Dhrangadhra Chemical Works Ltd vs The Dhrangadhra Municipality

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Civil Appeal No. 173 of 1959

Decision Date: 19 May 1959

Coram: Syed Jaffer Imam, Bhuvneshwar P. Sinha, J.L. Kapur, P.B. Gajendragadkar, K.N. Wanchoo

In a judgment delivered on 19 May 1959, the Supreme Court of India considered the dispute between Dhrangadhra Chemical Works Ltd and the Dhrangadhra Municipality. The bench that heard the matter consisted of Justice Syed Jaffer Imam, Justice Bhuvneshwar P. Sinha, Justice J. L. Kapur, Justice P. B. Gajendragadkar and Justice K. N. Wanchoo. The case was reported in 1959 AIR 1271 and in 1960 SCR (1) 388. The controversy arose under the provisions of the Bombay District Municipal Act, 1901, as adapted for the State of Saurashtra and amended by Act XI of 1955, specifically under section 153A(3). The Municipality issued a notice pursuant to sub-section (1) of section 153A, demanding that the appellant show cause why it should not be ordered to discharge effluent from its chemical works in the manner prescribed in the notice. The appellant objected to both the notice and the requisition attached to it. Consequently, the Government appointed a Special Officer under sub-section (3) of the same section to conduct an enquiry into the matter.

The Special Officer, after receiving the objections, treated several of the raised points as preliminary issues of law. He held that the question whether the effluent discharge polluted water or reduced soil fertility was a matter for the subjective satisfaction of the Municipality, that this satisfaction was binding on the officer, and that therefore the issue lay beyond the scope of his enquiry. The appellant challenged this view and the Court was asked to determine whether the Special Officer had correctly interpreted section 153A(3) and whether his restriction of the enquiry was proper.

After examining the scheme of section 153A, the Court concluded that the Special Officer had erred in his view of his jurisdiction. The Court explained that while the Municipality’s subjective satisfaction as to the existence of a nuisance cannot be questioned at the initial stage when it invokes the machinery of sub-section (1) or sub-section (2) and the nuisance is admitted, a different situation arises under sub-section (3). Under sub-section (3) the notice and requisition are wholly disputed and no mere modification is sought. In such a contested scenario, the language “to hold an enquiry into the matter” imposes a duty on the Special Officer to investigate the existence of the alleged nuisance and to reach an independent finding. Therefore, the Court held that the Special Officer was wrong to limit his enquiry to legal preliminaries and to leave the factual determination of pollution and soil impact to the Municipality’s subjective satisfaction.

The Court observed that the Special Officer was required to conduct a full enquiry into the existence of the alleged nuisance and to reach his own independent finding. The position of the Special Officer and the powers vested in him by the relevant provisions of the Act demonstrated that subsection (3) was enacted by the Legislature as a safeguard against any arbitrary use of authority by the Municipality. The Court emphasized that it was of paramount importance that such proceedings be concluded as swiftly as possible in the public interest. The matter was before the Civil Appellate Jurisdiction in Civil Appeal No. 173 of 1959, which was filed by special leave from the judgment and order dated 16 July 1958 issued by the Special Officer appointed under section 153(3) of the Bombay District Municipal Act, 1901 (Bombay Act No. 111 of 1901), as applied to Saurashtra, Zalawad Division, Surendranagar. The original jurisdiction involved Petition No. 174 of 1958, a petition under Article 32 of the Constitution of India seeking enforcement of Fundamental Rights. Counsel for the appellant and petitioner were engaged, while counsel for the respondent in the appeal and respondent No. 2 in the petition appeared, and counsel for respondent No. 3 in the petition also participated. The judgment was delivered on 19 May 1959 by Justice Imam. The respondent Municipality contended that the appellant’s chemical works discharged large quantities of effluent containing calcium, sodium and other salts through unlined channels, thereby contaminating the potable water of surrounding wells and rendering it unfit for use, as well as adversely affecting the fertility of nearby soil through percolation. After obtaining governmental approval, the Municipality issued a notice on 14 June 1956 to the appellant under section 153A(1) of the Bombay District Municipal Act, 1901, as adapted and applied to the State of Saurashtra and as amended by Act XI of 1955 (referred to as the Act). The notice required the appellant, within one month of receipt, to show cause in writing why it should not be directed to arrange, within nine months of such direction, the discharge of the effluent through a covered reinforced drainage and to pump it over a distance of about eight miles in the Ran area of Kutch near Kuda, as shown in the annexed plan. The appellant responded on 10 July 1956, stating that it had discharged effluent until 1943 via an unlined channel running parallel to the railway line toward Halvad. In 1944, anticipating that wells in the Harijanvas and Kolivas areas near the channel might be affected, the appellant constructed an alternative channel at a considerable distance from those areas and from the city, which lay on the western side of the railway lines, while the factory was situated on the eastern side.

