Holding

The intake point is within the reservoir, so the water is supplied from an irrigation work and the appellant is liable to pay water rate.

Summary

The appellant, Orient Paper and Industries Ltd., drew water from a point in the river Ib that lay below the 630 RL mark of the Hirakud reservoir. The Irrigation Officer assessed water rate under the Orissa Irrigation Act, 1959, holding that the intake point was within the reservoir and thus water was supplied from an irrigation work. The appellant challenged the assessment, arguing that the water was drawn from the natural river flow and that the officer could not make a fresh assessment of water rate. The Supreme Court examined the statutory definitions of "irrigation work" and "reservoir" under Section 4(d) and held that the reservoir includes all land up to the maximum water level, irrespective of whether water is flowing or stagnant. Consequently, the Court affirmed that the intake point lay within the reservoir, making the appellant liable to pay water rate, and dismissed the appeal.

Issues considered

Whether the point of water intake below 630 RL lies within the reservoir as defined under the Orissa Irrigation Act, 1959.
Whether water drawn from such a point constitutes supply from an "irrigation work" within the meaning of Section 4(d).
Whether the Irrigation Officer could undertake a fresh assessment of water rate beyond merely determining the location of the intake point.
Whether the appellant is liable to pay water rate and related penalties under the Act.

Subjects

water rateirrigation workreservoir definitionOrissa Irrigation Actindustrial water useopen remandstatutory interpretation

Judgment

A ORIENT PAPER AND INDUSTRIES LTD. AND ORS.
v.
TASHILDAR-CUM-IRRIGATION OFFICER AND ORS.

SEPTEMBER 7, 1998

B [DR. A.S. ANAND AND S. RAJENDRA BABU, JJ.]

Olissa lnigation Act, 1959 : Sections 2(d) and 28.
·'
ll7igatio11 work-Water rate--Lei)' of-For drawing water from-Reser-
C voir-Meaning of-Maximum level of Dam stated to be 630 RL-Appellant
lifted water from a point which was below 630 RL in the liver bed-Autholities
found that flow of water was not on(v limited to the liver but it extended to
the elllire rese1voir including central areas coveling the contours of the rese1~
voir and any water lifted from the point whether apparently stagnant, flowing
or artificially stored would be water coming from an inigatio11 work under the
D definition of the Act and would be liable to payment of water rate and other ....
consequences presoibed under the Act-Held : Consistent finding of fact by
the authorities is proper and conclusive.

Practice and Procedure :
E
Remmzd-Open remand-Appellate autholity set aside entire order
under appeal and remanded the matter to the autholity concemed-He/d :
Since it was an ope11 remand where the scope of the enquiry was not resuicted,
it was pemzissible for the concemed autlwlity to examine all questions arising
thereto.
F
Words and Phrases :

"R.~se1voir" and "inigation work''-Meaning of-!11 the context of S.4(d)
of the Olissa lnigatio11 Act, 1959.

G The appellant was engaged in the manufacture of paper and board.
The appellant had been drawing water for its use from the flowing stream
of a river. A dam was constructed by the State Government the maximum
level of the reservoir of which was 630 RL. The Irrigation Officer imposed
water rate on the appellant under the Orissa Irrigation Act, 1959 as it drew
H water from the reservoir of the said dam.
442
ORIENTPAPERAND INDUSIRIES L1D. v. TASHILDAR-CUM-IRRlGATION OFFICER 443

Aggrieved by the aforesaid order the appellant preferred an appeal A
before the appellate authority. The appellate authority set aside the entire
order under appeal and remanded the matter for fresh disposal after
proper inquiry. It was found by the authorities that the pdint from which
the appellant drew water was found to be below 630 RL in the bed of the
.....
said river. The authority also found that the flow of water was not only B
limited to the river but it extended to the entire reservoir including central
areas covering the contours of the lower level. Ultimately, it was observed
that the intake point was within 630 RL and hence it was part of the
reservoir and any water lifted from the point whether apparently stag-
nant, flowing or artificially stored would be water coming from an irriga-
tion work as defined under Section 4( d) of the Act. Therefore, the appellate c
authority held that the appellant would be liable to payment of water rate
and other consequences prescribed under the Act. The appellant filed an
appeal before the High Court, which was dismissed. Hence this appeal.

