Holding

The expression ‘fee’ is included within ‘tax’ for the purposes of Article 265, and any levy of a fee requires legislative authority; consequently the impugned demand is unconstitutional absent such authority.

Summary

Tata Iron & Steel Co. (TISCO) was allotted a large parcel of land on which it draws water from the Subarnrekha River; the State of Bihar (now Jharkhand) built the Chandil Dam and issued a demand for payment of Rs.31.351 million, claiming it was a fee for water use. TISCO challenged the demand as unconstitutional, alleging it violated Article 265 of the Constitution which forbids levying any tax or fee without legislative authority, and also infringed fundamental rights. The High Court held that the State could levy a fee under Entry 66 of List II of the Seventh Schedule but gave limited relief, without conclusively deciding whether the demand was a tax or fee or whether any statute authorized it. The Supreme Court held that the term “fee” falls within the meaning of “tax” under Article 265, so any such levy requires a law, and therefore the impugned demand was unconstitutional in the absence of statutory authority. However, because the State’s alternative pleas relying on the Bihar Irrigation Act, 1997 and the Bihar Public Irrigation and Drainage Works Act, 1947 were not properly pleaded before the High Court, the Court remitted the matter for the High Court to examine those statutes, setting aside the lower court’s judgment.

Issues considered

The demand for water usage is a 'tax' or a 'fee' within the meaning of Article 265.
Whether a 'fee' is covered by the prohibition of Article 265 and thus requires legislative authority.
Whether the Bihar Irrigation Act, 1997 or the Bihar Public Irrigation and Drainage Works Act, 1947 provide the necessary authority to levy the demand.
Whether a pure question of law not raised before the High Court can be entertained by the Supreme Court.
Whether the State can levy a fee under Entry 66 of List II of the Seventh Schedule without specific legislation.

Legislation cited

Subjects

Article 265TaxationFeeConstitutional lawWater rightsRiparian rightsLegislative authorityState levySupreme Court jurisdictionInterpretation of Constitution

Judgment

[2017] 12 S.C.R. 517

TATA IRON AND STEEL CO. LTD. & ANOTHER A
v.
STATE OF BIHAR & OTHERS
(Civil Appeal No. 5360 of 2005 etc.)
DECEMBER 15, 2017 B

[J. CHELAMESWAR AND S. ABDUL NAZEER, JJ.]
Constitution of India:

Art.265 and 366(28) - Large chunk of land allocated to · c·
appellant-Company by the State - Water of the river which flew
past that parcel of land was used by the company - Dam constructed
on the river by the State - Demand by the State against the appellant-
Company towards bill for water drawn from the river - Writ petition
challenging the demand - Dismissed by High Court - On appeal
plea of the company that demand was violative of Art.265 - Pleas D
of State that the demand was 'fee' and the expression 'tax' in Art.265
would not take within its sweep 'fee' - Alternative plea of State that
demand was justified under Bihar Irrigation Act, 1997 or Bihar
Public Irrigation and Drainage Works Act, 1947 - Held: Expression
'fee' is comprehended in the expression 'tax'for the purpose of
Art.265 and even for collection of 'fee' authority of law (i.e. E
legislative support) is mandatorily required - Alternative plea since
is raised for the first time before this Court, would not be gone into
by this Court - Matter remitted to High Court for examination of
the questions raised in alternative plea - Bihar Irrigation Act, 1997
- Bihar Public Irrigation and Drainage Works Act, 1947. F
Plea:
New plea - Involving question of law - Raising of. for the
first time before Supreme Court - Held: Supreme Court will not be
averse to examine a pure question of law raised for the first time - G
However, it is not bound/obliged to examine in every case where q
question of law is raised - Questions of law arising out of the
application and interpretation of a local law ought not to be normally
entertained by Supreme Court unless such questions are intertwined
with substantial questions of interpretation of the Constitution.
H
517
518 SUPREME COURT REPORTS [2017] 12 S.C.R.

