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A farm worker looks for dried plants to remove in a paddy field on the outskirts of Ahmedabad, India, September 8, 2015.Reuters file

Villagers in Madhya Pradesh's Singrauli village alleged that a breach in an artificial ash pond, which stored toxic chemicals from a coal power plant run by Essar Power MP Ltd., had affected all farmland in a 4-km radius.

A statement released by Essar confirmed that the breach occurred on Wednesday night.

"Our security personnel deployed at the location have given a statement to the local police saying that they spotted 4-5 unidentified persons fleeing from the site of the incident last night. We have filed an application for FIR alleging sabotage, and also apprised all local authorities about the incident," the statement read.

Photos and videos of the incident show farmland covered in sludge. The artificial pond stored the coal ash which is extremely toxic and contained toxins such as arsenic. Research says that the leak of the ash into the ground could result in the contamination of groundwater and can severely affect the residents' health.

"Five children got stuck in a house. We rescued them around midnight," Singrauli district collector KVS Chaudhary told NDTV.

He added: "Some 500 farmers are affected after the ash leak. We have called for a preliminary probe and will look into all aspects, including the statement by Essar. The state and central pollution control officers are taking samples."

As per pollution control norms by the government, ash ponds are required to have a concrete wall to ensure that there are no leaks. The ash ponds should also not be used beyond their capacity.

In this case, the breach had allegedly occurred in a pond wall. "In some areas, the ash has gone up to six feet. Two villages are affected. The breach happened in a wall of the ash pond. These walls should be built of mud and bricks and concrete, but in this case the wall was built with ash," said Jagat Narayan Vishwakarma, an activist.

While activists alleged that the sludge had gone on to farmlands, the company maintained that the land where the ash has fallen is non-agricultural land owned by EPMPL. "In fact, families continue to live on the land at their own risk as encroachers despite repeated requests from EPMPL," the statement said.

Singrauli is the second most polluted industrial zone in the country after Ghaziabad. It houses 10 coal-based power plants and is situated along the Madhya Pradesh-Uttar Pradesh border.