On behalf of the appellant it was contended that the Irrigation D
Officer could not got into fresh assessment of water rate and should have
restricted himself to determine whether water was being drawn from within
the reservoir or not; and that the point at which the water was drawn by
the appellant did not lie within the reservoir area or water was not drawn
from a government source or a waterworks.
E
Dismissing the appeal, this Court

HELD : 1. Irrigation work is defined under Section 4( d) of the Orissa
Irrigation Act, 1959 as to include all land occupied by Government for the
purpose of reservoir, tanks etc. and other structures occupied by or on F
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 G
-. but includes the area where the water is held by a dam constructed by the
. Government; then if from 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 H
444 SUPREME COURT REPORTS [1998) SUPP.1 S.C.R.

A not lie within the reservoir area or water isnot drawn from a Government
source or a waterworks. Under Section 28 of the Act, the Irrigation Officer
is empowered to fix the compulsory basic water rate for supply of water
from the Government source as distinguished from a private source. The
consistent view taken by all the authorities on a question of fact is that the
B point at which the water is drawn by the appellant lies within the reservoir
area and it is conclusive. [451-E; F; G]

Titaghur Paper Mills Coy. Ltd. v. State of Orissa, ILR (1975) Cut 1095,
referred to.
••
c there 2.wasThean entire order made by Irrigation Officer was set aside and
open remand. When the scope of enquiry after remand was
not restricted by the appellate authority, it was certainly permissible for
the Irrigation Officer to examine all questions arising thereto. [449-G]

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1798 of
D 1986 Etc.

From the Judgment and Order dated 15.1.86 of the Orissa High
Court in O.J.C. No. 609 of 1980.

Shanti Bhushan, P.N. Gupta, Alok Mahajan and J. Buther for the
E Appellants.
Jayant Das and Raj Kumar Mehta for the Respondents.

The Judgment of the Court was delivered by

p RAJENDRA BABU, J. The appellant before us is the owner of
two factories, one situated 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
G measuring 889 acres is in the possession of the appellant and abutting the
bank of river'lb. 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
H Mill. The appellant has been drawing water from the year 1939 from the
ORIENT PAPER AND INDUSIRIESLID.v. TASHILDAR-CUM-IRRIGATION OFFICER(R. BABU, J.] 445

flowing stream of said river lb. Water so drawn from the said river is A
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 ;md ·sedimenta-

- tion 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
B

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 c
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, a~sessment 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 D
Divisional Commissioner, Northern Division, Orissa regarding the con~
struction of the cross-bundhs by the appellant on the river lb and drawing
of water from the said river for its use at its mill. In the 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
benefi.ted the villagers in various ways and accumulated water was also E
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 ap-
pears to have been dropped. In the year 1967-68, permission ·was also
granted to the appellant for construction of sand bundhs on payment of F
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 G
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 appel- H
446 SUPREME COURT REPORTS [1998] SUPP. 1 S.C.R.

A lant utilised the water of the reservoir. During the period from Sep-
tember 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

B
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
C 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 lb. Therefore, it is not
D liable to pay any levy under the Act. Thereafter proceedings were initiated
in Irrigation Case No. 1 (IRR) of 1972 by the Irrigation 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 lb and not from any irrigation work as defined
E under the statute and since it has been drawing water from the natural
flow of river Ib since 1'.)39, 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 Irrigation Officer
imposed water rate for the year 1961-62 to 1973-74 amounting to Rs.
p 19,13,184 and for the year 1974-75 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
G 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 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
H
ORIENT PAPER AND INDUSJRIESLTD.v. TASHILDAR-CUM-IRRIGATION OFFICERjR. BABU.J.J 447

Department examined one witness, certain documents were also produced. A
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
1961-62 to 1975-76 and a further sum of Rs. 12,61,440 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 B
unauthorised use of water and further that the waler 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 preferred an appeal against the order. The appeal
c
was disposed of by the Appellate Authority upholding the findings
of the Irrigation Officer. _The Appellate Authority modified the calcula-
tions 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 Appellate authority, the appellant preferred a Revision D
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:- E

"(i) Whether in the second enquiry the Talisildar could go into
the question of fresh assessment of water rate instead of restrict-
ing his finding out if the intake point is within the Hirakud Reser-
voir?
F
(ii) Whether the intake point of the mill is below 630 R.L.?