The appellant explained that the effluent discharged from its factory traveled a considerable distance away from the villages of Kolivas and Harijanvas and even further away from the city that lies on the western side of the railway lines, while the factory itself is situated at a considerable distance on the eastern side of those railway lines. It was stated that for the last three or four years the appellant had periodically surveyed the water of various wells within the city. The results of those tests had consistently shown that the water was not polluted in any manner as a consequence of the effluent being released through the existing channels. The appellant further asserted that all the papers and reports relating to those periodic tests were available for inspection by the respondent Municipality and could be examined by appointment. In addition, the appellant inquired whether the respondent Municipality had undertaken similar water-quality tests before issuing the notice, and if such analyses had been made, the appellant requested that the municipality permit inspection of those reports and other relevant documents. Regarding the fertility of the soil, the appellant emphatically denied that any adverse effect had been caused by the discharge of the effluent through the existing channels. The appellant also pointed out that the municipality’s direction to arrange discharge of the effluent through a covered pucca drain and to pump it over a distance of about eight miles, as shown in the plan annexed to the notice, would entail an expenditure of nearly eight to nine lakh rupees. In the prevailing circumstances, such a capital outlay would be so large as to cripple the appellant’s industrial activities. Moreover, the appellant argued that the scheme proposed by the municipality was impracticable and technically difficult to implement; the appellant’s own engineer had been consulted on this matter. Consequently, the appellant informed the municipality that, in these circumstances, it objected to the requisitions and expressed its inability to comply with them. The respondent then requested that the Government appoint a Special Officer under section 153A(3) of the Act. By an order dated 17 May 1958, the Government appointed Mr T.U. Mehta, District and Sessions Judge of Jhalawad District, as Special Officer to conduct an enquiry and to complete it within three months from the date of the notification. When the matter was placed before the Special Officer, he recorded an order which now forms the subject of the present appeal by special leave. The Special Officer framed seven issues; the first through fourth issues were treated as preliminary questions of law. Of those seven issues, Issue No. 4 was identified as one of the most important and was framed as follows: “Is it shown that the question whether the discharge of the effluent from the factory of the respondent company is polluting water and adversely affecting the fertility of the soil is a question of the subjective satisfaction of the Municipality and that this question is beyond the scope of the present enquiry?” Alongside Issue 4, Issue No. 6 required consideration and was framed thus: “If the point in Issue 4 is decided in the negative, is it proved that the effluents discharged by the factory of the respondent corrupt the potable waters of the surrounding wells so as to render them unfit for any use, and also adversely affect the fertility of the soil in the surrounding area by percolation?” The Special Officer decided Issue 4 in the affirmative, holding that the question of whether the discharge polluted water and harmed soil fertility was indeed a matter for the subjective satisfaction of the Municipality and therefore lay beyond the scope of his enquiry. On that basis, he concluded that Issue 6 did not arise for consideration.

