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PETITIONER: ORIENT PAPERS AND INDUSTRIES LIMITED AND ANOTHER

       Vs.

RESPONDENT: TAHSILDAR-CUM-IRRIGATION OFFICER AND OTHERS

DATE OF JUDGMENT:       07/09/1998

BENCH: A.S.ANAND, S.RAJENDRA BABU

ACT:

HEADNOTE:

JUDGMENT:  JUDGEMENT Rajendra Babu.J. The  appellant  before  us  is  the  owner  of   two factories,  one  situate  at  Brajarajnagar  in the State of Orissa and the  other  at  Amlai  in  the  State  of  Madhya Pradesh.   The  mill  at  Brajrajnagar  was installed by the appellant which is engaged in the manufacture of  paper  and board since  1939.    A  compact block of land measuring 889 acres is in the possession of the appellant and abutting the bank of river Ib.  East to West.  The  lands  on  which  the said   Mill   is  situated  was  used  for  the  purpose  of cultivation earlier and is situated  about  400  yards  away from the  river  bank.  Water is required for the purpose of manufacture of paper and board and for domestic purposes for the use of the workers and staff residing  in  the  colonies attached to  the Mill.  The appellant has been drawing water from the year 1939 from the flowing stream of said river Ib. Water so drawn from the said river is  purified  before  use for   manufacturing   paper  and  for  supply  for  domestic purposes.  The water after it is used is discharged into the river after purification in the filter  and  water  recovery plant and  sedimentation  lagoons.    During the lean period which is about four months in a year from January  to  June, when  the  flow of water in the river is less, the appellant constructs sand bundhs across the river at different  places for impounding  the  water.    Without  construction of such bundhs, it would not be possible to get water in  sufficient depth from the pumps. Hirakud Dam  was  constructed in the year 1956.  The maximum level of the reservoir of the said dam is stated to  be  630 R.L.   The Orissa Irrigation Act, 1959 (hereinafter referred to as "the Act") which came into force from 1st  June,  1961 was  enacted  to  consolidate and amend the laws relating to the irrigation, assessment and levy of water rate  and  cess in force  in  different  parts  of  the State of Orissa.  In March 1969, the Collector of Sambalpur addressed a letter to the Secretary of Revenue Divisional  Commissioner,  Northern Division,   Orissa   regarding   the   construction  of  the cross-bundhs by the appellant on the river Ib and drawing of water from the said river for its use at its mill.   In  the

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course  of  his  letter, he adverted to permission to put up sand bundhs and also regarding payment of water  rate.    He suggested  that the construction of the bundhs benefited the villagers in various ways and  accumulated  water  was  also utilised in  some  places  for  growing  crops.   He further suggested that the mill should pay Salami  at  the  rate  of Rs.1.000/-  per bundh per year and thereby the proposal made to initiate action for encroachment  appears  to  have  been dropped.   In  the year 1967-68, permission was also granted to the appellant for construction of sand bundhs on  payment of royalty   of  Rs.1,000/-  per  year.    This  arrangement continued till 1975-76 when  royalty  was  enhanced  to  Rs. 3,000/- per  bundh  per  year  from  the  year 1976-77.  The collector stated in his letter that the  Revenue  Divisional Commissioner  had  suggested that the appellant should pay a lump sum of Rs.  1,000/- per year towards water rate and the amount so paid was to be adjusted  against  the  water  rate fixed under   law.    It  is  also  indicated  that  on  the construction of Hirakud dam in the year 1956, the  appellant was  using  natural flow of the water for a part of the year where the level of the reservoir was  below  that  level  at which the pumping station was situated and when the level of the  reservoir  rose  above  that level during the months of September to December.  the appellant Utilized the water  of the reservoir.      During  the  period  from  September  to December, the appellant  draws  water  from  the  artificial reservoir  created by putting cross bundhs at their own cost and they are liable to pay water rate only for  that  period of the  year.   Taking average period during which the water rate was payable by the appellant  to  be  four  months  and assuming  that  about  six  lacs  gallons was to be used per hour, the water rate was roughly worked out at Rs.   12  per hour or Rs.  280/- per day or Rs.  8,500/- per month.  It is suggested that the Mill may have to pay about Rs.  34,000/to Rs.   40,000/-  for  four  months  depending upon the actual quantity of water used during a particular year.    However, it  was  made  clear that after coming into force of the Act from the year 1961-62, the appellant became  legally  liable to  pay  water  rate  so  long  as  it  draws water from the reservoir.  The stand taken by the appellant in reply to the communication sent by the Collector on the lines  as  stated above  is  that even when the level of water rises above the level of the pump, it uses the flowing  water  of  the  said river Ib.  Therefore, it is not liable to pay any levy under the Act.      Thereafter   proceedings   were  initiated  in Irrigation Case No.  1  (IRR)  of  1972  by  the  Irrigaiton Officer.  A show cause notice was issued as to why water tax should not  be  charged.  The appellant replied that the Act and the Rules framed thereunder did not apply to the case as the appellant was drawing water from the flowing  stream  of the  river  Ib  and  not from any irrigation work as defined under the statute and since it has been drawing  water  from the  natural  flow  of  river Ib since 1939, it had acquired rights to enjoy free flow of water from the  river  and  the said right  cannot  be  abridged under the law.  By an order made on 27th April, 1974,  the  Irrigaiton  Officer  imposed water rate  for the year 1961-62 to 1973-74 Rs.  1,47,168/on the basis that the Act and the Rules were applicable to  the appellant   as  it  was  drawing  water  from  the  Hirakund reservoir.   Water  tax  was  calculated  on  the  basis  of consumption at 6 lacs gallons per hour. Aggrieved  by  the  aforesaid  order  an  appeal was preferred  before  the  sub   Divisional   Officer,   Sadar, Sambalpur  to  set  aside  the  order made by the Irrigation Officer and to remand the matter for fresh  disposal  as  in

