THE DAMODAR VALLEY CORPORATION ACT, 1948 
________ 

ARRANGEMENT OF SECTIONS 
_________ 

PART I 

INTRODUCTORY 

SECTIONS 

1.  Short title, extent and commencement. 
2.  Interpretation. 

PART II 

ESTABLISHMENT OF THE CORPORATION  

3.  Incorporation. 
4.  Constitution of the Corporation. 
5.  Conditions of service of members. 
6.  Appointment of officers and servants. 
7.  Conditions of service of officers and servants. 
8.  Functions and duties of members. 
9.  General disqualification of all officers and servants. 
10.  Appointment of Advisory Committee. 

PART III 

FUNCTIONS AND POWERS OF THE CORPORATION 

General 

11.  Limits of Damodar Valley and area of operations. 
12.  Functions of the Corporation. 

Irrigation and water-supply 

13.  Provision for irrigation and water-supply. 
14.  Rates for supply of water for irrigation. 
15.  Rates for supply of water for industrial and domestic purposes. 
16.  Supply of water to those whose supply has been stopped or reduced. 
17.  Construction of dam, etc., prohibited except with the approval of the Corporation. 

Supply and generation of electrical energy 

18.  Supply and generation of electrical energy. 
19.  Effect on existing licences. 
20.  Charges for supply of electrical energy. 

Other activities 

21.  Other activities of the Corporation.  

1 

 
 
 
 
SECTIONS 

22.  General powers of the Corporation. 
23.  Power to close roads and open spaces. 
24.  Powers under certain other enactments. 

Powers 

Co-operation and avoidance of submersion 

25.  Co-operation with other authorities to minimise inconvenience caused by submersion. 
26.  Submersion of coal mines to be avoided by the Corporation. 

PART IV 
FINANCE, ACCOUNTS AND AUDIT 

27.  Expenditure till the Corporation is established. 
28.  Vesting of property in the Corporation. 
29.  Fund of the Corporation. 
30.  Liabilities of participating Governments to provide capital to the Corporation. 
31.  Payment by participating Government on specified date. 
32.  Expenditure on objects other than irrigation, power and flood control. 
33.  Allocation of expenditure chargeable to project on main objects. 
34.  Capital allocated to irrigation 
35.  Capital allocated to power. 
36.  Capital allocated to flood control. 
37.  Disposal of profits and deficits. 
38.  Payment of interest. 
39.  Interest charge and other expenses to be added to and receipts taken for reduction of capital cost. 
40.  Provision for depreciation and reserve and other funds. 
41.  Corporation's share in betterment levy by State Governments. 
42.  Borrowing of money. 
43.  Liability to pay Central taxes. 
44.  Budget. 
45.  Annual report. 
46.  Other annual financial statements. 
47.  Accounts and audit. 

PART V 

MISCELLANEOUS 

48.  Directions by the Central Government. 
49.  Disputes between the Corporation and Governments. 
50.  Compulsory acquisition of land for the Corporation. 
51.  Control of Central Government. 
52.  Application of certain provisions of the Indian Forest Act, 1927, to the forests of the Corporation. 
53.  Penalty. 
54.  Procedure for prosecution. 
55.  Power of entry. 
56.  Members, officers and servants of the Corporation to be public servants. 

2 

 
 
SECTIONS 

57.  Protection of action of action taken under the Act. 
58.  Effect of other laws. 
59.  Power to make rules. 
60.  Power to make regulations. 

THE SCHEDULE. 

3 

 
 
 
 
THE DAMODAR VALLEY CORPORATION ACT, 1948 
ACT NO. 14 OF 19481 

[27th March, 1948.]  

An Act to provide for the establishment and regulation of a Corporation for the development of 

the Damodar Valley in the Provinces of Bihar and West Bengal.  

WHEREAS  it  is  expedient  to  provide  for  the  establishment  and  regulation  of  a  Corporation  for  the 

development of the Damodar Valley in the Provinces of Bihar and West Bengal: 

AND WHEREAS in pursuance of section 103 of the Government of India Act, 1935, (26 Geo. 5, c. 2.) 
resolutions have been passed by all the Chambers of the Provincial Legislatures of the said Provinces to 
the effect that certain matters dealt with in this Act which are enumerated in the Provincial Legislative 
List should be regulated in those Provinces by Act of the Dominion Legislature; 

It is hereby enacted as follows:— 

PART I 

INTRODUCTORY 

1.  Short  title,  extent  and  commencement.—(1)  This  Act  may  be  called  the  Damodar  Valley 

Corporation Act, 1948. 

(2) It extends to the States of Bihar and West Bengal. 
(3)  It  shall  come  into  force  on  such  date2  as  the  Central  Government  may,  by  notification  in  the 

Official Gazette, appoint in this behalf.  

