Grasim Industries Ltd. vs State Of Madhya Pradesh & Ors

The petitioner before this Court Grasim Industries Limited is a company registered under the Companies Act having a plant of manufacturing Staple

Fiber, Engineering and Chemical Products at Birlagram, Nagda, District Ujjain, has filed this present petition being aggrieved by the letter dated

30/12/2016 passed by respondent No.1 by which administrative approval has been accorded to the scheme for supply of water to 22 villages of Nagda

Development Block by constructing an intake well upstream river Chambal near to Dam No.-1 constructed by the petitioner/company. The

petitioner/company is also aggrieved by the decision taken by the Finance Committee held on 12/08/2016 giving administrative approval to the

respondent No.1 in respect of construction of an intake well for supply of drinking water to villages.

The facts of the case reveal that the petitioner-company is certainly having a manufacturing unit at Nagda and employs large number of workmanand

as the petitioner/company was having need of water for carrying out the manufacturing processes, they have constructed 4 stop dams at Chambal

River. The dams were constructed in the year 1953, 1955, 1989 and 1994 and an agreement was executed between the petitionercompany and the

Water Resources Department of State of M.P. on 01/04/2010, which is Annexure P-4.

Learned senior counsel has straight away drawn the attention of this Court towards special conditions i.e. clause 22 and the same reads as under:-

“22.1 Company shall draw water from the four dams constructed by the company across non perennial river-Chambal, and the reservoir at village

Takrawada. The source of water shall termed as “Self Constructed Water Source†in view of Water Resources Department memo

no.18/1/91/m/31/400 dated 14.02.2006 for the purpose of payment of water charges.

 22.2 As per state government’s order No.CB/31/Karya/Rast/03/1190 dated 08.10.2003 issued by the Water Resource Department of

Government of Madhya Pradesh the said “Self Constructed Water Source†as described above in point no. 22.1 has been created solely to meet

company’s industrial and drinking water requirement of industrial township, Birlagram. Moreover, Nagda and Khachrod municipalities and

Western Railways at Nagda are permitted to draw drinking water from company’s Self Constructed Water Source.

22.3 Subject to change in quantity of monthly drawl of water by the company every year, this agreement shall be valid for a period of 30 years of

commencing from 01.05.1998, the date from which rates of water charges for “Self Constructed Water Sourceâ€​ are notified by the government.

22.4 The quantity of water drawn shall be measured at intake well of the company.

22.5 The Company shall comply with the conditions for treating effluent as prescribed by M.P. Pollution Control Board.â€​

It has been argued before this Court that on account of the heavy expenditure carried out by the company four stop dam constructed by the company,

and therefore, in case the State is permitted to construct an intake well for supplying drinking water to the villages, it will result in short supply to the

manufacturing unit and will ultimately result in discontinuance of workers as they will not having sufficient water to carry out the manufacturing

process.

He has further stated that the State wanted to supply water to 14 neighbourging villages and the first meeting took place on 08/09/1997, Clause 6 of

the minutes of the aforesaid meeting reads as under:-

 “6. dfe’uj mTtSu }kjk dgk x;k fd yksd LokLF; ;kaf=dh foHkkx dh tkudkjh ds vuqlkj bu 14 xzkeksa esa ls pkj xkzeksa fNjfejk] papksfM;k]

cyokM+k ,oa jktxxzsfle m|ksx ds orZeku ,fudV ds ikl gS ogka mDr ,fudV ls ikbZi ykbZu fcNkdj rFkk nwjLFk xzkekas dsk LFkkuh; L=ksrksa ls ty miyC/k djkuk csgrj

fodYi gksxkAâ€​

The second meeting took place on 17/11/1997 and finally third meeting took place on 01/12/1997. The petitionercompany has deposited Rs.63.14

Lakhs for the purposes of supply of water to 14 villages. However, while all this was going on, the respondents have framed a scheme, details of the

scheme are available in Annexure P-1 and P-2 dated 30/12/2016 and by constructing intake well and by incurring the cost of Rs.29.29 crores, the

State Government is supplying water to the villages.

The petitioner’s contentions is that the action of the State Government in constructing an intake well and to supply water to the villages is contrary

to the terms and conditions of the agreement executed between the parties on 01/04/2010 and once the company is ready to supply water and has

deposited the Rs. 63.14 Lakhs with the State Government, the State Government cannot construct its own intake well, which would result in closure of

the manufacturing unit/partial production of the manufacturing unit.Â

It has also been argued before this Court that the company has raised an objection in the matter and their objections have not been decided. Two such

objections are on record as Annexure P-18 and P-21.

It has been stated that the State Government be directed to decide the objections raised by the petitioner keeping in view the agreement dated

01/04/2010. It has also been stated that after receiving a fund of Rs.63.14 Lakhs, the state has not disclosed as to how the funds have been spent by

the State Government and once it was agreed that the State Government shall be supplying water to 14 villages by accepting 43.14 Lakhs, there is no

necessity for construction an intake well.