A Disposing of the appeals and remitting the matter to High
Court, this Court
HELD: 1.1 The expressions "taxes" and "duties" are to
be found in many provisions of the Constitution. The expression
"fee" finds a place in Article 110(2) and 199(2), which are in pari
B materia. Both the Articles recognise the existence of two kinds
of fees. Fees for licences and fees for services. Each one of the
three lists contained in the Seventh Schedule have entries which
employ the expression "fees" (Entry 96 of List I, 66 of List II
and 47 of List Ill). Article 366 contains definitions of various
C expressions employed in the Constitution. Article 366(28) defines
the expression "taxation". The expressions "fee" and "duty"
are not defined.·under the Constitution. Article 366(28) employs
another expression "impost". [Paras 18, 19] [526-B-E]
1.2 The expression "fee" is also comprehended in the
expression "tax" for the purpose of Article 265 and even for the
D collection of a "fee", authority of law (i.e. legislative support) is
mandatorily required under the Constitution. [Para 21] [526-F]
Jindal Stainless Ltd. & Another v. State of Haryana &
Others 2016 (11) Scale 1 - followed.

E Commissioner oj Income Tax, Udaipur, Rajasthan v.
McDowell and Company Limited (2009) 10 SCC 755 :
[2009] 8 SCR 983 - relied on.
Kewal Krishun Puri v. State of Punjab and Ors.
(1980) 1 SCC 416 : [1979] 3 SCR 1217 ; Municipal
Corporation of Delhi and Ors. v. Mohd. Yasin (1983) 3
F
sec 229 : [1983] 2 SCR 999 ; Sreenil'CISU General
Traders and Ors. 1< State of A.P. and 01:5. 1983 (4) SCC
0
353: [1983] 3 SCR 843 ; State of A.P. and Ors. v.
Shivalik Agra Poly Products and Ors. (2004) 8 SCC
556 : [2004] 4 Suppl. SCR 393 - referred to.
G
2.1 Insofar as the alternative submission made before this
Court that the impugned demand could be justified under. the
Bihar Irrigation Act 1997 (Act 11 of 1998) there was neither any
clear pleading before the High Court nor a submission.
Therefore, this Court would not examine the abovementioned
H
TATA IRON AND STEEL CO. LTD. & ANOTHER v. STATE OF 519
BIHAR & OTHERS

two submissions as the court of first instance. [Paras 25, 26] A
[528-F-G]
2.2 No doubt that it has been repeatedly held by this court
that this court would not be averse to examine a pure question of
law, (but not argued in the High Court) raised for the first time
before this Court. This court only asserted its jurisdiction to B
resort to such an examination but did not declare that this Court
is bound to examine in every case where a question of law is
raised. [Para 26] [529-A-B]
2.3 Questions of law arising out of the application and
interpretation of a local law ought not to be normally entertained c
. by this court unless such questions arc intertwined with
substantial questions of interpretation of the Constitution. At
any rate, such questions ought not to be examined by this court
as a court of first instance when such questions were not either
raised or argued properly before the High Court. Even in those
cases where the parties raised such questions but the High Court D
failed to examine such ·questions, this Court cannot become a
substitute for the High Court. [Para 26] [529-C-D]
2.4 It appears that the entire thrust of the case of the
respondent -State appears to be that the State while making the
impugned demands is only trying to recover some portions of E
the expenditure incurred in constructing the Chandil Dam of
which TISCO is one of the direct beneficiaries. The counter
affidavit filed by the State gives a vague impression that the State
was suggesting that the impugned demands arise out of an
agreement between the State and TISCO. There appears to be F
some dispute regarding the existence of a concluded agreement
by TISCO which obligates TISCO to make the payment of the
impugned demand. It can be seen from the counter affidavit that
the respondent State itself admits absence of a concluded
agreement. [Paras 27, 28] [529-E-G; 530-A]
G
3. The judgment under appeal cannot be sustained and
needs to be set aside. However, having regard to the fact that
the State asserts that the two enactments provide the necessary
authority of law for sustaining the impugned demand, the matter
is remitted to the High Court for an examination of the
abovementioncd questions after giving an appropriate H
520 SUPREME COURT REPORTS [2017] 12 S.C.R.