2. Interpretation.—In this Act, unless there is anything repugnant in the subject or context,— 

(1) “Corporation” means the Damodar Valley Corporation; 

(2) “Damodar Valley” includes the basin of the Damodar river and its tributaries; 

(3) “member” means a member of the Corporation and includes the Chairman; 

(4) “participating Governments” means the Central Government, the State Government of Bihar and 

the State Government of West Bengal; 

(5) “prescribed” means prescribed by rules made under section 59; 

(6) “State Government” means the Government of Bihar or as the case may be of West Bengal, and 

“State Government” means the Governments of Bihar and West Bengal; 

(7) “regulations” means the regulations made by the Corporation under section 60.  

PART II 

ESTABLISHMENT OF THE CORPORATION  

3. Incorporation.—(1) With effect from such date as the Central Government may, by notification in 
the  Official Gazette, appoint in this behalf, there shall be established a Corporation by the name of  the 
Damodar Valley Corporation. 

(2) The said Corporation shall be a body corporate having perpetual succession and a common seal, 

and shall by the said name sue and be sued. 

1. This Act has been amended in the State of West Bengal by West Bengal Act 3 of 1956. 
2. 2nd April, 1948, see Gazette of India, Part I. 

4 

 
 
                                                           
4. Constitution of the Corporation.—1[(1) The Corporation shall consist of— 

(a) a Chairman; 

(b) a member (technical) and a member (finance); 

(c) one representative from the Central Government; 

(d) two representatives one each from the State Government of Jharkhand and West Bengal; 

(e) three independent experts one each from the field of irrigation, water supply and generation or 

transmission or distribution of electricity; and 

(f) a Member-Secretary. 

(1A)  The  Chairman  and  members  under  clauses  (a),  (b),  (d)  and  (f)  of  sub-section  (1)  shall  be 
appointed  by  the  Central  Government  in  consultation  with  the  State  Governments  concerned  while  the 
members under clauses (c) and (e) shall be appointed by the Central Government, by notification in the 
Official  Gazette. 

(1B)  The  Chairman  and  members  under  clauses  (a),  (b)  and  (f)  of  sub-section  (1)  shall  be            

whole-time while the members under clauses (c), (d) and (e) shall be part-time. 

(1C) The Chairman shall be the Chief Executive Officer of the Corporation. 

(1D) Without prejudice to the provisions contained in sub-section (1C), the Member-Secretary shall 

be in charge of general administration and business development of the Corporation.] 

(2)  A  person  shall  be  disqualified  for  being  appointed,  or  for  continuing  as,  a  member  of  the 

Corporation— 

(a) if he is a member of 2[Parliament] or any State Legislature; or 
(b) if he has, directly or indirectly, any interest in a subsisting contract made with, or in any work 
being  done  for,  the  Corporation  except  as  a  shareholder  (other  than  a  director)  in  an  incorporated 
company provided that where he is a shareholder, he shall disclose to the Government the nature and 
extent of shares held by him in such Company. 
(3) No act or proceeding of the Corporation shall be invalid by reason only of the existence of any 

vacancy amongst its members or any defect in the appointment of a member thereof.  

5. Conditions of service of members. —3*       
 (2)  The  remuneration  and  other  conditions  of  service  of  the  members  shall  be  such  as  may  be 

*               *                 *   

* 

* 

prescribed. 

6. Appointment of officers and servants. —4* 

   * 

* 

     * 

 * 

(3)  The  Corporation  may  appoint  such  other  officers  and  servants  as  it  considers  necessary  for  the 

efficient performance of its functions.  

7. Conditions of service of officers and servants.—The pay and other conditions of service of the 

officers and servants of the Corporation shall— 

5* 
* 
(b) as respects the other officers and servants, be such as may be determined by regulations.  

* 

* 

* 

6[8. Functions and duties of members.—The functions and duties of members shall be such as may 

be prescribed.] 

1. Subs. by Act 1 of 2012, s. 2, for sub-section (1) (w.e.f. 19-8-2013). 
2. Subs. by the A.O. 1950, for “the Central”. 
3. Sub-section (1) omitted by Act 59 of 1957, s. 2. 
4. Subs-sections (1) and (2) omitted by Act 1 of 2012, s. 3 (w.e.f. 19-8-2013). 
5. Clause (a) omitted by s. 4, ibid. (w.e.f. 19-8-2013). 
6. Subs. by s. 5, ibid., for section 8 (w.e.f. 19-8-2013). 

5 

 
 
 
 
 
 
 
 
 
 
 
 
                                                           
9. General disqualification of all officers and servants.—No person who has directly or indirectly, 
by  himself  or  his  partner  or  agent,  any  share  or  interest  in  any  contract,  by  or  on  behalf  of  the 
Corporation, or in any employment under, by or on behalf of the Corporation otherwise than as an officer 
or servant thereof, shall become or remain an officer or servant of the Corporation.  