The Special Officer was required to consider Issue No. 4, which asked whether the allegation that the respondent company was polluting water and adversely affecting soil fertility should be treated as a matter of the Municipality’s subjective satisfaction and therefore lie beyond the scope of the enquiry. Alongside Issue No. 4, Issue No. 6 had to be examined. Issue No. 6 asked whether, if Issue No. 4 were decided negatively, it could be proved that the effluent discharged by the respondent’s factory contaminated the potable water of surrounding wells to the extent that the water became unfit for any use and also prejudicially altered the fertility of the surrounding soil by percolation. The Special Officer concluded that Issue No. 4 was answered in the affirmative. He held that the question of whether the effluent discharged by the factory polluted water and harmed soil fertility was indeed a matter for the subjective satisfaction of the Municipality and that it fell outside the jurisdiction of his enquiry. Consequently, he determined that Issue No. 6 did not arise for consideration because the premise of a negative answer to Issue No. 4 was rejected.

When addressing Issue No. 5, which concerned whether the notice issued by the Municipality was mala fide, arbitrary, capricious, and issued without the Municipality sufficiently applying its mind, the Special Officer expressed the view that this question lay “out of the purview of the present enquiry.” Issues 2 and 3 were decided by the Special Officer in favour of the appellant; however, they were not discussed further because they were not relevant to the present appeal. Issue 1 dealt with the question of whether sections 153A to 153G of the Act infringed the appellant’s fundamental rights guaranteed under Articles 14, 19 and 31 of the Constitution. The Special Officer observed that, during the arguments presented on behalf of the appellant, no claim was made that Articles 14 and 31 were infringed; the submission was confined solely to an alleged infringement of Article 19. He rejected the contention that Article 19 was violated.

After these findings, the Special Officer stated that only Issue 7 remained for determination. He ordered that the case should now proceed to decide Issue 7, which was framed as follows: if it were found that the effluents from the respondent’s factory corrupted potable water and soil fertility, what final recommendation should be made concerning the method and manner of discharge of those effluents. The appellant argued that the Special Officer had unduly limited the scope of the enquiry by adopting an erroneous view of the enquiry’s reach and by refusing to exercise the jurisdiction vested in him by the Act. The appellant further submitted that section 153A of the Act was inconsistent with Article 19 of the Constitution.

It was argued by the appellant that the provision of section 153A of the Act infringed the guarantee of freedom of trade and commerce contained in article 19 of the Constitution. The respondent, on the other hand, maintained that the Special Officer had acted correctly in holding that the presence of a nuisance described in subsection 1 of section 153A was a matter for the subjective satisfaction of the municipal authority and therefore lay outside the ambit of the Special Officer’s enquiry. The respondent further submitted that section 153A did not offend article 19 because it represented a reasonable restriction on the exercise of the right guaranteed under article 19(1)(c). Such a restriction, according to the respondent, was necessary in order to prevent a nuisance that could jeopardise public health and the fertility of the soil. After considering the submissions of both parties, the Court found it necessary to set out the full text of sections 153A and 153B of the Act for the record.

