State cannot retrospectively recover utility charges for concluded transactions where original bills were fully settled.

The petitioners entered into an agreement with the State Government on 09.11.1993 for water supply related to the Hazira Industrial area.

Following disputes regarding exorbitant rates, a revised agreement was executed on 19.03.2002, governed by Government Resolutions (G.R.s) dated 30.01.2001 and 24.09.2002, which differentiated between industrial and drinking water rates.

Based on these G.R.s, the petitioner paid Rs. 1065.10 Lakhs for the period between April 1997 and October 2003, and the Respondent issued a "No Due Certificate" up to 31.10.2003.

However, on 21.07.2005, the Respondent issued a demand notice for Rs. 146.79 Lakhs, reassessing drinking water bills retrospectively from 01.05.1997.

The State contended that the reassessment was necessary as the legally claimable amount was omitted from previous bills due to "inadvertence".

The court primarily applied the principle of Promissory Estoppel and the doctrine of concluded transactions.

Union of India v. M/s. Anglo Afghan Agencies (AIR 1968 SC 718), which held that the Government cannot escape its representations by pleading executive necessity or asserting that estoppel does not bind the Crown.

Madhyamam Broadcasting Limited v. Union of India (2023 SCC Online SC 366) to emphasize that administrative actions must be transparent, reasoned, and non-arbitrary to satisfy the rule of law.

The court noted that the petitioner and the State were bound by a 20-year agreement and several G.R.s defining the rate structure.

The petitioner had consistently paid the bills raised by the State until June 2005.

The court reasoned that since the transaction was concluded and the petitioner had received a "No Due Certificate," the State could not retrospectively apply the G.R. of 24.09.2002 to reassess charges back to 1997.

The court observed that had the petitioner been aware of these higher charges at the material time, they might have altered their conduct, such as passing the cost burden to consumers.

Drawing from Anglo Afghan Agencies, the court found it "unfair" for the State to demand arrears on a concluded contract where the petitioner had acted upon the price charged by the State.

The subsequent G.R. of 03.02.2007, which discontinued the disputed G.R.s of 2001 and 2002, further indicated a shift in policy that favored the petitioner's stance on prospective application.

The court held that the State cannot demand arrears retrospectively after a transaction is concluded and the consumer can no longer pass on the financial burden.

The court directed that the State is foreclosed from acting contrary to the understanding acted upon by the parties during the 1997–2005 period.