Supreme Court of India
STATE OF HIMACHAL PRADESHversusUNION OF INDIA & ORS.
- Citation
- 2011 INSC 717
- Decided
- 27 September 2011
- Disposal
- Hearing Adjourned
- Bench
- R V RAVEENDRAN
Holding
Himachal Pradesh, as a successor state under Section 78 of the Punjab Reorganisation Act, 1966, is entitled to a 7.19% share of the power generated by the Bhakra‑Nangal and Beas Projects, and the suit is maintainable; the claim to 12% free power is not supported by law.
Summary
The State of Himachal Pradesh sued the Union of India and five other parties seeking its share of electricity generated by the Bhakra‑Nangal and Beas hydro‑electric projects, claiming entitlement based on the submergence of its territory and the Punjab Reorganisation Act, 1966. The Court examined whether the suit was barred by limitation, the Bilaspur merger, Article 363, Article 262, and the scheme of the Punjab Reorganisation Act. It held that the suit was not time‑barred, that the Bilaspur merger extinguished any pre‑merger rights, but that Himachal Pradesh retained a statutory right under Section 78 of the 1966 Act to receive and utilise power as a successor state. The Court found no final agreement on power allocation and therefore could determine the share, rejecting the claim to a 12% free‑power entitlement which was a policy decision, not a legal right. Consequently, Himachal Pradesh was awarded a 7.19% share of the power from both projects, with interest on amounts due from Punjab and Haryana, and the suit was partially decreed against those two states while dismissed against the Union, Rajasthan and Chandigarh.
Issues considered
- Whether the suit is barred by limitation, delay or laches.
- Whether the plaintiff can claim any right based on the pre‑merger rights of the Raja of Bilaspur.
- Whether the suit is barred by Article 363 of the Constitution.
- Whether the suit is maintainable under Article 131 of the Constitution.
- Whether the plaint discloses a cause of action against defendants 3 and 4 under Order 23 Rule 6(a) of the Supreme Court Rules.
- Whether the Punjab Reorganisation Act, 1966 (sections 78‑80) bars the suit.
- Whether an agreement on power sharing was reached on 17 April 1967.
- Whether the plaintiff is entitled to 12% free power from the projects.
- Whether the plaintiff is entitled to an additional 7.19% share of total power.
- Whether the plaintiff is entitled to a monetary decree for compensation/reimbursement.
- Whether the plaintiff is entitled to interest on the determined amounts.
Legislation cited
- Government of India Act, 1935s. 290-A
- Himachal Pradesh Act, 1970
- Inter-State Water Disputes Act, 1956s. 11
- Punjab Reorganisation Act, 1966s. 78, s. 79, s. 80
- Supreme Court Rules, 1966s. Order 23 Rule 6(a)
Subjects
Original jurisdictionArticle 131Punjab Reorganisation ActPower sharingHydroelectric projectsSuccessor state rightsLimitationArticle 363Article 262Inter‑state water disputesCompensationInterest
Judgment
[2011] 11 S.C.R. 527
STATE OF HIMACHAL PRADESH A
v.
UNION OF INDIA & ORS.
(Original Suit No. 2 of 1996)
SEPTEMBER 27, 2011
B
[R.V. RAVEENDRAN AND A.K. PATNAIK, JJ.]
CONSTITUTION OF IND/A, 1950:
Articles 131(b) and 363 - Suit - Plaintiff (State of c
Himacha/ Pradesh) claiming its share in the power generated
in Bhakra-Nangal and Beas Projects - Relief claimed against
Union of India (D-1), State of Punjab (D-2), State of Haryana
(D-3), State of Rajasthan (D-4) and Union Territory of
Chandigarh (D-5) - Held: As regards submergence of large 0
area in construction of the projects, plaintiff cannot make any
claim on the basis of the rights of Raja of Bilaspur prior to
the merger of the Bilaspur State with the Dominion of India -
Further, when agreements between the States of Punjab and
Rajasthan were made for construction of the Projects, the
predecessor of the plaintiff was a Union Territory and it was
E
the Union of India which had the right over the water and land
therein and, therefore, the plaintiff can have no cause of
action to make a claim to power from the said Projects on the
basis of submergence of large areas in construction of the
projects -However, the plaintiff as a successor State of the F
composite State of Punjab, has the statutory right uls 78 of
the Punjab Reorganisation Act, 1966 to the utilization of power
and also the constitutional right to equal treatment vis-a-vis
the other successor States and, as such, has cause of action
to file and maintain the suit as against D-2, D-3 and D-5 - G
More over, as uls 78 (1) the Central Government failed to
determine the rights of the plaintiff, it has cause of action to
fi.le the suit against D-1 also - However, as D-4 was never a
527 H
528 SUPREME COURT REPORTS [2011] 11 S.C.R.
A part of composite State of Punjab, "its rights are not affected
by the 1966 Act and, thus, plaintiff has no cause of action to
file the suit against D-4 - Supreme Court Rules, 1966 - 0.
