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Report by Nawvi Kamalnathan

In the case of The Chief Engineer, Water Resources Department and Others (hereinafter referred to as appellants) Versus Rattan India Power Limited through its Director and Others (hereinafter referred to as respondents) the important issue of, the party signing the contract is entitled to the amount of consideration or not was dealt with by the Supreme Court.


The respondent has entered into a contract with the appellant to Pay the sum of Rs.1,00,000/- for irrigation restoration charges reserved for irrigation purposes. The same consideration was agreed to be paid on the date of signing the contract. A writ petition filed before the High Court of Bombay directed the respondent to pay Rs 50,000/- per hectare by reducing the irrigation restoration charges affecting the total liability reduction.

The appellant sought an appeal as per the Irrigation Department of the State of Maharashtra. As per the circular, no water shall be utilized for other purposes unless an agreement is entered into by the concerned government and the industry. Water usage for industrial purposes is seen as a loss of water rather than being directed to agricultural purposes.


The substance of the argument made by the learned counsel appearing on behalf of the appellant was that the contract is sacrosanct in nature. The impugned order entered by the respondent and the appellant for accepting the irrigation restoration charges shall not be entitled to be challenged.


On the other hand, the counsel appearing on behalf of the respondent contended that the rate prevailing in the in-principle approval granted by the high-powered committee is directly linked to the approval or sanction was applicable and the appellant could have levied the charges.

The government circular shall apply prospectively and not to ongoing contracts. If the circular is given a retrospective effect, it would certainly undermine it.


The respondent is not justified in levying the charges when he agreed to pay the same while entering into a contract he issued an undertaking to pay the specific sum within the specific time period. The agreement and undertaking shall be stopping the respondent from challenging the irrigation restoration charges.

The rights and liabilities of the parties are standing crystallized from the date when entered into the contract. The in-principle approval granted in favour has been cancelled as they failed to execute an agreement with the appellant. Also, the central government undertaking was given an exemption as the power produced from it shall be used for public benefit. In comparison to all other parties, the respondent has been drawing high amounts of water, especially from an area scarce of water resources.

However, the records before the court state only two instalments being paid by the respondents, and therefore, the court directed the respondents to pay the balance amount with interest from the date of instalment fell from the date of the impugned order.

In conclusion, the Hon’ble Supreme Court of India allows the Civil Appeal arising from the special leave petition and sets aside the impugned judgment passed by the High Court of Bombay, and directs the parties to bear their own costs.

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