| AGREEMENT BETWEEN HIS MAJESTY'S GOVERNMENT OF NEPAL AND THE GOVERNMENT OF INDIA ON THE GANDAK IRRIGATION & POWER PROJECT Kathmandu, 4 December 1959 PREAMBLE WHEREAS His Majesty's Government of Nepal and the Government of India consider that it is in the common interests of both Nepal and
India to construct a barrage, canal head regulators and other appurtenant works about 1000 feet below the existing Tribeni canal
head regulator and of taking out canal systems for purposes of irrigation and development of power for Nepal and India (hereinafter
referred to as "the project"). AND WHEREAS in view of the common benefits, His Majesty's Government have agreed to the construction of the said barrage, canal head
regulators and other connected works as shown in the Plan annexed to this Agreement to the extent that they lie within the territory
of Nepal, by and at the cost of the Government of India. NOW THE PARTIES AGREE AS FOLLOWS 1. Investigation and Surveys : His Majesty's Government authorise the Project Officers and other persons acting under the general or special orders of such officers
to move in the area indicated in the said Plan with men, material and equipment as may be required for the surveys and investigations
in connection with the Project, before, during and after construction, as may be found necessary from time to time. These surveys
include ground, aerial, hydraulic, hydrometric, hydrological and geological surveys; investigations for communication and for the
alignment of canals and for materials required for the construction and maintenance of the Project. 2. Authority for the execution of works and their maintenance : (i) His Majesty's Government authorise the Government of India to proceed with the execution of the Project and for this purpose His
Majesty's Government shall acquire all such lands as the Government of India may require and will permit the access to, the movement
within and the residence in the area indicated in the Plan of officers and field staff with labour force, draught animals, vehicles,
plants, machinery, equipment and instruments as may be necessary for the execution of the Project and for its operation and maintenance
after its completion. (ii) In case of any apprehended danger or accident to any of the structures, the officers of the Government of India will execute
all works which may be necessary for repairing the existing works or preventing such accidents and/or danger in the areas indicated
in the Plan. If any of such works have to be constructed on lands which do not belong to the Government of India, His Majesty's Government
will authorise these works to be executed and acquire such additional lands as may be necessary for the purpose. In all such cases
the Government of India shall pay reasonable compensation for the lands so acquired as well as for damage, if any, arising out of
the execution of these works. 3. Land Acquisition : (i) His Majesty's Government will acquire or requisition, as the case may be, all such lands as are required by the Government of
India for the Project, i.e. for the purpose of investigation, construction and maintenance of the Project and the Government of India
shall pay reasonable compensation for such lands acquired or requisitioned. (ii) His Majesty's Government shall transfer to the Government of India such lands belonging to His Majesty's Government as are required
for the purposes of the Project on payment of reasonable compensation by the Government of India. (iii) Lands requisitioned under para (i) shall be held by the Government of India for the duration of the requisition; and lands acquired
under sub-clause (i) or transferred under sub-clause (ii) shall vest in the Government of India as proprietor and subject to payment
of land revenue (Malpot) at the rates at which it is leviable on agricultural lands in the neighbourhood. (iv) When such land vesting in the Government of India or any part thereof ceases to be required by the Government of India for the
purposes of the Project, the Government of India will reconvey the same to His Majesty's Government free of charge. 4. Quarrying His Majesty's Government shall permit the Government of India on payment of reasonable royalty to quarry materials such as block stones,
boulders, shingle and sand required for the construction and maintenance of the Project from the areas indicated in the said Plan.
5. Communications (i), His Majesty's Government shall allow the Government of India to construct and maintain such portion of the main Western Canal
which falls in the Nepal territory and to construct and maintain communications for the construction and maintenance of the: Project.
Theroads will be essentially departmental roads of the Project and their use by commercial and non-commercial vehicles of Nepal will
be regulated as.mutually agreed upon between His Majesty's Government and the Government of India. (ii) The bridge over the Gandak Barrage will be open to public traffic, but the Government of India shall have the right to close
the traffic over the bridge for repair, etc. (iii) The Government of India agree to provide locking arrangements for facility of riverine traffic across the Barrage free from
payment of any tolls whatever, provided that this traffic will be regulated by the Project staff in accordance with the rules mutually
agreed upon between His Majesty's Government and the Government of India. (iv) His Majesty's Government agree to permit installations of telegraph, telephone, and radio communications as approximately indicated
in the Plan for the bonafide purpose of the construction, maintenance and operation of the Project. (v) The Government of India shall permit the use of internal telegraph, telephone and radio communications as indicated in the Plan
to the authorised servants of His Majesty's Government in emergencies, provided such use does not interfere with the construction,
maintenance and operation of the Project. 6. Ownership, Operation and Maintenance of Works : Subject to the provisions of sub-clause (v) of clause 7, all works connected with the Project in the territory of Nepal will remain
the property of and be operated and maintained by the Government of India. 7. Irrigation for Nepal (i) The Government of India shall construct at their own cost the Western Nepal Canal including the distributory system thereof down
to a minimum discharge of 20 cusecs for providing flow irrigation in the gross commanded area estimated to be about 40,000 acres.