23, r. 6(a)-Punjab Reorganization Act, 1966 - s. 78.
Articles 131(b) and 363 - Suit - Plaintiff-State claiming
8
its share in the power generated in Bhakra-Nangal Project,
on the basis of submergence of territories of erstwhile State
of Bilaspur, which was one of the constituents of the plaintiff-
State - Held: Bila spur Merger Agreement dated 15. 8. 1948
does not contain any provisions which have any relevance to
C the claim of the plaintiff to its share to the power generated in
the Bhakra-Nanga/ Project - However, the claim of the
plaintiff is also based on the Punjab Reorganization Act,
1966 and the provisions of the Constitution and such a claim
is not barred under Article 363.
D
Articles 131(b) and 262 (2) - Suit - Plaintiff-State
claiming its share in power generated in Bhakra-Nangal and
Beas Projects -Maintainability of - Held: The relief claimed
does not relate to inter-State river water or use thereof but
E pertains to sharing of power generated in the said projects and
such a dispute was not barred under Article 262 (2) of the
Constitution rlw s. 11 of Inter-State Water Disputes Act, 1956.
Article 131 (b) - Suit -Limitation - Plaintiff-State
claiming its share in power generated in Bhakra-Nanga/ and
F Beas Projects - Suit filed in 1996 - Resisted as barred by
limitation - Held: Suit was not barred by limitation, delay or
/aches, as the Article does not prescribe any period of
limitation to file such a claim - Moreover, there has been no
final a/location of power from the said projects to the plaintiff
G as yet and the arrangements were only interim or ad hoc -
Until a final decision was taken the claim of plaintiff for
appropriate allocation of power from the two Projects was alive
and cannot be held to be stale or belated - Limitation - Delay!
/aches.
H
STATE OF HIMACHAL PRADESH v. UNION OF INDIA 529
& ORS.
PUNJAB REORGANIZATION ACT, 1966: A
s. 78 - Rights and liabilities in regard to Bhakra-Nangal
and Beas Projects - Suit under Article 131 of the Constitution
- Plaintiff-State claiming its share in the power generated in
the two Projects - Maintainability of - Held: s. 78(1) confers 8
a legal right on the plaintiff as a successor State to receive
and utilize the power generated in Bhakra-Nangal and Beas
Projects - As there is only a 'tentative, ad hoc or interim
arrangement' arrived at in the meeting held on 17.4.1967 and
there is no final agreement between the successor States of
the composite State of Punjab, Supreme Court, therefore, has C
the jurisdiction to decide the extent to which the plaintiff-State
would be entitled to receive and utilize the power generated
in the two Projects and, as such, the suit is not barred by the
scheme of ss. 78 to 80 - Constitution of India, 1950 - Article
131. D
CIRCULARS/GOVERNMENT ORDERS!
NOT/FICA TIONS
Government of India, Ministry of Irrigation & Power Jetter
dated 27. 7.1985 - Allocation of 12% of power generated, to E
'mother-State" free of cost - Held: Is applicable to Joint
ventures between the Union and one or more State
Governments - In the instant case, the letter is not applicable.
Relief - Entitlement of plaintiff-State to receive power F
uenerated in Bhakra-Nangal and Beas Projects - Held: The
purpose of the two Projects was to benefit the entire composite
State of Punjab including the transferred territories which
became part of plaintiff-State - If the ratio of the population
of the transferred territories vis-a-vis the composite State of
Punjab was 7. 19%, equal treatment warranted that a/location G
of 7.19% of the share of the composite State of Punjab
g.~merated in the two Projects would be only fair and equitable
- It is, therefore, declared that plaintiff-State is entitled to
7 19% of the share of the composite State of Punjab from
B hakra-Nangal Project w. e. f. 1. 11. 1966 and from Beas Project H
530 SUPREME COURT REPORTS [2011] 11 S.C.R.
A with effect from the dates of production in Unit I and Unit II -
From this entitiement, what has been received by the plaintiff
has to be deducted for the purpose of finding out the amount
due to the plaintiff-State from defendants 2 and 3 up to
October, 2011- With effect from November 2011, the plaintiff-
s State would be given its share of 7. 19% as decreed in the
judgment- Since defendants 2 and 3 have utilized power in
excess of what was due to them under law, it is held that the
plaintiff-State will be entitled to the interest at the rate of 6%
on the amounts determined by the Union of India to be due
c from them- Interest.