10.  Appointment  of  Advisory  Committee.—Subject  to  any  rules  made  under  section  59  the 
Corporation may from time to time appoint one or more Advisory Committees for the purpose of securing 
the efficient discharge of the functions of the Corporation, and in particular for the purpose of securing 
that  those  functions  are  exercised  with  due  regard  to  the  circumstances  and  requirements  of  particular 
local areas.  

PART III 

FUNCTIONS AND POWERS OF THE CORPORATION 

General 

11.  Limits  of  Damodar  Valley  and  area  of  operations.—(1)  The  Central  Government  shall,  by 

notification in the Official Gazette, specify the limits of the Damodar Valley. 

(2) The  Corporation shall carry out all or any of its functions and exercise all or any of its powers 

within the Damodar Valley. 

(3) The Central Government may, after consultation with the State Governments by notification in the 
Official Gazette, direct that the Corporation shall carry out such function and exercise such power in such 
other area as may be specified therein and the area so specified shall be called the “area of operation” of 
the Corporation.  

12. Functions of the Corporation.—The functions of the Corporation shall be— 

(a) the promotion and operation of schemes for irrigation, water-supply and drainage, 

(b) the promotion and operation of schemes for  the generation, transmission and distribution of 

electrical energy, both hydro-electric and thermal, 

(c)  the  promotion  and  operation  of  schemes  for  flood  control  in  the  Damodar  river  and  its 
tributaries and the channels, if any, excavated by the Corporation in connection with the scheme and 
for the improvement of flow conditions in the Hooghly river, 

(d) the promotion and control of navigation in the Damodar river and its tributaries and channels, 

if any, 

(e) the promotion of afforestation and control of soil erosion in the Damodar Valley, and 

(f)  the  promotion  of  public  health  and  the  agricultural,  industrial,  economic  and  general  well-

being in the Damodar Valley and its area of operation. 

Irrigation and water-supply 

13.  Provision  for  irrigation  and  water-supply.—The  Corporation  may,  with  the  approval  of  the 
State  Government  concerned  which  shall  not  be  unreasonably  withheld,  construct  canals  and 
distributaries and maintain and operate them: 

Provided  that  the  State  Government  may,  after  giving  notice  and  subject  to  the  payment  of  fair 

compensation, take over the maintenance and operation of any such canal or distributary. 

14. Rates for supply of water for irrigation.—(1) The Corporation may, after consultation with the 
State Government concerned, determine and levy rates for the bulk supply of water to that Government 
for irrigation, and fix the minimum quantity of water which shall be made available for such purpose. 

6 

 
(2) The rates at which such water shall be supplied by the State Government to the cultivators and 

other consumers shall be fixed by that Government after consultation with the Corporation. 

15.  Rates  for  supply  of  water  for  industrial  and  domestic  purposes.—The  Corporation  may 
determine  and  levy  rates  for  bulk  supply  and  retail  distribution  of  water  for  industrial  and  domestic 
purposes and specify the manner of recovery of such rates. 

16.  Supply  of  water  to  those  whose  supply  has  been  stopped  or  reduced.—If,  with  a  view  to 
operating  its  schemes,  the  Corporation  has  stopped  or  reduced  the  supply  of  water  to  any  person  for 
agricultural, industrial or domestic purposes which such person was, prior to such stoppage or reduction, 
enjoying  by  virtue  of  any  prescriptive  right,  the  Corporation  shall  arrange  such  supply  of  water  on  the 
same terms as before. 

17. Construction of dam, etc., prohibited except with the approval of the Corporation.—Save as 
otherwise prescribed, no person shall construct, operate or maintain in the Damodar Valley any dam or 
other work or any installation for the extraction of water without the consent of the Corporation. 

18. Supply and generation of electrical energy.—Notwithstanding anything contained in the Indian 

Electricity Act, 1910 (9 of 1910), or any licence granted thereunder— 

(i) No person shall without the permission of the Corporation— 

(a) sell electrical energy to any consumer in the Damodar Valley where the energy is taken 

by the consumer at a pressure of 30,000 volts or more; 

(b) transmit electrical energy in the Damodar Valley at a pressure of 30,000 volts or more; 

(c) generate any electrical energy at an installation having an aggregate capacity of more than 
10,000 kilowatts in any part of the Damodar Valley lying to the north of a straight line drawn east 
to west passing through a point at latitude twenty-two degrees, fourteen minutes and   forty-seven 
seconds and longitude eighty-seven degrees, fifty-one minutes and forty-two seconds except such 
portion of the municipal area of Burdwan as may lie to the north of such straight line: 

Provided that nothing in sub-clause (c) shall apply to any person who was, at the commencement of 
this Act, generating electrical energy at an installation having an aggregate capacity of more than 10,000 
kilowatts, so long as the capacity of such installation is not increased: 

Provided  further  that  nothing  in  sub-clause  (c)  shall  apply  to  the  power  station  installation  of  the 
fertiliser factory at Sindri having an aggregate capacity of 80,000 kilowatts so long as the capacity of such 
installation is not increased beyond 80,000 kilowatts. 

