioners have an easementary right by prescription to the waters of the river Subarnarekha;
f) to dec

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