A opportunity to the parties to file proper further pleadings in the
matter and argue the same. [Para 30] [530-B-C]
Case Law Reference
[2009] 8 SCR 983 relied on Para 20
B 2016 (11) SCALE 1 followed Para 21 .
[1979] 3 SCR 1217 referred to Para 22
[1983] 2 SCR 999 referred to Para 22
[1983] 3 SCR 843 referred to Para 22
c [2004] 4 Suppl. SCR 393 referred to Para 22

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 5360
of2005.
D From the Judgment and Order dated 20.08.2004 by the High Court
of Jharkhand at Ranchi in CWJC No. 3819 of 1993 (R)
WITH
Civil Appeal No. 5359 of2005.
E Ajit Kumar Sinha, Dushyant A Dave, Gopal Jain, Sr. Aµvs,
Krishnanand Pandeya, Jayesh Gaurav, Ms. Rita Kumari Gupta,
A.K. Than vi, Aamar dave, Mrs. Nandini Gore, Ms. Tahira Karanjawala,
Ms. Sonia Nigam, Ms. Trishala Kulkarni, Arjun Sharma, Ms. Khusboo
Bari, Mrs.Manik Karanjawala, Advs for the appearing parties.
The Judgment of the Court was delivered by
F
CHELAMESWAR, J.
CIVIL APPEAL N0.5360/2005
1. This appeal arises out of the judgment dated 20.8.2004 in CWJC
No.3819 of 1993 of the High Court of Jharkhand at Ranchi.
G
2. ·The appellants herein are the unsuccessful petitioners before
the High Court.
3. A brief factual background of the matter is as follows:
The first appellant-Tata Iron & Steel Company Ltd. (for short
H "TISCO") is a company registered under the Compariies Act having an
TATA IRON AND STEEL CO. LTD. & ANOTHER v. STATE OF 521
BIHAR & OTHERS [CHELAMESWAR, J.]

industrial unit at Jamshedpur in the district of Singhbhum, East Bihar A
(Now the State of Jharkhand). The industrial unit is primarily engaged
in the business of manufacture and sale of iron and steel products. For
the purpose of establishing the industry TISCO required considerable
extent of land. A huge extent of land admeasuring 15,725 acres was
acquired by the Government and conveyed to TISCO by the then
B
Secretary of State of India in Council by two conveyances dated
19.1.1912 and 23.9.1929. ·
4. The industrial unit and township connected with TISCO came
into existence over a period of time on the said parcel of land. 1 It is an
admitted fact that a river 'Subarnrekha' flows past the said parcel of
land. It is also an admitted fact that from time to time, TISCO has been C
drawing water from Subarnrekha River for various purposes connected
with the industry and its employees. It is also an admitted fact that the
necessary infrastructure for the use and distribution of water for the
above mentioned purposes was established by TISCO. By virtue of an
enactment known as Bihar Land Holdings Act, as amended by another D
Act of 1972, the above mentioned lands came to be vested in the State
of Bihar. However, the land was once again conveyed to TISCO by
two documents dated 4.8.1984 and 1.8.1985, the details of which may
not be necessary for the purposes of this judgment.
5. The State ofBihar undertook the construction of a multipurpose
project on Subarnrekha River of which a dam known as Chandil Dam E
was a part. It enables impounding the water of Subarnrekha Rivet.
Chandil Dam is located upstream of Subarnrekha River above the
township ofTISCO.
6. Respondents issued a demand notice dated 30. 9.1993 calling
upon TISCO to pay an amount of Rs.31.351 millions towards bill of F
water drawn from the river. 2
7. On receipt of the said notice, the appellants filed a writ petition
with prayers:
"(a) to issue a Writ or Order or direction under Article 226 of the
Constitution against the Respondent authorities to desist from G
interference with the (sic) petitioners right in any manner
' Over a period of time a city came into existence around the industrial unit.
2
"As per the direction given by Water Resources Department and communicated to
.undersigned by administrator Subernarekha Project. I am enclosing bill of water drawn
by Tisco iron Mango river sire in duplicate amounting to Rs. 31.351 million for early
payment to Executive Engineer Darn Division No. 2, Chandil. H
,/
522 SUPREME COURT REPORTS [2017] 12 S.C.R.