(ii) The  Corporation  may  sell electrical  energy  to  any  consumer  in the  Damodar  Valley  but  no 
such  sale  shall,  except  with  the  permission  of  the  State  Government  concerned,  be  made  to  any 
consumer requiring supply at a pressure of less than 30,000 volts. 

(iii)  The  Corporation  may,  with  the  permission  of  the  State  Government  concerned,  extend  its 

transmission system to any area beyond the Damodar Valley and sell electrical energy in such area. 

19.  Effect  on  existing  licences.—(1)  Where  any  licence  granted  under  the  Indian  Electricity  Act, 
1910  (9  of  1910),  becomes  inoperative  wholly  or  partly  by  virtue  of  the  provisions  of  section  18,  the 
licence shall be deemed to have been revoked or modified so as to be consistent with those provisions. 

(2)  Where  a  licence  is  deemed  to  have  been  revoked  under  sub-section  (1)  the  Corporation  shall 
purchase  the  undertaking  of  the  licencee,  and  where  a  licence  is  modified  under  that  sub-section,  the 
Corporation shall, at the option of the licensee, either purchase the undertaking or pay fair compensation 
to the licensee. 

7 

 
(3)  The  purchase  price  or  the  amount  of  compensation  payable  by  the  corporation  under                         

sub-section  (2)  shall  be  such  as  may  be  agreed  to  between  the  Corporation  and  the  licensee  or,  in  the 
event of disagreement, as may be determined by arbitration. 

20. Charges for supply of electrical energy.—The Corporation shall fix the schedule of charges for 
the supply of electrical energy, including the rates for bulk supply and retail distribution, and specify the 
manner of recovery of such charges: 

Provided that the Corporation may in any contract for bulk supply of electrical energy impose such 
terms and conditions including a retail rate schedule as it may deem necessary or desirable to encourage 
the use of electrical energy.  

Other activities 

21. Other activities of the Corporation. — (1) The Corporation may establish, maintain and operate 
laboratories, experimental and research stations and farms for conducting experiments and research for—  

(a) utilising the water, electrical energy and other resources in the most economical manner for 

the development of the Damodar Valley, 

(b) determining the effect of its operations on the flow conditions in the Hooghly river,  

(c) making improvements in navigation conditions in the port of Calcutta, and 

(d) carrying out any other function specified under section 12.  

(2) The Corporation may set up its own planning, designing, construction and operating agencies, or 
make  arrangements  therefor  with  the  participating  Governments,  local  authorities,  educational  and 
research institutions or any person carrying on the business of an architect, an engineer or a contractor. 

Powers 

22. General powers of the Corporation.—(1) The Corporation shall have the power to do anything 

which may be necessary or expedient for the purposes of carrying out its functions under this Act. 

(2)  Without  prejudice  to  the  generality  of  the  foregoing  provision,  such  power  shall  include  the 

power— 

(i) to acquire and hold such movable and immovable property as it may deem necessary and to 

lease, sell or otherwise transfer any such property; 

(ii) to construct or cause to be constructed such dams, barrages, reservoirs, power houses, power 
structures, electrical transmission lines and sub-stations, navigation works, irrigation, navigation and 
drainage canals and such other works and structures as may be required; 

(iii)  to  prevent  pollution  of  any  water  under  its  control  and  to  take  all  measures  to  prevent 
discharges  into  such  water  effluents  which  are  harmful  to  water  supply,  irrigation,  public  health  or 
fish life; 

(iv) to  stock  its  reservoirs or  water  courses  with fish and  to  regulate  or  prohibit  taking  out  fish 

from the water under its control; 

(v)  to  undertake  resettlement  of  the  population  displaced  by  the  dams,  acquisition  of  land  for 

reservoirs and protection of watersheds; 

(vi) to aid in the establishment of co-operative societies and other organisations for the better use 

of facilities made available by the Corporation; 

(vii) to undertake measures for the prevention of malaria. 

8 

 
 
 
23.  Power  to  close  roads  and  open  spaces.—(1)  The  Corporation  may,  after  giving  notice  to  the 

persons concerned or to the public generally, — 

(a)  turn,  divert  or  discontinue  the  public  use  of,  or  permanently  close,  any  road  or  any  part 

thereof, or  

(b) discontinue the public use of, or permanently close, any open space or any part thereof. 

(2) Whenever the Corporation discontinues the public use of, or permanently closes, any road or open 

space the Corporation shall pay reasonable compensation to every person— 

(a)  who  was  entitled,  otherwise  than  as  a  licensee,  to  use  such  road  or  open  space  or  part 

thereof as a means of access, or 

(b) Whose immovable property was receiving air and light on account of such open space or 

part,  

and who has suffered damage— 

(i) in any case falling under clause (a) from such discontinuance or closure, and 

(ii) in any case falling under clause (b) from the use to which the Corporation has put such 

open space or part. 

