P.K. Balasubramanyan, C.J.
1. This writ petition is filed by the Tata Iron and Steel Company Limited (hereinafter referred to as Tisco) and its General Manager, Town Services. There are various prayers in this writ petition, but essentially what is sought for is a declaration that Tisco is entitled to use the water of Subarnrekha River to the extent of its industrial and other needs, unimpeded by any Governmental control and without payment, quashing of the bill raised by the Government claiming charges for water consumed by Tisco from Subarnrekha River and impounded by Chandil Dam. The lands, some of which about the river, were originally acquired for the purpose of establishing an industry and its adjuncts by Tisco. Subsequently, the Bihar Land Reforms Act was enacted under which the lands acquired and handed over to Tisco, became liable to be surrendered in terms of that Act. There was a challenge to that enactment by Tisco and ultimately the dispute was compromised between Tisco and the Government of Bihar. By that compromise, Tisco was deemed to be the lessee of the lands which had been acquired for its purposes earlier and which was being used by it. The case of Tisco is that since its land abut the Subarnrekha River, it is a riparian owner entitled to use the water of the river as such owner and the said riparian right cannot be interfered with by the Government by seeking to restrict its use of the water or trying to charge a fee or tax for the water extracted and used. There is also a claim that the water was being used for all Tisco's purposes, industrial, for the colonies and otherwise, and that Tisco had acquired a right by prescription to use the quantity of water it required for all its purposes. Yet another approach was that the Government had no right to impose any levy on the water used by Tisco of a running river and the demand in the bill could neither be supported as tax nor as fee. Though the quantum of water used has been adapted from the figures supplied by Tisco, an arbitrary rate, unilaterally determined by the Government, has been applied for quantifying the liability and the bill issued was unreasonable and liable to be interfered with, on that ground also.
2. On behalf of the State, it was contended that the claim by way Of prescription and/or as riparian owner cannot be decided in a proceeding under Article 226 of the Constitution of India. There was no covenant regarding the water either in the original transactions entered into by Tisco with the Government of Bihar or in the subsequent lease deed executed, after the disputes arising out of the Bihar Land Reforms Act were settled. The State had the right to regulate the water in a flowing river and no person or company could claim a right to use that water to the detriment of a fair distribution by the State of the water to all its citizens and in that view, the claim of Tisco was untenable. The Subarnrekha project undertaken by the Government was a project involving the States of West Bengal, Bihar and Orissa and the waters were to be shared by all the three States and the water and the use of the water which the State of Bihar is entitled to use, could certainly be regulated by the State and hence the action cannot be considered to be unauthorised. The Government had incurred considerable expenditure for the construction of the Chandil Dam and Tisco was a direct beneficiary of the project along with agriculturists of the basin. The Government was entitled to charge a rate for the water consumed by Tisco, considering the expenditure incurred by the State for Impounding the water and in fact, Tisco had agreed to pay for the water it consumed in a meeting called for discussion on the question, though a final agreement had not been drawn up thereon and that the present attempt of Tisco was to go back on that agreement. The State had only adopted the quantity of water as reported by Tisco and has imposed a charge only at a reasonable rate of Rs. 3/- per thousand gallons. The claim of riparian right could not be decided in this proceeding and the bill issued to Tisco was sustainable and called for no interference.
3. Notwithstanding some arguments in that behalf by learned senior counsel who appeared for Tisco, we are satisfied that the claim of Tisco, as a riparian owner and as having prescribed for some right or other, cannot be decided in this proceeding under Article 226 of the Constitution of India. We cannot also forget Section 2 of the Easements Act, 1882 which saves the right of the Government to regulate the collection, retention and distribution of the water of rivers and streams flowing in natural channels and of all natural lakes and ponds or of the water flowing, collected, retained or distributed in or by any channel or other work constructed at public expense, for irrigation. We find that the claim of right 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 competent civil Court based on property 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 of India.
4. Tisco has also challenged the demand made by the Government by the issuance of a bill for the water Tisco consumed, on the ground that the State has no power to levy a rate for the water consumed by Tisco in view of the existence of right in it to do so as indicated above. Since the State has a contention that it has incurred expenditure for the impounding of the water while constructing the Chandil Dam in furtherance of the project, the State has power to collect charges from Tisco, for water Tisco has consumed. This question again appears to us to be intrinsically interlinked with the claim of natural and easement right by Tisco and in that context, could not be decided satisfactorily without first deciding the claim of right by Tisco.