A whatsoever and more particularly by obstructing the free flow of
water in the River Subarnarekha;
b) to issue a writ, order or direction that the respondents be
restrained from interfering with or obstructing in any manner the
free flow of water from the River Subarnarekha for the needs of
B the petitioners and Jamshedpur Township and its inhabitants;
c) to declare that the impugned demand notice dated 30.9.1993
and '"Bill" is illegal and void and/or issue a writ or orderordirec.tion
quashing the "Bill of water drawn by Tisco" of Respondent no. 3
vide letter no. Su/Prasha/M/1595 dated 30.9.1993 issued with the
c approval of respondent nos. 1 & 2 as illegal, ultra-vires of the
Indian Constitution and is contrary to law;
d) to declare that the petitioners have absolute and indisputable
rights to water from the River Subarnarekha that flows on their
own land and to utilize such water for their own use without payment
D to any State or authority whatsoever;
e) to declare that the petitioners have an easementary right by
prescription to the waters of the river Subarnarekha;
f) to declare that the petitioners have right to the water of the
river Subarnarekha as riparian owner;
E g) to declare that the impugned actions and threats are contrary
to the petitioners' fundamental rights granted under Articles 14,
I9(1)(g) and 21;"
8. During the pendency of the said writ petition, various notices at
different points of time demanding tire payments of the amounts specified
F therein were received by TISCO. Such demands pertained to various
periods .during which water .was drawn by TISCO commencing from
November, 1992 to June, 1998. A summary of the same is Annexed to
the Additional Affidavit dated 19.2.2005 filed in the instant appeal. In
substance, TISCO was called upon to make a further payment of 55.43
G crores. It may be mentioned here that such additional demands were
made during the pendency ofthe writ petition No.3819/1993 before the
High Court.
9. It appears from the writ petition and the prayers (a), (b), (c)
and (d) thereof, TISCO's case is that it has a 'riparian right' over the
H waters of the Subarnarekha river apart from an "easementary right".
TATA IRON AND STEEL CO. LTD. & ANOTHER v. STATE OF 523
BIHAR & OTHERS [CHELAMESWAR, J.]

Though the High Court took note of the arguments based on the above A
claims, it declined to examine those claims holding;
"3 .... We find that the claim ofright by Tisco in this writ petition
is essentially based on what it calls a riparian right and its
prescriptive right. The existence of such a right, either natural or
prescriptive, can be decided only in a properly instituted suit in a B
competent civil court based on proper pleadings and evidence to
be adduced by the parties and those are not questions that we
should venture to decided in this proceeding under Article 226 of
the Constitution oflndia."
10. Before the High Court, it was the specific case of TISCO c
that the impugned demand (be it either a tax or a fee) is without any
authority of law and therefore unconstitutional. It appears from the
copy of the writ petition that it was the specific case of the petitioner
that the impugned demand is without the authority of law and violative
of Article 265 3 of the Constitution of India apart from Articles 14 and
19(1 )(g) . D

. 11. It appears to be the case of the respondent-State that (i) under
Entry 17 4 of List II of the Seventh Schedule of the Constitution, the
State has power to legislate on water and under Entry 66 5 of the List II
the State could collect a fee in connection with any one of the matters in
the list and was therefore competent to make the impugned demands; E
(ii) necessary statutory support for the impugned demands could be found
in the provisions of Bihar Irrigation Act, 1876; and (iii) the State had
spent considerable amount for the construction of"Subarnarekha River
Multi Purpose Project" of which TISCO is one of the "direc"t
beneficiaries" and therefore, the State is entitled to collect the money F
for the water consumed by TISCO.

'The petitioners respectfully submit that the impugned demand notice for a compulsory
exaction from the petitioners without the authority of law directly infringes the
petitioner's fundamental rights under A11icle 14 and 19(1 )(g) and also violates Article
265 of the Constitution.
4
17. Water, that is to say, water supplies, irrigation and canals, drainage and embankments,
G
water storage and water power subject to the provisions of entry 56 of List !.
'66. Fees in respect of any of the matters in this List, but not including fees taken in
any court.

H
524 SUPREME COURT REPORTS (2017] 12 S.C.R.

A 12. The respondents also submitted that there was some dialogue
between the State and TISCO for the purpose of creating a contractual
obligation on TISCO to make payments for water drawn by it. Therefore,
TIS CO was obliged by a contract to pay monies due under the impugned
demands.
B 13. The High Court did not examine the questions - Whether the
impugned demand is a Tax or a Fee or a liability arising under a contract?,
and, Whether the prohibition contained in Article 265 is confined only to
levy and collection of tax or it would also extend to levy or collection of
a fee?
c 14. No clear finding is recorded by the High Court that there
exists any law authorizing the levy and collection of the impugned demand.
Though the High Court made references to the Bihar Irrigation Act,
1876, it did not record any conclusion whether the said Act provides the
necessary statutory authority for the levy and collection of the impugned
demands. However, by the judgment under appeal, High Court opined
D that:
"Under Entry 17 of List II of the Seventh Schedule to the
Constitution of India, the State has power to legislate on water,
subject to Entry 56 of List I.