(3)  In  determining  the  compensation  payable  to  any  person  under  sub-section  (2),  the  Corporation 
may  take  into  consideration  any  benefit  accruing  to  such  person  from  the  construction,  provision  or 
improvement of any other road, or open space at or about the same time that the road or open space or 
part thereof, on account of which the compensation is to be paid, is discontinued or closed. 

(4) When any road or open space or any part thereof is permanently closed under sub-section (1), the 

Corporation may sell or leave such part of it as is not required for its purposes. 

24. Powers under certain other enactments.—(1) Notwithstanding anything contained in the Acts 
specified  in  column  one  of  Part  I  of  the  Schedule,  the  Corporation  may  carry  out  all  or  any  of  the 
functions and exercise all or any of the powers of a State Government in the Damodar Valley under the 
provisions of such Acts specified in column two thereof against each item of column one. 

(2)  Notwithstanding  anything  contained  in  the  Acts  specified  in  column  one  of  Part  II  of  the 
Schedule, any officer authorised by the Corporation may carry out all or any of the functions and exercise 
all  or  any  of  the  powers  of  a  Canal  Officer,  Collector,  or  Forest  Officer,  as  the  case  may  be,  in  the 
Damodar Valley under the provisions of such Acts specified in column two thereof against each item of 
column one. 

Co-operation and avoidance of submersion 

25. Co-operation with other authorities to minimise inconvenience caused by submersion.—The 
Corporation shall co-operate with the participating Governments, railway authorities and local authorities 
and bodies, with a view to minimising the inconvenience likely to be caused by the submersion of roads 
and communications and shall bear the cost of any realignment thereof or resettlement of any population 
rendered necessary by such submersion.  

26.  Submersion  of  coal  mines  to  be  avoided  by  the  Corporation.—The  Corporation  shall  make 
every  endeavour  to  avoid  submersion  of  coal  or  mineral  deposits  and  shall  co-operate  with  the  coal 
mining  industry  and  the  bodies  set  up  by  the  participating  Governments  to  ensure  the  maintenance  of 
supplies of sand for stowing purposes in coal mines and in other ways to minimise the inconvenience to 
the coal mining industry. 

9 

 
 
 
PART IV 

FINANCE, ACCOUNTS AND AUDIT 

27.  Expenditure  till  the  Corporation  is  established.—All  expenditure  incurred  by  the  Central 
Government  for  and  in  connection  with  the  establishment  of  the  Corporation  up  to  the  date  of  its 
establishment shall be treated as the capital provided by the Central Government to the Corporation and 
such capital shall be adjusted between the participating Governments in accordance with the provisions of 
sections 30 to 36. 

28. Vesting of property in the Corporation.—All property acquired and works constructed for the 
purposes  of  the  Damodar  Valley  scheme  before  the  establishment  of  the  Corporation  shall  vest  in  the 
Corporation and all income derived and expenses incurred in this behalf shall be brought into the books of 
the Corporation. 

29. Fund of the Corporation.—(1) The Corporation shall have its own fund and all receipts of the 

Corporation shall be carried thereto and all payments by the Corporation shall be made therefrom. 

(2) Except as otherwise directed by the Central Government, all moneys belonging to that fund shall 
be deposited in the Reserve Bank of India or the Agents of the Reserve Bank of India or invested in such 
securities as may be approved by the Central Government. 

30.  Liabilities  of  participating  Governments  to  provide  capital  to  the  Corporation.—The 
participating  Governments  shall,  as  hereinafter  specified,  provide  the  entire  capital  required  by  the 
Corporation for the completion of any project undertaken by it. 

31.  Payment  by  participating  Government  on  specified  date.—Each  participating  Government 
shall provide its share of the capital on the dates specified by the Corporation and if any Government fails 
to provide such share on such dates the Corporation may raise loan to make up the deficit at the cost of 
the Government concerned. 

32.  Expenditure  on  objects  other  than  irrigation,  power  and  flood  control.—The  Corporation 
shall  have  power  to  spend  such  sums  as  it  thinks  fit  on  objects  authorised  under  this  Act  other  than 
irrigation, power and flood control and such sums shall be treated as common expenditure payable out of 
the fund of the Corporation before allocation under section 32. 

33.  Allocation  of  expenditure  chargeable  to  project  on  main  objects.—The  total  capital 
expenditure chargeable to a project shall be allocated between the three main objects, namely, irrigation, 
power and flood control as follows, namely:— 

(1)  expenditure  solely  attributable  to  any  of  these  objects,  including  a  proportionate  share  of 

overhead and general charges, shall be charged to that object, and 

(2)  expenditure  common  to  two  or  more  of  the  said objects, including  a  proportionate  share  of 
overhead  and  general  charges,  shall  be  allocated  to  each  of  such  objects  in  proportion  to  the 
expenditure  which,  according  to  the  estimates  of  the  Corporation,  would  have  been  incurred  in 
constructing a separate structure solely for that object, less any amount determined under clause (1) in 
respect of that object.  