The State of Himachal Pradesh, comprising erstwhile
State of Bilaspur, erstwhile State of Himachal Pradesh
and the transferred territories of the composite State of
Punjab, filed the instant suit claiming its share in the
D power generated from Bhakhra Nangal Project and Beas
Project ( Unit I and Unit II), and compensation as a result
of submergence of its lands and properties in the
construction of the said Projects. The plaintiff based its
claim on a draft agreement, which was to be executed on
E behalf of Raja of Bilaspur and the Province of Punjab for
the construction of Bhakra Dam, and the scheme of
apportionment of assets and liabilities, between the
successor States/Union Territories under the Punjab
Reorganization Act 1966, according to which the assets
F and liabilities were to be transferred to the successor
states in proportion to the population ratio distributed
amongst the successor States/Union Territories and as
7.1~% of the total population of the composite State of
Punjab was transferred along with the territories
G transferred to the plaintiff -State, it was entitled to 7 .19%
of the total power generated in the Bhakra-Nangal and
Beas Projects. In view of s. 78(1) of the Punjab Re-
oganisation Act, 1966, the plaintiff was entitled to its
share in the power generated in Bhakra Nangal and Beas
H Projects. As no agreement was entered into within two
STATE OF HIMACHAL PRADESH v. UNION OF INDIA 531
& ORS.
years of the appointed day, the plaintiff filed its claim by A
letter dated 22.10.1969 before the Central Government
and kept on making successive representations, but no
progress was made in the matter. The cause of action
arose when, ultimately, the Central Government failed to
determine the claim and, accordingly, intimated the B
plaintiff by letter dated 11.4.1994 and, in a joint meeting
held on 30.8.1995, the parties failed to arrive at any
agreement. On the failure of the Central Government to
determine the share of the plaintiff in the power generated
in Bhakra Dam and Beas Projects, the plaintiff claimed c
compensation from the Central Government also. The
defendants contested the suit.
On the pleadings of the parties ultimately the
following were the issues for decision before the Court :
D
1. "Whether the suit is not maintainable being
barred by limitation, delay and !aches?"
2. "Whether after the merger of the State of
Bilaspur with the Dominion of India, plaintiff E
could still have any cause of action to file the
present suit?"
3. "Whether the suit is barred by reasons of
Article 363 of the Constitution?"
F
4. "Whether the suit was not maintainable under
Article 131 of the Constitution?"
5. "Whether the suit does not disclose any cause
of action against the defendant Nos. 3 & 4 and
therefore liable to be rejected under Order XX.Ill G
Rule 6(a) of the Supreme Court rules, 1966?"
6. "Whether the suit is not maintainable by virtue
of the scheme of the Punjab Reorganisation
Act, 1966 in general and provisions of H
532 SUPREME COURT REPORTS [2011] 11 S.C.R
A Sections 78 to 80 of the said Act in particular."
7. "Whether in the discussions held on 17th
April, 1967, any agreement was reached
between the party States as regards their
share in power generated (rights to receive
B
and utilize the power generated in the Bhakra
Project?"
8. "Whether the Plaintiff-State is entitled to 12%
of the net power generated in Bhakra -Nangal
c & Beas Projects free of cost from the date of
commissioning of the projects?"
9. Whether the plaintiff is entitled to an allocation
of 7.19% in addition to 12% free power of the
D total power generated in Bhakra Nangal &
Beas Projects from the date of commissioning
of Projects or the appointed date (01.11.1966).
10. Whether the plaintiff is entitled to a decree for
a sum of Rs. 2199.7 crores against the
E defendants jointly and severally, as
compensation/ reimbursement for their failure
to supply to the plaintiff 12% and 7.19%
shares in the power generated in the projects
up the date of the filing of the suit and such
F further sums as may be determined, as
entitlement of the plaintiff for the period
subsequent to the filing of the suit.?
11. "Whether the plaintiff State is entitled to the
award of any interest on, the amounts
G
determined as its entitlement?"
Decreeing the suit in part against defendant Nos. 2
and 3 (States of Punjab and Haryana), the Court.
H
STATE OF HIMACHAL PRADESH v. UNION OF INDIA 533
& ORS.
