Packaged drinking water is the modern-day manna for the thirsty traveller and city slicker alike. The promise of purity has seduced even the no-nonsense Indian middle class and a product that was virtually unseen in the Indian market just a few years ago has already found its way to the fridge in a large number of urban households. The relatively nascent market for packaged water (which includes both mineral water and drinking water in packaged form) is already estimated at about Rs1,200 crore and is growing at a mouth-watering 40% every year.
The main ingredient in packaged water comes from naturally flowing streams and underground water. The commercial use of underground water has been permitted post liberalization and privatization. Given the size of the market for packaged water, and more importantly, its potential size, the lands from which this water is tapped are like gold mines for the land owners, who can monopolize its use.
So where do the rights over such mineral water flow from? Actually, there is no single law which confers the right of ownership over these water resources, which come ‘packaged’ with the land.
Under the Land Acquisition Act, 1894, and the Transfer of Property Act, 1882, the rights which flow from the ownership of land include the benefits which arise out of land, and things attached to the earth or permanently fastened to anything attached to the earth.
However, whether or not ownership of ‘land’ would also imply user rights of the underground water resources has not been expressly dealt with under these statutes.
Perhaps the only legislation which comes closest to the issue is the archaic Indian Easements Act of 1882, which provides that an owner can enjoy the benefits deriving from water below the land surface, provided it not cause nuisance or prevent another person’s enjoyment of his own property.
Further, the ‘public trust’ doctrine extends to underground water resources such that the government preserves/owns these resources for public use and for the benefit of the larger public.
While matters relating to water are in the state list of the Constitution of India, the rising depletion of groundwater resources inspired the ministry of water resources to come up with a Model Groundwater Bill in January 2005. Many states have already adopted this Bill, with modifications. This Bill requires all existing users of groundwater in notified areas to obtain a certificate of registration from a groundwater authority (to be established). Certification will be granted if the use is not against public interest.
Certain other factors, such as the quantity used, purpose of use, and intended future use will also be considered. Penalties (including fines and/or imprisonment) have been prescribed for non-compliance.
This Bill remains silent on the owner’s right to use groundwater, leaving intact the assumption that land owners have the right of usage over the underground water resources of their land.
The commercial production and distribution of packaged water is addressed by the Prevention of Food Adulteration Act, 1954, pursuant to which a company is required to obtain a licence for the sale/manufacture of packaged natural mineral water.
Recently, due to alleged excessive exploitation of underground water, Coca Cola found itself in troubled waters in Kerala. The panchayat of the village where water was being extracted by Coca Cola refused to renew the cola giant’s licence under the Kerala Ground Water (Control and Regulation) Act, 2002. The Kerala high court then pronounced the landmark decision of ‘Hindustan Coca-Cola Beverages (P) Ltd. v. Perumatty Grama Panchayat’ (2005(2) KLT 554), whereby it held that a person has the right to draw water, in reasonable limits, without waiting for permission from any authority. It also observed that “(it must be assumed) that a person has the right to extract water from his property, unless it is prohibited by a statute. Extraction thereof cannot be illegal.” The court even stated that the panchayat had no ownership over such private water source as that would, in effect, deny the proprietary rights of the occupier. This judgment is significant, adding legal certainty to commercial transactions that are likely to be affected by this issue, so far unaddressed by statute.
However, some legal risks remain for the packaged water business. In the case of ‘M.C. Mehta v. Kamal Nath’ (1997), the Supreme Court observed that certain resources like air, sea, waters and forests have such great importance to the public that it would be wholly unjustified to make them subject to private ownership.
In the final analysis, the only thing that’s as clear as packaged water claims to be is that there is legal uncertainty over the rights relating to commercial production and distribution of water. Despite the ruling in the Coca Cola case, the government may, in the larger public interest, prohibit or make conditional the use of water of certain lands. So while India stacks up on packaged water and drinks up the claims of the packaged water industry, the legislative bodies need to wake up to the need for clear legislation in this regard.
This column is contributed by AZB & Partners, Advocates & Solicitors.
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