E **** **** ••••
.. the State of Bihar must be found to be competent to enact laws
in terms of Entry 17 of List II of the Seventh Schedule.

**** **** ****
Under Entry 66 of List II to the Seventh schedule, the State has
F
power to collect a fee in respect of any of the matters in the list
but excluding the fees taken in any Court. Once we consider that
the State has the right to legislate on water, that is to say, water
supplies, irrigation and canals, drainage and embankments, water
storage and water power, there must necessarily be a right to
G impose a fee on the water supplied by the State to Tisco after the
same is impounded at Chandil Dam built across the Subarnrekha
River at State's expense or the water flowing down stream of
Subarnrekha River from any water source. The expenditure
incurred by the State for construction of the claim would be the
quid pro quo for the fee to be imposed by the State. We are
H
TATA IRON AND STEEL CO. LTD. & ANOTHER v. STATE OF 525
BIHAR & OTHERS [CHELAMESWAR, J.]

therefore of the view that the State is in a position to demand A
payment for the water used by Tisco from the Subarnrekha River
during the relevant period."
In substance, the High Court held that in view of the Entry 66 of
the List II of the Seventh Schedule the State is legally justified in making
the impugned demands! High Court appears to be of the view that the B
mere existence of an entry (Entry 66 of List-II) in the Seventh Schedule
is sufficient to justify the impugned demand.
However; High Court granted a limited relief to TIS CO directing
the respondent-State to collect the fee for water consumed for domestic
purposes at a rate lower than the rate applicable for the water consumed c
for the industrial purposes.
"Para 9 ....Therefore, as far as the bill issued to Tisco prior to the
coming into force of the Bihar Irrigation Act is concerned, the
matter requires to be reconsidered by the State Government. The
Government has to verify the figures and determine the quantum D
of water used by Tisco for its industrial purposes as distinct from
other purposes and impose a liability on Tisco for water used for
industrial purposes all the present rate, and impose a rate for water
used for other purposes at a lesser rate consistent with the rate
charged for other domestic consumers. We do not find anything
irrational or arbitrary in the rate of Rs. 3/- per thousand gallons E
adopted by the State. But that rate can be justified only for the
water used by Tisco for industrial purposes. Water used for
purposes other than industrial purposes has to be charged at a
lesser rate as indicated above."
15. Hence the instant appeal. F
16. Before this Court also it is categorically pleaded 6 and argued
by Shri Dushyant Dave on behalf of TISCO that the impugned demand
is without any authority oflaw and therefore violative of Article 265 of
the Constitution oflndia.
G
6 That the High Court failed to appreciate that the impugned demand notice for a

compulsory exaction from the petitioner without authority of law directly infringes the
petitioner's fundamental rights under Article 14 and 19 (l)(g) and also violates Article
265 of the Constitution - ground No. XIV of SLP

H
526 SUPREME COURT REPORTS [2017] 12 S.C.R.

A 17. On behalf of the respondent-State, it is submitted that the
impugned demand is a 'fee' but not a 'tax', the expression 'tax' occurring
in Article 265 cannot take within its sweep - "fee". Therefore, there is
no need for a legislative sanction for the impugned demand.
18. The expressions "taxes" and "duties" are to be found in many
B provisions 7 of the Constitution. The expression "fee" finds a place in
Article 110(2)8 and 199(2), which are in pari materia. Both the Articles
recognise the existence of two kinds of fees. Fees for licences and fees
for services. Each one of the three lists contained in the Seventh Schedule
have entries which employ the expression "fees" (Entry 96 of List I, 66
of List II and 47 of List III). Article 366 contains definitions of various
c expressions employed in the Constitution. Article 366(28) defines the
expression "taxation"-
"(28) taxation includes the imposition of any tax or impost, whether
general or local or special, and tax shall be construed
·accordingly;''
D
19. The expressions "fee" and "duty" are not defined under the
Constitution. A1ticle 366(28) employs another expression "impost". What
are the legal contours of each one of these expressions i.e. "tax",
"impost", "duty" and "fee" fell for the consideration of this Court from
time to time.
E
20. This Court in Commissioner of Income Tax, Udaipur,
Rajastha11 v. McDowell And Company Limited, (2009) 10 SCC 755
held:
"21. "Tax", "duty", "cess" or "fee" constituting a class denotes to
various kinds of imposts by State in its sovereign power of taxation
F
to raise revenue for the State. Within the expression of each
specie each expression denotes different kind of impost depending
on the purpose for which they are levied. This power can be