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his view the proper inquiry had not been made to come to the conclusion  whether the lifting of water was done within the point of Hirakud Reservoir.  The matter was reconsidered  by the  Appellate  Authority  and  when  the appellant examined three witnesses and the  Department  examined  one  witness, certain documents  were  also produced.  By an order made on 10th August, 1976, the appellate  authority  held  that  the appellant was  liable to pay a sum of Rs.  1,89.21,600/- for the years 1976-77.  Thus amounting to a  total  sum  of  Rs. 2.01,83,050/-,   The   finding  recorded  by  the  Appellate authority on remand is that the appellant was drawing  water from the reservoir area and, therefore, it was liable to pay for the unauthorised use of water and further that the water discharged  by  the  appellant was not purified before being discharged in the river.  The assessment  of  the  levy  was made  at the maximum rate applicable for unauthorised use of the water.         The appellant perferred an appeal against the order. The appeal  was  disposed  of  by  the  Appellate  Authority upholding  the  findings  of  the  Irrigation  Officer.  The Appellate Authority modified the calculations of the  amount due  from  the  appellant by deleting charges for the period prior to coming into force of the Act. Being dissatisfied by the order made by the  appellant  authority,  the  appellant preferred  a  Revision  Petition under Section 48 of the Act before  the  Divisional  Commissioner,  Northern   Division, Sambalpur  who  rejected the same with a modification to the extent that the rate of tax  for  the  unauthorised  use  of water  was  reduced to four times the bulk rate instead of 6 times as imposed by the lower  authorities.  The  Revisional Authority  formulated  nine  questions for its consideration and they are as follows:-         i)Whether  in the second enquiry the Tahsildar         could go into the question of  fresh  assessment  of         water rate instead of restricting his finding out if         the intake point is within the Hirakud Reservoir?         ii)Whether  the  intake  point  of  the mill is         below 630 R.L.?         iii)If so, whether  this  point  is  within  the         reservoir of Hirakud project?         iv)Whether   the  definition  of  reservoir  to         include the bed of river Ib is valid?         v)Whether the  drawal  of  water  is  from  an         irrigation work as defined under the Act?         iv)Whether  drawal  of  water can be treated as         supply on which water rate is payable?         vii)Whether drawal  of  water  can  be  held  as         unauthorised?         viii)Whether water discharged is polluted; and         ix)Whether    any    levy   is   possible   for         unauthorised use under rule 47(2) within  the  frame         work of the Orissa Irrigation Act?" All  the  questions were answered in the affirmative and  against  the  appellant.  The  matter  was,  therefore, carried in a writ petition before the High Court. Before the High  Court  the  contentions  put  forth  by the appellants pertain to -- 1)The appeliant does not use the water from the  river Ib  for  the purpose of irrication or domestice purpose and, therefore, the Act and the Rules do not apply. 2)The water is drawn by  the  appellants  at  a  point which  is within the Hirakund reservoir area and as such the appellant do not draw  arter  for  any  irrigation  work  as defined under Section 4(9) of the Act. 3)Even  assuming that the appellants are liable to pay