Section 153A provides for the regulation of the discharge of effluent containing salt or other chemicals by factories. It reads in full: “Regulation of discharge of effluent containing salt or other chemicals by factories. (1) If it be shown to the satisfaction of the Municipality that the owner or manager of a factory, situated or located within the limits of the Municipal District, is discharging from such factory effluent containing salt or other chemicals in such manner as renders, or is likely to render, saline the potable waters of wells, tanks, ponds or other water receptacles, or corrupts, or is likely to corrupt, such water in such a way as to render it unfit for any use by the public or is prejudicially affecting, or is likely to so affect, the fertility of the soil, in the surrounding area either by percolation or otherwise, the Municipality may, with the previous approval of the Government, issue a written notice to the manager or the owner of such factory, requiring him to show cause in writing within a fixed period why he should not be directed to arrange within such period as may be fixed in such notice, or as may be extended from time to time, for the discharge of such effluents in such manner as may have been previously approved by the Government and as may be specified in the notice, so that the discharge of such effluents may not have the effect of rendering saline or corrupting the waters of wells, tanks, ponds or other water receptacles, or of prejudicially affecting the fertility of the soil, in surrounding area. (2) If no reply to the notice given under subsection (1) is received from the manager or the owner of the factory within the fixed period, or if a reply is received to the effect that the manager or the owner consents to comply with the requisition in such notice, the Municipality may forthwith pass such order as may be necessary for the purpose of regulating the discharge of effluents in the manner specified in such notice. (3) If a reply to the notice given under subsection (1) is received from the manager or the owner of the factory, objecting or consenting subject to modification to the requisition specified in such notice, the Government shall, on a request”. The paragraph continues with the procedure for the Government’s involvement, which is set out in the subsequent provision. Section 153B then states: “Report by Special Officer and order to be passed by Municipality with sanction of Government. The Special Officer shall on completion of the inquiry entrusted to him under subsection (3) of Section 153A, send his report to the Municipality and the Municipality shall, with the previous approval of the Government, pass an order in terms of the recommendations of such officer.” These statutory excerpts were reproduced to ensure that the Court’s analysis was grounded in the precise language of the legislation.

It was observed that when the Municipality made a request to the Government under the provisions of the Act, the Government was required to appoint a special judicial officer who could not be of a rank lower than that of a District Judge. This officer was designated as the “Special Officer.” The appointment order specified that the Special Officer must conduct an inquiry into the matter, carry out the functions assigned to him, and complete the inquiry within the time frame laid down in the order of appointment. Section 153B of the Act further provided that the Special Officer, after finishing the inquiry mandated by subsection (3) of Section 153A, was to submit a report to the Municipality. The Municipality, having first obtained the prior approval of the Government, was then empowered to issue an order in accordance with the recommendations made by the Special Officer.

The appellant argued that before a notice was issued under subsection (1) of Section 153A, the existence of a nuisance, as contemplated in that subsection, could be based merely on the subjective satisfaction of the Municipality. However, the appellant contended that once a notice was served, a different set of considerations became relevant under subsection (3). The purpose of Section 153A, the appellant explained, was to allow the Municipality, when it was convinced that a nuisance as described in subsection (1) existed, to issue a notice directing the person concerned to show cause why he should not be ordered to arrange the discharge of effluent in a manner previously approved by the Government and described in the notice. The aim of such an order was to prevent the effluent from rendering water in wells, tanks, ponds or other receptacles saline or corrupted, and to avoid any prejudice to the fertility of the soil in the surrounding area. Under subsection (2), the person served with the notice could consent to comply with the requisition contained in the notice; upon such consent, the Municipality could immediately pass any orders it deemed necessary to regulate the discharge of the effluent as specified in the notice. At this stage, there was no dispute between the Municipality and the person, because the person’s consent implied acknowledgement of the nuisance, and therefore the question of whether a nuisance existed under subsection (1) did not arise.

The appellant further pointed out that a different set of considerations arose when the circumstances fell within subsection (3) and a Special Officer had to be appointed. Subsection (3) provided that if the reply to the notice issued under subsection (1) either objected to the requisition in the notice or accepted it only with modifications, the Government, upon the Municipality’s request, must appoint a Special Officer to hold an inquiry into the matter. The appellant maintained that an objection to the requisition in the notice encompassed not only a dispute over the alleged existence of a nuisance under subsection (1) but also a challenge to the manner in which the effluent discharge was to be carried out. Consequently, the Special Officer was bound to conduct an inquiry covering the entire dispute, making the Municipality’s satisfaction regarding the existence of the nuisance a justiciable issue. The Special Officer, therefore, was required to investigate both the existence of the nuisance and the appropriate method for discharging the effluent, and to report on both aspects. In response, the respondent Municipality submitted that, under subsection (1), the satisfaction concerning the nuisance was purely the subjective satisfaction of the Municipality and no other authority could intervene. It further argued that the requisition in that subsection was addressed to the person served with the notice, requiring him to show cause why he should not be directed to comply with the terms specified in the notice.