7 See Articles 265, 266, 268, 269, 270, 271, Entries 82 to 91 of List I and Entries ~6 to
G
63 of List II of the Seventh Schedule to the Constitution
•Article 110(2) A Bill shall not be deemed to be a Money Bill by reason only that it
provides for the imposition of fines or other pecuniary penalties. or for the demand or
payment of fees· for licences or fees for serYices rendered. or by reason that it
provides for the imposition, abolition. remission, alteration or regulation of any ta~ by
any local authority or body for local purposes.
H
TATA IRON AND STEEL CO. LTD. & ANOTHER v. STATE OF 527
BIHAR & OTHERS [CHELAMESWAR, J.]

exercised in any of its manifestation only under any law authorizing A
levy and collection of tax as envisaged under Article 265 which
uses only the expression that no "tax" shall be levied and collected
except authorised by law. It in its elementary meaning conveys
that to support a tax legislative action is essential, it cannot be
levied and collected in the absence of any legislative Sl!nction by B
exercise of executive powerof State under Article 73 by the Union
or Article 162 by the State.

22. Under Article 366(28) ''Taxation" has been defined to include
the imposition of any tax or impost whether general or local or
special and tax shall be construed accordingly. "Impost" means c
compulsory levy. The well-known and well-settled characteristic
of "tax" in its wider sense includes all imposts. Imposts in the
context have following characteristics:

(i) The power to tax is an incident of sovereigntyc
D
(ii) "Law" in the context of Article 265 means an Act of
legislature and cannot comprise an executive order
or rule without express statutory authority.

(iii) The term ''tax" under Article 265 read with Article
366(28) includes imposts of every kind viz. tax, duty, E
cess or fees.

(iv) As an incident of sovereignty and in the nature of
compulsory exaction, a liability founded on principle of
contract cannot be a "tax" in its technical sense as an
impost, general, local or special." F

21. A nine-judge Constitution Bench of this Court in Jindal
Stainless Ltd. & Another v. State of Haryana & Others, 2016 (11)
Scale 1, quoted the abovementioned statement of law with approval.
Therefore, it is now well settled that the expression "fee" is also G
comprehended in the expression "tax" for the purpose of Article 265.
and even for the collection of a "fee", authority of law (ie. legislativ\:
support) is mandatorily required under the Constitution.

22. ln view of the abovementioned authoritative pronouncement,
we need not examine the various ancillary submissions made on behalf H

//
528 ·SUPREME COURT REPORTS [2017] 12 S.C.R.

A of the respondent State relying upon various judgments9 of this Court
rendered prior to judgment in Jindal Stai11less case (supra) that the
expression "tax" occurring in Article 265 does not take within its sweep
the expression "fee".

23. The next question that is required to be examined is whether
B the impugned demand could be justified as a demand made.pursuant to
the authority of law conferred either under the Bengal Irrigation Act
1876 or Bihar Public Irrigation and Drainage Works Act, 19.47.
24. The High Court took note of the rival submission in this context.
" ......... It is also submitted on behalf of the State that the Bengal
c Irrigation Act, 1876 had application to the districts ofHazaribagh
and Ranchi, though it was not applicable to the Santhal Parganas
and that it really applied to Jamshedpur in which the Works of the
writ petitioner are located. Counsel for Tisco submitted that the
Bengal Irrigation Act, 1876 did not cover the use of water for
D non-irrigation purposes and the said Act did not confer any power
on the Government to recover any rate for the water used for
non irrigation purposes, like the one involved in this case. This is
yet another question that requires to be considered and decided."

E But there is neither any discussion by the High Court nor any
conclusive finding on the submissions.
25. Insofar as the alternative submission made before this Court
that the ·impugned demand could be justified under the Bihar Irrigation
Act 1997 (Act 11 of 1998) there was neither any clear pleading before
F the High Court nor a submission.
26. In the circumstances, we would not like to examine the
abovementioned two submissions as the court of first instance. We must
place it on record that the learned counsel appearing for the respondent-
State submitted that since they are pure questions of law, this Court is
G obliged to examine the same.

