Battle for water

The Kerala High Court rules in favour of Pepsi in the company's dispute with a panchayat over the right to water.

R. KRISHNAKUMAR in Thiruvananthapuram

ON April 10, a Division Bench of the Kerala High Court annulled an order issued by the Pudusseri grama panchayat in Palakkad district, which had cancelled the licence for a Pepsi bottling unit in the industrial township of Kanjikode on the grounds that it was using up drinking water sources that were crucial for the survival of neighbouring villages.

In the summer of 2003, following a ban on the Coca-Cola bottling unit at Plachimada by the Perumatty panchayat, the Pudusseri panchayat cancelled the licence granted to Pepsico India Holdings Private Limited, perhaps the most important customer inside WISE Park Industrial Development Area, a 300-hectare plot that also includes several other water-intensive industrial ventures. The panchayat had said that it was forced to cancel the company's licence because the company was overexploiting groundwater sources in a situation of drought. It subsequently cancelled the sanction given to the company to operate a 2,000 hp motor to extract groundwater.

Both Coke and Pepsi obtained stay orders from the State government on the orders of the two panchayats. Then, in December 2003, both the panchayats approached the High Court to appeal against the State government's decision.

The Bench held that the Pudusseri panchayat did not have the power to issue or cancel licences to industries in special industrial areas. It said that although the concerns about overexploitation of water might have been genuine, "the court cannot be blamed for this predicament" because "the legislature and the executive, in their wisdom, had excluded the industrial area from the purview of the Panchayat Raj Act". This meant that the panchayat could not take any action against the company.

Kanjikode was declared an Integrated Industrial Township by the State government on July 24, 2001, under the provisions of the Kerala Industrial Single Window Clearance Board and Industrial Township Area Development Act, 1999. Section 6 of the Act states:

"[N]otwithstanding anything contained in any law for the time being in force, all industrial undertakings established or proposed to be established in an industrial area shall be exempted from obtaining permits from municipalities, grama panchayats, town planning department or development authorities for construction of buildings for starting an industrial establishment."

Pepsico applied for sanction to establish the plant through the Kerala Industrial Single Window Clearance Board. The Board directed the panchayat to issue a licence in 2001. The Division Bench made it clear that the panchayat had no jurisdiction to issue or renew the Pepsico unit's licence. However, the panchayat could take its complaint to the attention of the authorities concerned, the Single Window Clearance Board and the State Ground Water Department, which would be entitled to take appropriate action.

Significantly, the court said that the concern of the panchayat (about water shortage) was not one that should be ignored, as the right to life enshrined under Article 21 of the Constitution implies the right to food and water. Provision of drinking water is the concern of the panchayat as well as the State. The court said that the apprehensions raised by the panchayat about the exploitation of groundwater, the depletion of the water table and the drying up of wells should not be lost sight of by the authorities under the Kerala Ground Water (Control and Regulation) Act and the Kerala Industrial Single Window Clearance Board.

It is worth examining the latest order of the court in the context of its earlier observations in the case involving the Coca-Cola bottling unit at Plachimada, which is (unlike the Pepsi plant) located near a residential locality. A single-Judge Bench of the High Court took the view that "groundwater was a public property held in trust by a government and that it had no right to allow a private party to overexploit the resource to the detriment of the people". It also ordered the soft-drink maker to find alternative sources of water for its production needs and stop exploiting the village's groundwater resources.

Had the Division Bench upheld the earlier order, the ruling could have had a major impact on the issue of a community's right to water. But the ruling was in Coca Cola's favour. It said that a "water-based industry, with a huge investment, has [a right] to receive water to quench its thirst without inconveniencing others". It added that the panchayat was wrong in rejecting the company's application for renewal of its operational licence before making "a scientific assessment" of the reasons for the water scarcity in the region. It elaborated:

"[A] person has the right to extract water from his property, unless it is prohibited by a statute. We hold that ordinarily a person has a right to draw water, in reasonable limits, without waiting for permission from the panchayat and the government. This alone could be the rule, and the restriction, an exception." The Bench also added that even reference to the mandatory function of a panchayat as envisaged in the Panchayat Raj Act, namely the maintenance of traditional drinking water sources, could not prevent the owner of a well from extracting water as he wished: "The panchayat has no ownership about such private water sources, in effect denying the proprietary rights of the occupier. ... We do not find justification for upholding the finding of the learned (single) Judge that extraction of groundwater is illegal. It is definitely not something like digging out a treasure-trove. We cannot endorse the finding that the company has no legal right to extract this `wealth'. If such restriction is to apply to a legal person, it may have to apply to a natural person as well. Abstract principles cannot be the basis for the court to deny basic rights, unless they are curbed by valid legislation."

The Bench said that its order was based on scientific data provided by a multi-agency expert committee appointed by it to ascertain whether the level of exploitation of groundwater by the company was indeed the reason for the water scarcity in the region. The committee had found that the rainfall in the region in the two years from 2002 "was much less than the mean value" and that this deficiency in rainfall was the "most significant factor" that caused the water scarcity. It also pointed out that "the unregulated withdrawal of groundwater" from the wells within the factory complex and outside during the water deficit period had aggravated the scarcity situation further.

Chief Minister V.S. Achuthanandan said soon after the court order was announced that "the legal loopholes" that allowed Pepsico to win the case would soon be plugged. In a related incident, on August 9, 2006, the State government imposed a ban on the production and sale of soft drinks marketed by Coca-Cola and Pepsi in Kerala. The Chief Minister had announced that the decision was based on several studies, including a report of government departments, which found that the soft-drink products contained substances hazardous to health.

But the High Court ruled that "the State government had no powers to pass orders prohibiting the manufacture and sale of Coca-Cola and Pepsi" and that the power to do so under the provisions of the Prevention of Food Adulteration Act was instead vested with the Central government, which had already decided against such a ban.