In this case the Court observed that when a notice issued under subsection (1) was objected to, the objection covered not only the allegation that a nuisance existed but also the direction concerning the manner in which the effluent should be discharged. Because the objection concerned both of these matters, the Court held that the Special Officer was obligated to conduct an inquiry into the entire dispute, including the existence of the nuisance and the prescribed method of discharge. Consequently, the Municipality’s satisfaction that a nuisance existed became a justiciable issue. The Special Officer was required to investigate the controversy and to submit a report that addressed both whether a nuisance was present and how the effluent should be discharged in accordance with the notice.

The Court then turned to the arguments raised by the respondent Municipality. The Municipality asserted that, under subsection (1), satisfaction was purely subjective and belonged exclusively to the Municipality, and no other authority could question it. It maintained that the requisition under subsection (1) invited the person to show cause why he should not be directed to arrange the discharge in the manner specified, and that the requisition did not invite a challenge to the existence of the nuisance itself. According to the Municipality, subsection (3) dealt only with the requisition that was the subject of the Special Officer’s inquiry and did not concern the existence of a nuisance, which remained a matter of the Municipality’s subjective satisfaction. The Municipality further contended that, because the legislature had granted the Municipality the power to determine whether a particular factual state existed and, upon finding it did, to proceed with further action, that factual determination formed part of the issue the Municipality was required to investigate and therefore was not subject to judicial review. After considering the positions of both parties, the Court concluded that, to justify the issuance of a notice with prior government approval, a nuisance must actually exist to the satisfaction of the Municipality. That satisfaction was deemed subjective and could not be questioned by any other authority. Once the notice ordered the recipient to show cause why he should not be directed to arrange the discharge as specified, the recipient could either accept the Municipality’s claim that a nuisance existed and agree to comply with the direction, or raise an objection that would bring the matter within the scope of the Special Officer’s inquiry.

In this case the Court observed that when a notice requires the discharge of effluent in the manner specified, the Municipality is empowered to immediately issue any orders necessary to regulate that discharge in accordance with the notice. The Court explained that such authority is available to the Municipality because the recipient of the notice does not contest the existence of the nuisance and is willing to comply with the requisition without raising any objection. The Court further stated that if the recipient fails to respond to the notice, the Municipality may likewise issue an order of the same character without delay. In both of these circumstances, the Court noted, there is no dispute as to whether the nuisance exists, and the Municipality’s subjective satisfaction is deemed to correspond with the factual situation on the ground.

The Court then turned to the statutory scheme contained in Section 153A. It observed that sub-section (2) of that provision covers the situation just described, whereas sub-section (3) addresses a fundamentally different set of circumstances. Under sub-section (3) two distinct possibilities arise: first, the person served with the notice may object to the notice and to the requisition it contains; second, the person may agree to the requisition but only subject to certain modifications. The Court explained that in either of these scenarios the Government, upon request by the Municipality, must appoint a judicial officer of at least District Judge rank to conduct an enquiry into the matter.

The Court pointed out that while sub-section (2) assumes an absolute consent and willingness to comply, sub-section (3) does not grant such absolute consent even when the person consents subject to modification. The Court clarified that a residual dispute concerning the manner of compliance remains between the parties, and that dispute is the very issue that the Special Officer’s enquiry is intended to resolve. Nevertheless, the Court emphasized that in this situation the existence of the nuisance is implicitly acknowledged and therefore does not require further investigation.

Conversely, the Court held that when the person wholly objects to the notice and its requisition, the objection is essentially directed at the notice itself. This means the objector challenges both the Municipality’s declaration that a nuisance exists and the direction regarding how the effluent should be discharged. The Court observed that if sub-section (3) were intended to preclude any objection to the Municipality’s finding of a nuisance, the language “objecting or consenting subject to modification to the requisition” would be unnecessary. In such a case, the provision could have simply used the phrase “consenting subject to modification to the requisition.” Finally, the Court interpreted the phrase “to hold an enquiry into the matter” as a clear indication that the Special Officer must conduct a full enquiry whenever an objection of this nature is raised.