34.  Capital  allocated  to  irrigation.—The  total  amount  of  capital  allocated  to  irrigation  shall  be 

shared between the State Governments as follows, namely:— 

(1)  the  Government  concerned  shall  be  responsible  for  the  capital  cost  of  the  works  constructed 

exclusively for irrigation in its State; and 

(2) the balance of capital cost under irrigation for both the States of Bihar and West Bengal shall be 
shared  by  the  State  Governments  in  the  proportion  to  their  guaranteed  annual  off-takes  of  water  for 
agricultural purposes: 

10 

 
Provided that the divisible capital cost under this clause shall be provisionally shared between them in 
accordance with their previously declared intentions regarding their respective guaranteed off-takes and 
any payments made accordingly shall be adjusted after the determination of the guaranteed off-takes. 

35.  Capital  allocated  to  power.—The  total  amount  of  capital  allocated  to  power  shall  be  shared 

equally between the three participating Governments. 

36. Capital allocated to flood control.—The total amount of capital up to fourteen crores of rupees 
allocated to flood control shall be shared equally between the Central Government and the Government of 
West Bengal and any amount in excess thereof shall be the liability of the Government of West Bengal. 

37. Disposal of profits and deficits.—(1) Subject to the provisions of sub-section (2) of section 40, 
the net profit, if any, attributable to each of the three main objects, namely, irrigation, power and flood 
control, shall be credited to the participating Governments in proportion to their respective shares in the 
total capital cost attributed to that object. 

(2) The net deficit, if any, in respect of any of the objects shall be made good by the Governments 

concerned in the proportion specified in sub-section (1): 

Provided  that  the  net  deficit  in  respect  of  flood  control  shall  be  made  good  entirely  by  the 

Government of West Bengal and the Central Government shall have no share in such deficit. 

38. Payment of interest.—The Corporation shall pay interest on the amount of capital provided by 
each  participating  Government  at  such  rate  as  may,  from  time  to  time,  be  fixed  by  the  Central 
Government and such interest shall be deemed to be part of the expenditure of the Corporation. 

39. Interest charge and other expenses to be added to and receipts taken for reduction of capital 
cost.—For  a  period,  not  exceeding  fifteen  years,  from  the  establishment  of  the  Corporation,  if  the 
Corporation runs in deficit, the interest 28 charges and all other expenditure shall be added to the capital 
cost and all receipts shall be taken in reduction of such capital cost. 

40.  Provision  for  depreciation  and  reserve  and  other  funds.—(1)  The  Corporation  shall  make 
provision  for  depreciation  and  for  reserve  and  other  funds  at  such  rates  and  on  such  terms  as  may  be 
specified by the Auditor-General of India in consultation with the Central Government. 

(2) The  net  profit  for  the purposes  of  section  37  shall  be  determined  after  such  provision  has  been 

made. 

41.  Corporation's  share  in  betterment  levy  by  State  Governments.—In  the  event  of  any 
betterment  levy  being  imposed  by  a  State  Government,  the  proportionate  proceeds  thereof  in  so  far  as 
they are attributable to the operations of the corporation shall be credited to the Corporation.  

42.  Borrowing  of  money.—The  Corporation  may,  with  the  approval  of  the  Central  Government, 
borrow money in the open market or otherwise for the purposes of carrying out its functions under this 
Act. 

43. Liability to pay Central taxes.—(1) The Corporation shall be liable to pay any taxes on income 

levied by the Central Government in the same manner and to the same extent as a company. 

(2)  The  State  Governments  shall  not  be  entitled  to  any  refund  of  any  such  taxes  paid  by  the 

Corporation. 

44.  Budget.—(1)  The  Corporation,  in  consultation  with  the  1[member  (finance)],  shall  in  October 
each  year  prepare  in  such  form  as  may  be  prescribed  a  budget  for  the  next  financial  year  showing  the 
estimated  receipts  and  expenditure  and  the  amounts  which  would  be  required  from  each  of  the  three 
participating Governments during that financial year. 

1. Subs. by Act 1 of 2012, s. 6, for “financial adviser” (w.e.f. 19-8-2013). 

11 

 
                                                           
(2)  Printed  copies  of  the  budget  shall  be  made  available  to  each  of  the  three  participating 

Governments by the 15th day of November each year. 

(3) The budget shall be laid before 1[Parliament] and the State Legislatures concerned as soon as may 

be after it is prepared. 