(ii) The Government of India shall construct the Eastern Nepal Canal from the tall end of the Don Branch Canal upto river Bagmati
including the distributory system down to a minimum discharge of 20 cusecs at their own cost for providing flow irrigation in Nepal
for the gross commanded area estimated to be 1,03,500 acres. (iii) His Majesty's Government shall be responsible for the construction of channels below 20 cusecs capacity for irrigation in Nepal
but the Government of India shall contribute such sum of money as they may consider reasonable to meet the cost of construction.
(iv) The Nepal Eastern Canal and the Nepal Western Canal shall be completed, as far as possible, within one year of the completion
of the barrage. (v) The canal systems including the service roads situated in Nepal territory except the Main Western Canal, shall be handed over
to His Majesty's Government for operation and maintenance at their cost. 8. Power development and reservation for Nepal (1) The Government of India agree to construct one Power House with an installed capacity of 15,000 KW in the Nepal territory on the
Main Western Canal. (ii) The Government of India also agree to construct a transmission line from the Power House in Nepal to the Bihar border near Bhaisalotan
and from Sagaull to Raxaul in Bihar in order to facilitate supply of power on any point in the Bihar Grid upto and including Raxaul.
(iii) The Government of India shall supply power to His Majesty's Government at the Power House and/or at any point in the Grid upto
and including Raxaul to an aggregate maximum of 10,000 KW upto 60% load factor at power factor not below 0.85. The charges for supply
at the Power House shall be the actual cost of production, and on any point on the Grid upto Raxaul it shall be the cost production
plus the cost of transmission on such terms and conditions as may be mutually agreed upon. (iv) His Majesty's Government will be responsible for the construction at their own cost of the transmission and distribution system
for supply of power within Nepal from the Power House or from any point on the Grid upto and including Raxaul. (v) The ownership and management of the Power House shall be transferred to His Majesty's Government on one year's notice in writing
given by them to the Government of India after the full load of 10,000 KW at 60% load factor has been developed in Nepal from this
Power House. (vi) The ownership of the transmission system constructed by the Government of India at its cost shall remain vested in the Government
of India, but, on transfer of the Power House', the Government of India -shall continue the arrangements for transmission of power,
if so desired by His Majesty's Government, on payment of the cost of transmission. Provided that His Majesty's Government shall have
the right to purchase the transmission system from the Power House to Bhaisalotan situated in the Nepal territory on payment of the
original cost minus depreciation. (vii) The Government of India shall be free to regulate the flow into or close the Main Western Canal Head Regulator temporarily,
if such works are found to be necessary in the interest of the efficient maintenance and operation of the Canal or the Power House,
provided that in such situations the Government of India agree to supply the minimum essential power from the Bihar Grid to the extent
possible on such terms and conditions as may be mutually agreed upon. 9. Protection of Nepal's Riparian Rights His Majesty's Government will continue to have the right to withdraw for irrigation or any other purpose from the river or its tributaries
in Nepal such supplies of water as may be required by them from time to time and His Majesty's Government agree that they shall not
exercise this right in such manner as is likely, in the opinion of the parties hereto, prejudicially to affect the water requirements
of the Project as set out in the schedule annexed hereto. 10. Prorata reduction of supplies during period of shortage Whenever the supply of water available for irrigation falls short of the requirements of the total area under the Project for which
irrigation has to be provided the shortage shall be shared on prorata basis between the Government of India and His Majesty's Government.
11. Sovereignty and Jurisdiction Nothing in this Agreement shall be deemed to derogate from the sovereignty and territorial jurisdiction of His Majesty's Government
in respect of lands acquired by His Majesty's Government and made available to the Government of India for investigation, execution
and maintenance of the Project. 12. Arbitration : (1) Any dispute or difference arising out of or in any way touching or concerning the construction, effect or meaning of this Agreement,
or of any matter contained herein or the respective rights and liabilities of the parties hereunder, if not settled by discussion,
shall be determined in accordance with the provisions of this clause. (2) Any of the parties may by notice in writing inform the other party of its intention to refer to arbitration any such dispute or
difference mentioned in sub-clause (1); and within 90 days of the delivery of such notice, each of the two parties shall nominate
an arbitrator for jointly determining such dispute or difference and the award of the arbitrators shall be binding on the parties.
