(1.) THE point that arises for consideration in this case in whether a Grama Panchayat can cancel the licence of a factory manufacturing non alcoholic beverages on the
ground of excessive exploitation of ground water.
(2.) THE brief facts of the case are the following:-
The petitioner is Perumatty Grama Panchayat. The 2nd respondent Company is
running a factory at Moolathara in Perumatty Grama Panchayat. Its main products are
soft drinks and bottled drinking water. The said factory was established after obtaining
permission from the Panchayat. It started commercial production in March 2000 after
obtaining licence from the petitioner Panchayat. The main raw material used in the
manufacture of beverages is water. Substantial portion of the need for water is met by
exploiting ground water through bore-wells. The people in the locality raised objection
against the exploitation of ground water by the Company. Therefore, the Panchayat
passed Ext. P1 resolution on 7.4.2003, deciding not to renew the licence of the factory.
The translation of that resolution reads as follows:
As the excessive exploitation of ground water by the Coca-Cola Company in
Plachimada is causing acute drinking water scarcity in Perumatty Panchayat and
nearby places, it is resolved in public interest, not to renew the licence of the said
Company. It is also resolved to inform about this decision to the Honble Chief Minister
of Kerala and the Honble Minister for Industries, Kerala.
In the light of the said decision, Ext. P2 notice was issued by the Panchayat to the 2nd
respondent Company on 9.4.2003, the translation of which reads as follows:-
The Human Resource Manager,
Hindustan Coca-Cola Beverages (Pvt.) Ltd.,
Perumatty Grama Panchayat,
Chittoor Taluk, Palakkad District.
Notice issued under S.240 of the Kerala Panchayat Raj Act, 1994 and the Rules, by the
Special Grade Secretary of Perumatty Grama Panchayat.
As ground water is excessively exploited for the use of Hindustan Coca-Cola Beverages
Bottling Plant run in Plachimada and as a result, acute drinking water scarcity is felt in
Perumatty Grama Panchayat and nearby places, it was resolved by the Panchayat
Committee on 7.4.2003, not to renew the licence of the said Company.
Allegations have been raised that the excessive exploitation of ground water for the
functioning of the said unit is causing drinking water scarcity and other severe
environmental problems. In connection with this, political and mass organizations are
holding agitations. The agitation by the Adivasis opposite to the gate of the Company is
continuing for more than one year. Taking into account the above circumstances, to
prevent the excessive use of ground water and also the consequential environmental
problems, the Panchayat has taken this decision.
So, if you have anything to say, why the licence of the Company should not be
cancelled, the same may be informed in writing to the Panchayat Secretary within 15
days from the date of receipt of this notice. You are hereby informed that if you fail to
show cause, it shall be presumed that you have nothing to state and further action will
be taken in the matter. Any loss or damage on account of this would be entirely within
Upon receipt of the said notice, the Company submitted Ext. P3 reply on 30.4.2003. In
the said reply, it was pointed out that the factory is run with all necessary statutory
clearances. The Panchayat can cancel its licence, if only any violation of the conditions
of licence is found. The allegations of depletion of ground water and causing of
environmental problems by the functioning of the unit were denied by the Company.
Thereafter, after hearing the 2nd respondent, the Panchayat, by Resolution dated
12.5.2003, decided to cancel the licence of the Company. The translation of the said resolution reads as follows:-
The Panchayat is satisfied that the Hindustan Coca-Cola Beverages Pvt. Ltd. at Plachimada is doing excessive exploitation of water and as a result, the water sources in the wells and ponds in the nearby places have dried up, resulting in deterioration of quality of the limited water available, causing health/environmental problems and acute drinking water scarcity. This has given rise to serious concern among the public. The problem of drinking water scarcity and health/environmental problems are continuing as a reality. The Panchayat, being satisfied that the evidence submitted by the Company alongwith the explanation and at the time of hearing, is against facts and that the request of the Company authorities, not to cancel the licence and to renew it, cannot be considered, unanimously resolved not to renew the licence.
In the light of the above resolution, the Secretary of the Panchayat issued Ext. P4 order dated 15.5.2003, cancelling the licence granted to the 2nd respondent and
directing the Company to stop production with effect from 17.5.2003. The 2nd
respondent challenged the said order before this Court and this Court directed the
Company to invoke the statutory remedy available to it before the appropriate authority.
It was also ordered therein that if the alternate remedy is invoked, status quo shall be
maintained till the competent authority decides the matter. Pursuant to the said
Judgment, the 2nd respondent moved the Government in appeal. Pending appeal, the
implementation of Ext. P4 order was stayed. Ext. P5 is the appeal filed by the 2nd
respondent before the Government. After hearing both sides, the Government disposed
of that appeal by Ext. P6 order. The operative portion of the said order reads as
In the above circumstances, Government hereby order that the Perumatty Grama
Panchayat will constitute a team of experts from the departments of Ground Water and
Public Health and the State Pollution Control Board to conduct a detailed investigation
into the allegations levelled against the Company and its products. The Panchayat will
take a decision based on this independent investigation as to whether the licence
granted to the Company should be renewed or cancelled. The Panchayat will get the
enquiry conducted by these agencies and come to a just and fair conclusion based on
this enquiry within three months from the date of receipt of this order. All enquiries and
investigations should be conducted with notice to the appellant Company. Till the
Panchayat takes a final decision on the cancellation of the licence issued to the
Company, the stay granted by Government on 12.6.2003 against the order of
cancellation of licence by the Panchayat will continue in operation.
Feeling aggrieved by Ext. P6, the Panchayat has filed this Writ Petition. The 2nd
respondent Company has chosen not to challenge it. According to the Panchayat, it is
the ultimate authority to decide on the matters covered by the impugned order. The
protection and preservation of water sources are the exclusive domains of the
Panchayat. When the Panchayat takes a decision based on relevant materials, the
Government cannot interfere with it and dictate, how the Panchayat should act in the
(3.) THE Government have filed a counter - affidavit supporting the impugned order. The 2nd respondent Company has also filed a very detailed counter - affidavit supporting Ext. P6.;