Rajendra Babu, J. - (1.) 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 to 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.
(2.) Hirakund 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 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 Hirakund 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 utilised 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 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 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 has 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. 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.
(3.) 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 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 Hirakund 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 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 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.;