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water rate for the use of water for their mill or supply  of water  to  the residential colonies, levy at penal rates was uncalled for. A division bench of the High Court considered the matter and held that the contentions raised in the matter  are  covered by  a  decision  of  the  High Court in Titaghur Paper Mills Company Limited Vs.  State of Orissa and Another reported in ILR 1975 1095 (Cuttack).  The Court reflected the contention that the appellant had any riparian right to use water  from the  river  and such user of the water was available free of charge.  They also held that under Section 21(2) of the  Act supply  of  water  for purpose other than irrigation is also covered and therefore, the contention that they  draw  water for  the  purpose  other  than  irrigation and therefore the statute has no application was held to  be  untenable.    As long as the source of water from which supply is made is for irrigation as  defined  under  Section 4(9) of the Act.  the authorities under the Act were empowered to levy  the  water rate for  cess.  On the principal question as to whether the appellant draws water from the point which lies  within  the Hirakund  reservoir  the  matter  was  enquired  into by the Irrigation Officer.  He had held that the point  was  within the reservoir  area.  The appellate Authority as well as the Revisional Authority had affirmed this view  and  therefore, the  High  Court  held  that these aspects were questions of fact and cannot be re-examined by the High Court. The High Court took the  view  that  the  appellants were using the water from the river Ib since 1939 and during lean months, i.e.  from January to June, they were using the water by constructing sand bundhs on the river.  There was a serious  controversy between the parties that whether at the point at which the appellant had drawn water lie within  the area  of  Hirakud reservoir and, therefore penal rates could not have been levied and thereby held  that  the  appellants would be liable to pay water rate at the usual rate which is Rs.10/-  per lac gallons and directed the Irrigation Officer to revise the demand accordingly.  It is against this  order that this appeal has been preferred.  Shri   Shanti   Bhushan,   learned  Senior  Advocate appearing for the appellant submitted  that  the  Irrigation Officer could  not go into the question  of fresh assessment of water rate and ought to have confined his  findings  only to  the  question  of restricting it to the point whether it is within the Hirakud reservoir or not. On  this  aspect  of the matter, we may advert to the order made by the Appellate Authority  dated 23rd December, 1975. The concluding portion of the order reads as follows:-            "The main point is whether lifting of  water  from            river  Ib  is  being  done  from  a point which is            within the reservoir. This is a question  of  fact            and  as admitted by the Government Pleader, proper            enquiry to come to a finding that lifting is being            done from a point within  the  reservoir  has  not            been  conducted. The case is therefore remanded to            the  learned   Irrigation   Officer-cum-Tahsildar,            Jharsuguda for re-enquiry and disposal." Though  the various points on which the order made by the Irrigation Officer were challenged in the Appeal  on  the basis  of non consideration of the question whether the point at which the water was lifted by the appellant was within the reservoir, entire order made by the  Irrigation  Officer  was set  aside  and  there  was an open remand. When the scope of enquiry after remand was  not  restricted  by  the  appellate authority,  it  was  certainly  permissible by the irrigation Officer to examine all questions arising thereto.  Therefore,