5. 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. Entry 56 of List 1 provides for regulation and development of inter-State rivers to the extent it is declared by Parliament by law to be expedient in public interest. Subarnrekha River is an inter-State river and according to the counter affidavit filed by the State, the project caters to the requirement of three States. But as part of the inter- state project, the State of Bihar has control over the water allocated to the State of Bihar from the project and in respect of that water, 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. But the enactment, namely the Bihar Irrigation Act, 1997 (Act 11 of 1998) has been brought into force only on 6.7.1998 and the said enactment does not cover the bill impugned in this writ petition, the bill being for the period November, 1992 to June, 1993. Though in the supplementary counter affidavit filed on behalf of the State, an attempt has been made to refer to the National Water Policy of 1987 and that of 2002 and to the provisions of the Bihar Irrigation Act, 1977, the rights of parties involved in this writ petition could not be considered in the light of the provisions of that Act. It is also submitted on behalf of the State that the Bengal Irrigation Act, 1876 had application to the districts of Hazaribagh 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 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. .
6. Water of a flowing river is an asset of the State. Here, in this case, the river is an inter-State river. It could be considered to be an asset of more than one State. But that does not lead to a conclusion that the water impounded and flowing through the State of Bihar is not an asset of the State of Bihar. A Government, in public interest, is entitled to regulate the use of such water. The State of Bihar has also incurred expenditure for impounding of the water in the river and has also made arrangements for distribution of water among its citizens and industrial undertakings, like the petitioner. In our view, the State is certainly entitled to regulate the use of water so impounded in the river and ensure a fair distribution of the same. In the case on hand, we must also remember that the petitioner is not using the water for any primary purpose, like drinking or for the cattle and not even for Irrigation, which itself is only a secondary purpose. Water is being used for an industrial purpose and also to supply water to the employees of Tisco in the colonies maintained by Tisco. There is no dispute that Tisco has also undertaken the municipal obligations in respect of its township. That was really, in a sense, the responsibility of the State. Therefore, we get in this case a situation where a State resource is being used by an industrial concern for the domestic use of its employees as also for its industrial purposes. There may be justification in contending that water used for domestic purposes by way of supply to its employees should not be charged at the same rate at which water used for industrial purposes is charged. But that is different from saying that the State cannot recover any charge at all for the water used by Tisco. Under Entry 66 of List II to the Seventh Schedule, the State has 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 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 dam would be the quid pro quo for the fee to be imposed by the State. We are therefore of the view that the State is in a position to demand payment for the water used by Tisco from the Subarnrekha River during the relevant period. But we think that there must be a differentiation between the water used for industrial purposes and the water consumed otherwise by way of supply to the colonies, township and so on. This differentiation has been ignored while issuing the bill. Since the figures supplied by Tisco regarding the quantum of water it consumed, have been adapted by the Government, there cannot be any question regarding the total quantity consumed. But as we have indicated, there has to be a distinction between the water used for industrial purposes and that used otherwise, especially in the context of the municipal obligations entrusted to Tisco by the State Government. It is no doubt true, that Tisco is charging the occupants of its colonies at the same rate for the supply of water to them. But on that basis alone, it does not appear to be proper to permit the State Government to impose an obligation on Tisco in respect of the water consumed for its purposes. 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 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 at the present rate, and impose a rate for water used for other purpose 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 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.
7. Therefore, while declining to decide the claim of right by Tisco as a riparian proprietor and as having acquired rights by way of prescription, we quash the impugned bill only to the limited extent of directing the State Government to re-calculate the amount to be demanded, on the quantum of water used for non- industrial purposes and for industrial purposes at different rates as indicated above. It is seen that after the demand was raised by the Government against Tisco, certain amounts have been paid by Tisco under protest; The amount thus paid by Tisco will be retained by the State, until the matter is re-considered and fresh bill for the period in question issued. But the recovery of further amounts covered by the demand will be kept in abeyance until the liability is quantified afresh, after giving Tisco an opportunity of being heard and only the balance amount, if any remaining due, will be collected from Tisco. If the amount now realised is in excess of what is due on a re-calculation, the same would be refunded to Tisco. In the interests of justice and expediency, we direct the State to adapt the figures regarding consumption of water maintained by Tisco and to proceed to calculate the amount due from Tisco on the basis of those figures. But the State would be entitled to call upon Tisco to substantiate its figure, if any doubt arises in respect of the figure furnished by Tisco. The exercise will be completed expeditiously. The writ petition is thus partly allowed.