HC quashes ₹236 cr water bill against United Spirits' Maharashtra unit

A division bench of Justices Manish Pitale and YG Khobragade noted that the authorities wrongly classified all the water drawn by the company from the Godavari as raw material for its liquor unit

The Bombay High Court has quashed demand notices of over ₹236 crore issued by the Irrigation Department against United Spirits Limited for water drawn from the Godavari river for its liquor manufacturing unit, Bar and Bench reported.

 

A two-judge division bench of Justices Manish Pitale and YG Khobragade noted that the authorities wrongly classified all the water drawn by the company from the Godavari as raw material for its liquor unit.

 

United Spirits vs the Maharashtra government case

 

United Spirits Limited, which owns a distillery in Dharmabad in Maharashtra's Nanded district, had previously challenged successive demand notices, issued since December 2018, which classified its Dharmabad unit as a "raw material industry" under the Maharashtra Water Resources Regulatory Authority (MWRRA) tariff orders, which attracted higher charges of ₹240 per cubic metre.

 

 

However, the company argued that only a fraction of its water was used as raw material, with most used for process-related purposes, citing earlier High Court rulings requiring authorities to distinguish between the two.

 

The state government, on the other hand, contended that the liquor industries fall under the raw material category, adding that the company has failed in paying its dues exceeding ₹400 crore, while it continued to enjoy interim protection.  ALSO READ| HC rejects Shilpa Shetty, Raj Kundra's plea against LOC notice suspension

What did the court say?

 

The Bombay HC said that while the 2018 and 2022 tariff orders of the MWRRA were not unconstitutional, the officials had failed to conduct a necessary exercise to determine how much of the water was actually used as raw material and how much was consumed in ancillary processes. The bench refused to strike down the 2018 and 2022 bulk water tariff orders.

 

Quashing the demand notice, the court said that the authorities' approach of billing the entire water intake for raw material use was arbitrary and unsustainable. It further added, "Evidently, the said respondents have not undertaken any exercise to ascertain the extent to which the consumption of water by the manufacturing unit of the petitioner in its manufacturing activity is towards raw material and the extent to which it is utilised for other purposes like washing, cooling, etc. during the process of manufacturing."

 

Additionally, the court also quashed the orders of both the Primary Dispute Resolution Officer (PDRO) and the appellate authority, along with all the notices raised between 2018 and 2022, including the final ₹236.5 crore demand notice.

 

It, however, directed United Spirits to deposit ₹66.5 crore with the Water Resources Department within six weeks, based on earlier precedents that estimated 65 per cent of water used in breweries as raw material consumption.

 

The Court clarified that this amount would be subject to adjustment against recalculated bills after a fresh assessment. It further asked the executive engineer of the Water Resources Department to conduct a fresh assessment within three months after inspecting the unit and considering the material on record, while ensuring compliance with the principles of natural justice. Any excess deposit, the Court added, must be adjusted against future bills.