9 Kewal Krishan Puri Vs. State 9f Punjab and Ors., 1980 (I) SCC 416
Municipal Corporation of Delhi and Ors. Vs. Mohd. Yasin, 1983 (3) SCC 229 ·
Sreenivasa Gem~ral Traders and Ors. Vs. State of A.P. and Ors., 1983 (4) SCC ~53 -
State of A.P. and Ors. Vs. Shi.valik Agra Poly Products and Ors .. 2004(8) SCC 556
H
TATA IRON AND STEEL CO. LTD. & ANOTHER v. STATE OF 529
BIHAR & OTHERS [CHELAMESWAR, J.]

We reject the submission. No doubt that it has been repeatedly A
held by this court that this court would not be averse to examine a pure
question of law, (but not argued in the High Court) raised for the first
time before this Court. This court only asserted its jurisdiction to resort
to such an examination but did not declare that this Court is bound to
examine in every case where a question of law is raised. We are sorry
B
to place it on record that all sorts of questions of both fact as well as law
arc sought to be raised for the first time in this Court though no effort
was made to raise such arguments either i_n the High Court (or the
subordinate court, as the case may be). There appears to be some
magic in Bhagwan Das Road!

Questions of law arising out of the application and interpretation
c
of a local law, in our opinion, ought not to be normally entertained by this
court unless such questions are intertwined with substantial questions of
interpretation of the Constitution. At any rate, such questions, in our
opinion, ought not to be examined by this court as a court of first instance
when such questions were not either raised or argued properly before D
the High Court. Even in those cases where the parties raised such
questions but the High Court failed to examine such questions, this Court
cannot become a substitute for the High Court.

27. We are left with one more question in this matter. From the
tenor of the counter affidavit filed before the High Court, it appears that E
the entire thrust of the case of the respondent -State appears to be that
the State while making the impugned demands is only trying to recover
some portions of the expenditure incurred in constructing the Chandil
Dam of which TISCO is one of the direct beneficiaries. A reading of
the counter affidavit filed on behalf of the State by Dwarka Nath F
Srivastava, Superintending Engineer gives a vague impression that the
State was suggesting that the impugned demands arise out of an
agrcement 10 between the State and TISCO.

28. First of all, as a matter of fact,. there appears to be some
dispute regarding the existence of a concluded agreement by TISCO G
.. ___whic.h oblig>ttc.s TISCO
.
to make the payment of.
the impugned demand.

10
I say an<l submit that while on the issue of demanding payment it is submitted that
in response to the <lraft agreement prepared by the Government requiring Tisco to pay
water rate fixed.by the State from time to time.
H
530 SUPREME COURT REPORTS . [2017] 12 S.C.R.

A It can be seen from the abovementioned counter affidavit that the
respondent State itself admits 11 absence of a concluded agreement'.
29. None of the abovementioned aspects have been examined by
the High Court in the judgment under appeal.
30. In the circumstances, we are of the opinion that the judgment
B
under appeal cannot be sustained and needs to be set aside. It is,
accordingly, set aside. However, having regard to the fact that the State
assert5 that the two enactments referred to earlier provide the necessary
authority of law for sustaining the impugned demand, the matter is
remitted to the High Court for an examination of the abovementioned
c questions after giving an appropriate opportunity to the parties to file
proper further pleadings in the matter and argue the same.
CIVIL APPEAL N0.5359 OF lQQS.
31. The State of Jharkhand has filed this cross appeal challenging
the impugned judgment insofar as it directed the State Government to
D reconsider the levy regarding supply of water at a uniform rate both for
the industrial use as well as the use of water for domestic purposes.
32 . In view of the judgment in Civil Appeal No.5360 of2005, we
leave it open to the parties to argue the issue involved in this appeal also
before the High Court.
E
33. Both the appeals stand disposed of accordingly. During the
pendency of the matter before the High Court, the impugned demand
shall remain stayed.

Kalpana K. Triapathy Appeals disposed of.

11 The State Government has been most eager to settle the matter amicably and draw up

suitable agreement with the petitioner so that daily release and drawal of water as well
as mode of payment at the given rate becomes operationally affective and any area of
dispute is marginalized. With this end in view of State Govt. has .always taken recourse
to negotiation for mutual agreement and has held series of meeting with high level Tisco
management at ils behest. However, the petitioners has so far eluded the.arrival of any
mutual agreement on payment of water used or water consumed and has now restored
to litigation over these issues.