45. Annual report.—(1) The Corporation shall prepare, in such form as may be prescribed, an annual 
report  within  six  months  after  the  end  of  each  financial  year  giving  a  true  and  faithful  account  of  its 
activities during the previous financial year, with particular reference to— 

(i) irrigation; 
(ii) water supply; 
(iii) electrical energy; 
(iv) flood control; 
(v) navigation; 
(vi) afforestation; 
(vii) soil erosion; 
(viii) use of lands; 
(ix) resettlement of displaced population; 
(x) sanitation and public health measures; and 

(xi) economic and social welfare of the people. 

(2) The annual report shall also give a true and faithful account of the income and expenditure during 
the  previous  financial  year,  the  net  amounts  attributable  to  each  of  the  three  main  objects  and  the 
distribution  of  the  capital  cost  between  the  three  participating  Governments  and  show  the  progressive 
totals from the inception of the Corporation and the up-to-date financial results. 

(3) The payments provisionally made by each of the three participating Governments on the basis of 
the budget estimates shall be adjusted as soon as possible in accordance with the allocation made in the 
annual report. 

(4)  Printed  copies  of  the  annual  report  shall  be  made  available  to  each  of  the  three  participating 

Governments by the 15th day of October each year. 

(5) The annual report shall be laid before  1[Parliament] and the State Legislatures concerned as soon 

as may be after it is prepared.  

46. Other annual financial statements.—(1) The Corporation shall also prepare  such other annual 

financial statements in such form and by such dates as may be prescribed. 

(2) Printed copies of each such annual financial statement shall be made available to each of the three 

participating Governments by such date as may be prescribed.  

47. Accounts and audit.—The accounts of the Corporation shall be maintained and audited in such 

manner as may, in consultation with the Auditor-General of India, be prescribed. 

PART V 

MISCELLANEOUS 

48. Directions by the Central Government.—(1) In discharge of its functions the Corporation shall 

be guided by such instructions on questions of policy as may be given to it by the Central Government.  

(2)  If  any  dispute  arises  between  the  Central  Government  and  the  Corporation  as  to  whether  a 

question is or is not a question of policy, the decision of the Central Government shall be final. 

1. Subs. by  the A. O. 1950, for “the Central”. 

12 

 
                                                           
49.  Disputes  between  the  Corporation  and  Governments.—(1)  Save  as  otherwise  expressly 
provided in this Act, any dispute between the Corporation and any participating  Government regarding 
any matter covered by this Act or touching or arising out of it shall be referred to an arbitrator who shall 
be appointed by the Chief Justice of India. 

(2) The decision of the arbitrator shall be final and binding on the parties. 

50. Compulsory acquisition of land for the Corporation.—Any land required by the Corporation 
for  carrying  out  its  functions  under  this  Act  shall  be  deemed  to  be  needed  to  be  needed  for  a  public 
purpose and such land shall be acquired for the Corporation as if the provisions of Part VII of the Land 
Acquisition Act, 1894 (1 of 1894), were applicable to it and the Corporation were a company within the 
meaning of clause (e) of section 3 of the said Act. 

51.  Control  of  Central  Government.—(1)  The  Central  Government  may  remove  from  the 

Corporation any member who in its opinion— 

(a) refuses to act, 

(b) has become incapable of acting, 

(c)  has  so  abused  his  position  as  a  member  as  to  render  his  continuance  on  the  Corporation 

detrimental to the interest of the public, or 

(d) is otherwise unsuitable to continue as member. 

(2) The Central Government may suspend any member pending an enquiry against him. 

(3)  No  order  of  removal  under  this  section  shall  be  made  unless  the  member  concerned  has  been 
given an opportunity to submit his explanation to the Central Government, and when such order is passed 
the seat of the member removed shall be declared vacant and another member may be appointed under 
section 4 to fill up the vacancy. 

(4)  A  member  who  has  been  removed  shall  not  be  eligible for  reappointment as  member  or  in  any 

other capacity to the Corporation. 

(5) The Central Government may declare void any transaction in connection with which a member 

has been removed under sub-section (1). 

(6) If the Corporation fails to carry out its functions, or follow the directions issued by the Central 
Government under this Act, the Central Government shall have the power to remove the Chairman and 
the members of the Corporation and appoint a Chairman and members in their places.  

52.  Application  of  certain  provisions  of  the  Indian  Forest  Act,  1927,  to  the  forests  of  the 
Corporation.—All acts prohibited in respect of a reserved forest under section 26 of the Indian Forest 
Act, 1927 (16 of 1927) shall be deemed to be prohibited in respect of any forest owned by or under the 
supervision  or  control  of  the  Corporation  and  all  offences in  respect  of  such  forest  shall  be  punishable 
under the said Act as if they were committed in respect of a reserved forest. 

53. Penalty.—Whoever contravenes the provisions of sections 17 and 18 of this Act or any rule made 
thereunder shall be punished with imprisonment for a term which may extend to six months or with fine 
or with both.  

