Written by Omkar GokhaleMumbai | September 28, 2025 12:05 AM IST 4 min readThe court asked the state government to conduct a fresh assessment of water usage at the company's Dharmabad distillery in Nanded district of Marathwada region (Representative image)In a setback to Maharashtra government, the Aurangabad bench of the Bombay High Court has quashed and set aside demand notices of alleged outstanding dues of over Rs 400 crore issued by Water Resources department to the United Spirits Limited related to charges for lifting water from Godavari river for manufacturing of Indian-made foreign liquor (IMFL).The court asked the state government to conduct a fresh assessment of water usage at the company’s Dharmabad distillery in Nanded district of Marathwada region.The court directed the Executive Engineer of Water Resources (Irrigation) department to undertake within three months a “fresh exercise for issuing water charges bills to petitioner company for the period from November 2018 onwards, by applying rates prescribed by water tariff orders of 2018 and 2022 issued by Maharashtra Water Resources Regulatory Authority (MWRRA) to the water lifted by the petitioner, in light of the (court )observations and issue appropriate fresh water charges bills for the entire period.”The United Spirits had challenged the demand notices issued by the authorities of the Water Resources department between 2018 and 2022 terming them “arbitrary and illegal”. It said the basis of arriving at such “astronomical charges” was “unsustainable” and revised rate of Rs 240 per cubic metre was arbitrary.Senior advocate Zal Andhyarujina for the petitioner argued that while it was utilising only 2% of the water lifted from the river as raw material for end product of IMFL and other products, the authorities issued demand notices by concluding that entire water lifted by the company was used as raw material.The government through advocates Uday Warunjikar and V B Tapkir justified the demand notices and sought dismissal of the company’s plea. The authorities said while demand notices challenged were of Rs 240 crore in September 2022 and the petitioner was enjoying interim order (protection from coercive action) after depositing only nearly Rs 10 crore, the current outstanding demand has reached a “huge figure” of about Rs 450 crore.“In the absence of an appropriate enquiry and exercise to ascertain the nature and extent of utilization of the water lifted by the petitioner, the act on the part of the respondents Sub-Divisional Engineer and Executive Engineer, in issuing the demand notices and impugned water charges bills is found to be arbitrary and unsustainable,” a bench of Justices Manish M Pitale and Y G Khobragade noted.Story continues below this adThe court also observed that the authorities “wrongly placed reliance” on a report prepared by the National Environmental Engineering Research Institute (NEERI) on the extent of water being treated as raw material in the petitioner’s manufacturing unit. The NEERI report recorded that “final product of liquor industry utilises about 7% of the total water consumption.”The HC observed that the petitioner “succeeded in demonstrating that even if the respondents are entitled to raise demand notices and water charges bills on bulk water tariff orders of the year 2018 and 2022, such charges cannot be levied on the basis that the entire water lifted by the petitioner was utilized as raw material for its end product.”The HC said authorities failed to undertake exercise to ascertain extent to which the water consumption by the petitioner’s unit was towards raw material and extent to which it was utilised for other purposes including washing and cooling during manufacturing process.The court then ordered fresh exercise and said authorities shall undertake appropriate enquiry by the petitioner’s manufacturing unit, consider material and principles of natural justice shall be followed.Story continues below this adThe bench directed United Spirits to deposit a further amount of Rs 66.50 crore (beyond already deposited Rs 10 crore) with the authorities, which shall be adjusted towards fresh water charges bills to be issued after completion of fresh exercise.The court clarified that if an excess amount is paid by the petitioner, it shall be adjusted towards future water charge bills.Stay updated with the latest - Click here to follow us on Instagram© The Indian Express Pvt LtdTags:United Spirits Ltd