In this case the Court explained that when a party raises an absolute objection to both the notice and the requisition contained in it, the enquiry must cover the whole dispute. The Court observed that the appointment of a special judicial officer of at least the rank of a District Judge would be unnecessary if the officer were not required to examine whether a nuisance actually existed. If the existence of a nuisance were simply presumed because it was a matter of the Municipality’s subjective satisfaction, then the officer would only need to advise on how the effluent should be discharged, a task that could be performed by engineers or other technical experts. The Court held that the legislative scheme under section 153A leaves it to the Municipality’s subjective satisfaction to decide the existence of a nuisance before a notice is served; subsection (1) therefore does not contemplate any enquiry into the matter but merely activates the mechanism provided by section 153A. No problem arises where a notice has been issued and the party either consents absolutely to it or chooses not to respond. However, under subsection (3) the Court found that the appointment of a Special Officer was essential because the dispute between the Municipality and the party required investigation and a report from that officer. Section 153E confers upon the Special Officer the same powers as a civil court exercising jurisdiction under the Code of Civil Procedure, namely the authority to summon and examine any person on oath, to compel the discovery and production of documents, to receive evidence on affidavits, to requisition any public record or a copy thereof from any court or office, to issue commissions for the examination of witnesses or documents, and to deal with any other matters that may be prescribed. Section 153F provides for the appointment of assessors who may advise the Special Officer on technical questions, while section 153G declares that the proceedings before the Special Officer shall be deemed judicial proceedings within the meaning of sections 193 and 228 of the Indian Penal Code. These provisions, the Court concluded, demonstrate that the Legislature intended that, in the event of an absolute objection to the notice and requisition as in the present case, the dispute should be examined by a judicial officer of the rank of a District Judge. Subsection (3) therefore functions as a safeguard for the party objecting to the requisition. Consequently, the enquiry must necessarily relate to the entire controversy, and the words “to hold an enquiry into the matter” are sufficiently wide to encompass this. The Legislature intended that the party to whom the notice was issued should not be subjected to the arbitrary exercise of any power vested in the Municipality.

The Court observed that the Municipality had acted in a capricious manner and that the Special Officer had failed to interpret the provisions of sub-section (3) of section 153A of the Act. In the Court’s view, the Special Officer erred by concluding that it was beyond the scope of his enquiry to examine whether the nuisance alleged by the Municipality actually existed. By taking that position, the Special Officer denied himself the jurisdiction that the statute expressly granted him and that he was required to exercise. The Court noted that before the appellant could be required to comply with the Municipality’s requisition, which involved an expenditure of several lakhs of rupees, the Special Officer was required to determine and report whether a nuisance of the kind alleged by the Municipality was present. The appellant correctly contended that the Special Officer’s order, which declined to consider the question of the nuisance’s existence, should be set aside. The Court agreed that the Special Officer had wrongly decided that he could not address the existence of the nuisance, and therefore his order had to be vacated.

The Court further held that, given its view, there was no need to decide the appellant’s contention that the provisions of section 153A of the Act infringed Article 19 of the Constitution, a position that the appellant himself conceded. However, the Court emphasized that the enquiry must be completed without undue delay. The notice had been issued in June 1956, nearly three years earlier, and proceedings of this nature must be conducted with the utmost expedition because, if a nuisance exists, it should be removed promptly to protect public health and the fertility of the soil. Accordingly, the appeal was allowed with costs. The Court noted that a petition under Article 32 of the Constitution (Petition No. 174 of 1958) had also been filed by the appellant, but it was unnecessary to pass a separate formal order on that petition since the appellant had succeeded in Civil Appeal No. 173 of 1959, and the matter was thereby disposed of, except that no costs would be awarded in the petition. The appeal was thus allowed.