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we  find absolutely no merit in the first contention urged on behalf of the appellant and it is accordingly rejisted. A more  important point raised by Mr.  Shanti Bhushan is that the irrigation work as  defined  under  Section  4(9) would  not cover the area in which reservoir lies, but only a reservoir, tank,  anicuts,  dams,  weirs,  canals,  barrages, channels,   pipes,   wells,  tube-wells  and  artesian  wells constructed, maintained or controlled by the State or a local authority.  In order to appreciate  this  contention,  it  is necessary to refer to the view taken by the authority.  After examining  certain  documents produced by the authorities, it was held the point from which the  water  is  lifted  by  the appellant from  the river Ib is below 630 R.L.  in the bed of river Ib and it was stated that it cannot be  construed  that such  a point would not lie within the area of the irrigation work.  He held as follows:-            "True it  is  that  the  river  Ib  has  not  been            constructed or  maintained by the Government.  But            it does not necessarily mean that every spade  and            dredger  or  bulldozer to be constructed as a part            of the  reservoir.    But  the  lands  within  the            contours of  630 R.L.  in contiguity and the water            of which is compounded  by  artificial  dam  is  a            reservoir i.e.  an irrigation work." He  further  held  that  after  the  construction  of Hirakund  reservoir  it  could  not be said any more that the appellants are lifting water from the flowing stream  of  the river Ib because the place from which water is lifted is part of the reservoir itself. Flow of water is not only limited to the river Ib but it extends to the entire reservoir including central areas covering the contours of lower level. The water which  flows  or remains stagnant in areas covered within 630 R.L. in continuity is nothing but the water of the reservoir. And, thus he ultimately held that the appellants are  lifting water from the reservoir itself. Hence they are liable to pay water rate after commencement of the Orissa Irrigation Act. The Appellate Authority affirmed the finding recorded by the Irrigation Officer. It held as follows :- ....            "For  a  considerable  part  of  the year, the            water level of the  reservoir  extends  beyond  the            intake  point  and during this period the appellant            without any additional  effort,  is  lifting  water            directly  from  the  reservoir  area.  Only because            during part of the year the  stagnant  water  level            recedes beyond the lifting point, it cannot be said            that  the  lifting point ceases to be a part of the            reservoir."            And it further concluded as follows :-                 "Once ti is concluded that the intake point is            within 630 R.L., it will not cease to be a part  of            the  reservoir only because the water level recedes            beyond this point for a particular  period  of  the            year.  The  reservoir  limits  are  fixed  and have            nothing  to  do  with  the  water  Spread  area  at            different  points of time. The reservoir extends up            to the limits to which the water Spreads  at    the            maximum   water   level  and  hence  all  areas  in            continuity within 630  R.L.  are  included  in  the            reservoir."

Ultimately he observed that the intake point is within 630 R.L.  and hence it is a part  of  the  reservoir  and  any water  lifted  from  the  point  whether  apparently stagnant, flowing or artificially stored would be water coming  from  an

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irrigation work under the definition of the a Act and would be liable  to  payment  of  water  rate  and  other  consequences prescribed under the Act.  The Revisional Authority also  took the   view   that  as  was  done  by  the  lower  authorities. Therefore, the consistent view taken by all the authorities on a question of fact is that the point at  which  the  water  is drawn  by the appellants lies within the reservoir area and is conclusive. Irrigation  work  is defined under Section 4(d) of the Act as to include all land  occupied  by  Government  for  the purpose of   reservoir,  tanks  etc.    and  other  structures occupied by or on behalf of the State Government on such land. A reservoir cannot be understood merely to be a means to  hold water in  a  stream.    It  is only by controlling the flowing stream in an area water can be stored in  reservoir.    Viewed thus,  irrigation  work  would  include  land  used  for  such purpose.  In this case the finding recorded by the authorities is in accord with this view.  ’Reservoir’ may not  necessarily mean  only  the  constructed part of the land but includes the area where the water is held  by  a  dam  constructed  by  the Government  then if form such a point falling within that area water is drawn it must be held that the appellant is liable to pay the water rate.  Therefore, there is no substance  in  the contention  urged on behalf of the appellant that the point at which the water is drawn by the appellant does not lie  within the  reservoir  area  or  water is not drawn from a Government source or a water work.  Under Section  28  of  the  Act,  the Irrigation  Officer  is  empowered to fix the compulsory basic water rate for supply of water from  a  Government  source  as distinguished from a private source. In  the  result, we find no merit in this appeal which is accordingly, dismissed. Bearing in mind  the  circumstances in which this matter has been brought before us, we direct the parties to bear their own costs. CIVIL APPEAL NO. 1822 OF 1992 This appeal arises out of order made  on  3.4.1986  by the  High  Court of Orissa on an application for Review of its order made on 15.1.1986 in O.J.C.  Nos.  609 and 1144 of 1980. Against the order in O.J.C.  Nos.  609  and  1144  of  1980  a separate  appeal  by  special  leave has been preferred before this Court in C.A.  No.  1798 of 1986.  That appeal  has  been disposed of by us dismissing the same.  Hence this appeal does not survive for consideration and is dismissed.