54. Procedure for prosecution.—No Court shall take cognisance of an offence under this Act except 

on the complaint of an officer of the Corporation authorised by it in this behalf.  

55. Power of entry.—Any officer or servant of the Corporation generally or specially authorised by 
the Corporation may at all reasonable times enter upon any land or premises and there do such things as 
may be reasonably necessary for the purpose of lawfully carrying out any of its works or of making any 
survey,  examination  or  investigation  preliminary  or  incidental  to  the  exercise  of  powers  or  the 
performance of functions by the Corporation under this Act.  

13 

 
56.  Members,  officers  and  servants  of  the  Corporation  to  be  public  servants.—All  members, 
officers  and  servants  of  the  Corporation,  whether  appointed  by  the  Central  Government  or  the 
Corporation, shall be deemed, when acting or purporting to act in pursuance of any of the provisions of 
this Act to be public servants within the meaning of section 21 of the Indian Penal Code (45 of 1860). 

57. Protection of action taken under the Act.—(1) No suit, prosecution, or legal proceeding shall 
lie against any person in the employment of the Corporation for anything which is in good faith done or 
purported to be done under this Act. 

(2)  Save  as  otherwise  provided  in  the  Act  no  suit  or  other  legal  proceeding  shall  lie  against  the 
Corporation for any damage caused or likely to be caused by anything in good faith done or purported to 
be done under this Act.  

58. Effect of other laws.—The provisions of this Act or any rule made thereunder shall have effect 
notwithstanding anything contained in any enactment other than this Act or any instrument having effect 
by virtue of any enactment other than this Act. 

59.  Power  to  make  rules.—The  Central  Government  may,  by  notification  in  the  official  Gazette, 

make rules to provide for all or any of the following matters, namely:— 

(1) the salaries and allowances and conditions of service of members,1***; 
(2) the functions and duties of the 2[members]; 

(3) the dams or other works or the installations which may be constructed without the approval of the 

Corporation; 

(4) the forms  of  the  budget,  the  annual report and the  annual  financial statements  and  the  dates by 
which copies of the annual financial statements shall be made available to the participating Governments;  

(5) the manner in which the accounts of the Corporation shall be maintained and audited; 

(6) the appointment of an Advisory Committee; and 

(7) the punishment for breach of any rule made under this Act.  

60.  Power  to  make  regulations.—(1)  The  Corporation  may,  with  the  previous  sanction  of  the 
Central  Government,  by  notification  in  the  Gazette  of  India,  make  regulations  for  carrying  out  its 
functions under this Act. 

(2) In particular and without prejudice to the generality of the foregoing power, in such regulation the 

Corporation may make provision for— 

(a) making of appointments and promotions of its officers and servants; 

(b) specifying other conditions of service of its officers and servants; 

(c)  specifying  the  manner  in  which  water  rates  and  charges  for  electrical  energy  shall  be 

recovered;  

(d) preventing the pollution of water under its control; 

(e) regulating the taking out of fish from the water under its control;  

(f) regulating its proceedings and business; 

(g) prescribing punishment for breach of any regulation. 

(3) All regulations made under sub-sections (1) and (2) shall, as soon as possible, be published also in 

the Official Gazettes of the State Governments. 

1. The words “the secretary and the financial adviser” omitted by Act 1 of 2012, s. 7 (w.e.f. 19-8-2013). 
2. Subs. by s. 7, ibid., for “financial adviser” (w.e.f. 19-8-2013). 

14 

 
                                                           
THE SCHEDULE 

(See section 24) 

PART I 

Acts  

Provisions of the Acts specified in column (1) 

(1) 

(2) 

1. The Canals Act, 1864 (Ben. Act 5 of 1864). 

2. The Indian Forest Act, 1927 (16 of 1927). 

Section  6  (Power  of  State  Government  to  fix  and 
alter rates of tolls). 

Section 8 (Power of State Government to appoint 
persons to collect tolls who may farm collection). 

Section  35  (Protection  of  forests  for  special 
purposes). 

Section  36  (Power  to  assume  management  of 
forests). 

PART II 

Acts 

(1) 

Provisions of the Acts specified in column (1) 

(2) 

1. The Bengal Irrigation Act, 1876 (Ben. Act 3 of 1876). 

Part III (Power of the maintenance of canals). 

2. The Bengal Embankment Act, 1882 (Ben. Act 2 of 1882). 

3.The Indian Forest Act, 1927 (16 of 1927) 

Section  41  of  Part  IV  (Power  of  Canal  Officer  to 
issue notice to person causing obstruction). 

Section  42  of  Part  IV  (Power  of  Canal  Officer  to 
cause obstructions to be removed) . 

Part  II  (Powers  of  Collector  and  procedure 
thereon). 

Part III (Powers of Collector in cases of imminent 
danger to life or property). 

Section  36  (Power  to  assume  management  of 
forests). 

15 

 
 
  
  
 
  
  
  
 