On the other hand learned counsel for the respondents has argued before this Court that as per the agreement executed between the parties, the State

Government is certainly free to supply water to the villages. He has placed heavy reliance upon Clause 7 of the agreement dated 01/04/2010 and the

same reads as under:-

“(7) The permission hereby granted shall not in any manner prejudically affect the existing water rights vested in the upstream riparian owners nor

shall it in any way, prejudice government’s right to hereafter launch or implement any new scheme or schemes of its own at, on or in connection

with the present source of the said natural/ government water source. However Government of Madhya Pradesh hereby assures that any other water

rights granted by them for the purposes of irrigation or nay other industrial purposes shall be granted in a manner so as not to affect the availability of

required water for the project through out the term of this agreement.â€​

He has also argued before this Court that there is an arbitration clause and in case there is any difference of opinion between the parties, by virtue of

Clause 21, there is complete mechanism provided for settling the dispute. Clause 21 of the agreement reads as under:-

“(21) Settlement of Disputes

(21.1) Mutual Discussions â€" The parties to the agreement agree that all disputes touching upon arising out of this agreement including interpretation

of any of the clauses of this agreemnt, the respective rights and obligation of the parties or non performance of obligations on the part of any party

shall be amicable resolved by mutual negotiations. (21.2) Arbitration â€" if after sixty days of commencement of such negotiations, the parties have

been unable to resolve amicably a contract dispute, such dispute or difference shall be referred to Arbitration under the provisions of the

“Arbitration and Conciliation Act,, 1996â€​. the award of Arbitration panel shall be final and biding on the parties.â€​

Learned counsel has prayed for dismissal of the writ petition and has submitted that at this stage the construction is almost over, and therefore, the

question of interference does not arise.

Learned senior counsel appearing for the petitioner has argued before this Court that the arbitration clause is in respect of the Water Resource

Department of State of M.P. and the dispute is now between the respondent no.4 and the petitioner, therefore the arbitration clause will not come in

way in the writ petition.

Heard learned counsel for the parties at length and perused the record. The matter is being disposed of at motion hearing stage itself with the consent

of the parties.

Undisputedly, in the present case, there is an agreement dated 01/04/2010 (Annexure P-4) executed between the petitioner/company and Water

Resource Department of the State of M.P. Undisputedly, the petitioner/company has constructed 4 stop dams over the Chambal River in the year

1953, 1955, 1989 and 1994. The petitioner/company is uninterruptedly getting supply of water, which is natural resource from Chambal River right

from 1953. At the same time, the villagers, who have equal right to receive water from Chambal River are also receiving supply since time

immemorial. The so called agreement was executed between the Water Resource Department of State of M.P. and the petitioner/company and a

natural resource, over which, the villagers are also having a right, if the argument of the learned senior counsel is accepted, is being closed forever for

the villagers. Section 23 of the Contract Act, 1872 reads as under:-

“23. What consideration and objects are lawful, and what not. The consideration or object of an agreement is lawful, unless. The consideration or

object of an agreement is lawful, unlessâ€""" it is forbidden by law; or is of such a nature that, if permitted, it would defeat the provisions of any law; or

is fraudulent; or involves or implies, injury to the person or property of another; or the Court regards it as immoral, or opposed to public policy. In each

of these cases, the consideration or object of an agreement is said to be unlawful. Every agreement of which the object or consideration is unlawful is

void.â€​

In the considered opinion of this Court, such an agreement which restrict the villagers and public at large to use the natural resources is certainly

against public policy and it is not at all enforceable in law. There is a huge scarcity of water in Nagda and the supply to the industry cannot be

continued by depriving the villagers of drinking water. Even if, there is a necessity to close down the industry at the cost of survival of villagers, the

state is certainly empowered to do so.

In the considered opinion of this Court merely because the petitioner/company has deposited Rs.63.14 Lakhs, it does not mean that the Government is

not competent or empowered to supply water to the villagers, who are thirsty and who are dying without supply of water, and therefore, this Court is

of the opinion that no case for interference is made out in the matter and as the intake well has already been constructed, the State will ensure supply

water not only to 14 villages but to all neighbouring villages were the villagers are dying without water.

Learned senior counsel has placed reliance upon Section 40 of the M.P. Irrigation Act, 1931 and the same reads as under:-

“40. Supply of water for industrial, urban or other purposes. - The conditions for the supply of water for industrial, urban or other purposes not

connected with agriculture and the charges therefor, shall be as agreed upon between the State Government and the company, firm, private person or

local body concerned and fixed in accordance with rules made under this Act.

40A. Supply of water to compulsorily assessed area. - (1) Water may be supplied from a canal at any time to irrigate a compulsorily assessed area in

accordance with rules made under this Act.

(2) Rules may be made under this Act prescribing the conditions on which water may be supplied under this section, and regulating the procedure of

canal offices in giving such supply.â€​

The aforesaid section deals with supply of water from a canal. In the present case, we are not dealing with supply of water from a canal. This Court

is dealing with supply of water from a natural resource which is Chambal River and the villagers certainly do have a preferential right of supply of

water for drinking purposes and for other day to day needs, as Sections 40 and 41 of the Act, 1931 is not at all attracted.

The aforesaid statutory provision deals with supply of water to industry and other establishments, however, the aforesaid section does not restrain the

State Government to supply water to the citizens of this Country and it noway stop the State Government for constructing an intake well for the

purposes of supply of drinking water.

Accordingly, the present petition stands dismissed.

Certified copy as per rules.