(3) In case the arbitrators are unable to agree, the parties hereto may consult each other and appoint an Umpire whose award shall
be final and binding on them. 13. This Agreement will come into force with effect from the date of signatures of the authorised representatives of His Majesty's
Government and the Government of India respectively. IN WITNESS WHEREOF the undersigned being duly authorised thereof by their respective Governments have signed the present AGREEMENT
in Nepali, Hindi and English in duplicate, all three texts being equally authentic, at Kathmandu this 19th day of Marg Sambat 2016
corresponding to December 4, 1959. For purposes of interpretation the English text shall be used. For the Government of India On behalf of For and on behalf of the His Majesty's Government President of India of Nepal BHAGAWAN SAHAY (Sd.) Ambassador of India. SUHARANA SHUMSHERE
Deputy Prime Minister.
For His Majesty's Government of Nepal SUHARANA SHUMSHERE
For The Government of India _____________________________ EMBASSY OF INDIA, NEPAL, KATHMANDU Dated December 4, 1959 My Dear BHAGWAN SAHAY, There are a few matters pertaining to the Gandak Irrigation and Power Project Agreement in respect of which certain understandings
are necessary. They are detailed below : (a) Sub-clauses (i) and (ii) of Clause 3 lay down that the Government of India shall pay reasonable compensation for acquisition or
requisition of any lands which may be required for the Project. It is agreed that for purposes of fixation of rates of compensation
His Majesty's Government would appoint an Expert Committee with which Revenue Officers of the Gandak Project would also be associated.
The Committee will visit the area of the Project and fix the principles for assessment of compensation payable for such lands. The
total compensation payable for the lands acquired or requisitioned will be calculated on the basis of the agreed rates fixed by the
Committee. The Government of India shall deposit the agreed amount of compensation to the credit of His Majesty's Government in the
Rashtra Bank. Thereupon His Majesty's Government will make the required arrangements for payment of compensation to those persons
to whom it may be due. (b) Clause 4 provides that His Majesty's Government will grant permission to the Government of India for the quarrying of materials
required for the construction and the maintenance of the Project in the areas shown in the Plan annexed to the Agreement. It is our
understanding that if suitable materials are not available from these areas in sufficient quantities His Majesty's Government will
permit on the request of the Government of India quarrying in such other areas as may be mutually agreed upon. (c) Sub-clause (ii) of Clause 7 of the Agreement states that under the Eastern Nepal Canal the gross commanded area will be 1,03,500
acres. It may be explained that this gross commanded area will be possible only on the execution of the training works on the river
Bagmati for which certain proposals have already been under discussion with His Majesty's Government. The river has been taking a
westward course and certain training works are required to be set up in order to divert it back into its old eastern channel to flow
under the Bagmati Railway Bridge. Without the river training scheme the gross commanded area will not exceed 93,000 acres. (d) Sub-clause (iii) of Clause 7 of the Agreement refers to a contribution by the Government of India of a sum which they c.nsider
reasonable towards the cost of construction of channels below 20 cusecs capacity for irrigation in Nepal. It is our understanding
that such contribution would not cover any cost of land acquisition for the channels but would be related only to the actual expenditure
on works. As regards the latter it is estimated that a sum of Rs. fifteen lakhs will be sufficient and accordingly the Government
of India will make this sum available to His Majesty's Government in suitable instalments according to the progress of construction.
(e) Sub-clause (v) of Clause 8 provides that the ownership and management of the power house shall be transferred to His for a period of fifteen years after obtaining the ownership and management of the power house His Majesty's Government would be generating
secondary Power to the full extent possible and supplying it to the Government of India on payment of its actual cost of production.
(f) The schedule annexed to clause 9 gives the minimum quantities of water required for the Project after making the allowance for
the withdrawal of water from the upper reaches of the Gandak river and its tributaries sufficient for the irrigation of two lakh
acres which is the maximum area estimated to be available for the purpose. it is our understanding that if at any time, due to natural
causes the supplies in the river are insufficient for all the purposes His Majesty's Government will be entitled to continue to withdraw
water sufficient for the irrigation of such area. ___________________ Kathmandu, Nepal. December 4, 1959 My Dear BHAGWAN SAHAY, I acknowledge the receipt of your letter of December 4, 1959, regarding the Gandak Irrigation and Power Project which is as follows:
(Notprinted) We confirm the understandings as indicated in your letter. Yours sincerely, (Sd.) SUHARANA SHUMSHERE His Excellency Shri BHAGWAN SAHAY, Ambassador of India, Kathmandu.
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