(iii) If so, whether this point 1s within the reservoir of Hirakud
project?
G
(iv) Whether the definition of reservmr to include the bed of
river lb is valid?

(v) Whether the draVl'.al of water is from an irrigation work as
defined under the Act? H
448 SUPREME COURT REPORTS [1998) SUPP. l S.C.R.

A (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
B
(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
C the High Court. Before the High Court the contentions put forth by
the appellants pertain to _

(1) The appellant does not use the water from the river lb for the
purpose of irrigation or domestic purpose and, therefore, the Act and the
Rules do not apply.
D
(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
water for any irrigation work as defined under Section 4(9) of the Act.

(3) Even assuming that the appellants are liable to pay water rate
E 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 v. State of 01issa
F and Another reported in ILR (1975) 1095 (Cuttack). The Court rejected
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
G that they draw water for the purpose other than irrigation and there-
fore, 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 em-
powered 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
H Hirakund reservoir, the matter was enquired into by the Irrigation Officer.
ORIENT PAPER AND INDUSTRIES LTD. v. TASHILDAR-CUM-IRRIGATION OFFICER[R. BABU, J.] 449

He had held that the point was within the reservoir area. The Appellate A
Authority as well as the Revisional Authority had affirmed this view and
therefore, the High Court held that these aspects were questions uf fact
and cannot be re-exam:ned by the High Court.

The High Court took the view that the appellants were using the
water from the river lb since 1939 and during lean months, i.e. from B
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 iac gallons and directed the c
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 D
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 23r<l
December, 1975. The concluding portion of the order reads as follows:-
E
"The main point is whether lifting of water from river lb 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-Tah- F
sildar, 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 G
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 rest6.cted by the appellate authority, it
was certainly permissible by the Irrigation Officer to examine all questions
arising thereto. Therefore, we find absolutely no merit in the first conten-
tion urged on behalf of the appellant and it is accordingly rejected. H
450 SUPREME COURT REPORTS (1998) SUP,P. 1 S.C.R.

A 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, darns, weirs,
canals, barrages, channels, pipes, wells, tube-wells and artesian wells
constructed, maintained or controlled by the State or a local authority. In
B 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 lb is below 630 R.L. in the bed of river lb
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:-
c
"True it is that the river lb has not been constructed or
maintained by the Government. But it does not necessarily mean
that every inch of earth has to be touched by shovel or 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
D 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 reser-
voir, it could not be said any more that the appellants are lifting water from
E the flowing stream of the river lb because the place from which water is
lifted is part of the reservoir itself. Flow of water is not only limited to the
river lb 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
F 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 Irriga-
tion Officer. It held as follows :-
G "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
H lifting point, it cannot be said that the lifting point ceases to be
ORIENT PAPER AND INDUSTRIES LTD."· TASH!LDAR-CUM-IRRJGATION OFFJCER[R. BABU, J.] 451

a part of the reservoir." A
And it further concluded as follows :-

"Once it 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 B
the year. The re~ ~rvoir 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."
c
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 irrigation work under the definition of the Act and would
be liable to • payment of water rate and other consequences D
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.
E
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 F
stream in an area water can be stored in reservoir. Viewed thus, irriga-
tion 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 from such a point falling within that area water is G
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 Govern-
ment source or a water work. Under Section 28 of the Act, the Irrigation H
452 SUPREME COURT REPORTS [1998] SUPP. 1 S.C.R.

A 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.
B
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 0.J.C.
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.

v.s.s. Appeals dismissed.

-