HELD: A
Issue No. 1:
1. The suit was not barred by limitation, delay or
laches. Article 131 of the Constitution does not prescribe
any period of limitation within which a State or the Union B
of India has to file a dispute in this Court. Moreover, there
has been no final allocation of power from Bhakra-Nangal
and Beas Projects to the plaintiff-State as yet and
whatever allocations of power from the two Projects to it
have been made are only ad hoc or interim. Until a final C
decision was taken with regard to allocation of power to
·. the plaintiff-State from the two projects, its claim to
appropriate allocation of power from the two projects was
live and cannot be held to be stale or belated. [para 42]
[562-B-0] D
U.P. Jal Nigam & Anr. v. Jaswant Singh & Anr. 2006 (8)
Suppl. SCR 916 = (2006) 11 SCC 464 - cited
Issue No. 2:
E
2.1 By the Bilaspur Merger Agreement dated
15.08.1948 the Raja of Bilaspur ceded to the Dominion
Government full and exclusive authority, jurisdiction and
powers for and in relation to the governance of the State
and agreed to transfer the administration of the State to F
the Dominion Government on 12.10.1948. Thereafter, the
Government of India, Ministry of Law, issued a
notification dated 20.07.1949 (Ext. D-4/2-A) in exercise of
its powers u/s 290-A of the Government of India Act, 1935
making the States Merger (Chief Commissioners G
Provinces) Order, 1949, whereunder Bilaspur was to be
administered in all respects as if it was a Chief
Commissioner's Province. Under Article 294 (b) all rights,
liabilities and obligations of the Government of the
Dominion of India, whether arising out of any contract or H
534 SUPREME COURT REPORTS (2011] 11 S.C.R.
A otherwise, became the rights, liabilities and obligations
of the Government of India. Thus, all rights of the Raja of
Bilaspur vested in the Government of India. [para 43] [563-
B-G]
2.2 This Court, therefore, holds that the plaintiff will
8
not have any cause of action to make any claim on the
basis of any right of the Raja of Bilaspur prior to the
merger of Bilaspur State with the Dominion of India. [para
44] [563-G-H; 564-A-B]
C 2.3 However, the pleadings in the plaint and the
reliefs claimed therein, show that the plaintiff's claim to
the share of power generated in Bhakra-Nangal and Beas
Projects is also based on s.78 of the Punjab
Reorganisation Act, 1966 and its rights under the
D Constitution. The claim of the plaintiff-State to share of
power from Bhakra-Nangal and Beas Projects in the suit
insofar as it is based on provisions of the 1966 Act, and
the provisions of the Constitution, is not affected by the
merger of the State of Bilaspur with the Dominion of India.
E [para 44] [563-H; 564-A-C]
State of Seraikella and Others v. Union of India and
Another 1951 SCR 474 = 1951 SCR 474 =AIR 1951 SC
253; State of Orissa v. State of A.P. (2006) 9 SCC 591 -
relied on.
F
Issue No. 3
3. It is true that in view of the provisions of Articles
131 and 363 of the Constitution, this Court will have no
G jurisdiction under Article 131 to decide any dispute
arising out of any agreement or covenant between the
Raja of Bilaspur and the Government of the Dominion of
India. However, the only agreement proved to have been
executed by the Raja of Bilaspur and the Government of
H the Dominion of India before the commencement of the
STATE OF HIMACHAL PRADESH v. UNION OF INDIA 535
& ORS.
Constitution is the Bilaspur Merger Agreement dated A
15.8.1948 (Ext. D-4/1 A) and a close examination of its
provisions makes it clear that there are no provisions
therein which have any relevance to the claim of the
plaintiff to its share to the power generated in Bhakra-
Nangal and Beas Projects. Further, the draft agreement B
dated 07.07.1948, which had provisions in clause 13 for
allocation of power to the Bilaspur State, is not proved
to have been executed on behalf of the parties thereto
and cannot constitute a basis for allocation of power to
the plaintiff-State. Since the claim of the plaintiff-State is c
based also on the Punjab Reorganisation Act, 1966 and
the provisions of the Constitution, such a claim is not
barred under Article 363 of the Constitution. [para 47)
[566-G-H; 567-A-C]
Issue No. 4: D
4. It is true that in view of Clause (2) of Article 262 of
the Constitution and s.11 of the Inter-State Water Disputes
Act, 1956, neither the Supreme Court nor any other court
shallhave jurisdiction or exercise jurisdiction in respect E
of ·any water dispute which may (?e referred to a Tribunal
uj'lder the Act. However, in the instant case, a reading of
the assertions made in the plaint as well as the reliefs
claimed therein by the plaintiff, makes it evident that the
dispute does not relate to inter State river water or the F
use thereof, and actually relates to sharing of power
~1enerated in Bhakra-Nangal and Beas Projects and such
a. dispute was not barred under clause (2) of Article 262
of the Constitution read with s.11 of the Inter-State Water
Ctisputes Act, 1956. [para 49] [568-A·D]
G
State of Karnataka v. State of A.P. and Others 2000 (3)
SCR 301 = (2000) 9 SCC 572; State of Haryana v. State of
Punjab and Another 2002 (1) SCR 227 = (2002) 2 SCC 507
- relied on.
H
536 SUPREME COURT REPORTS [2011] 11 S.C.R.
A. Re: Cauvery Water Disputes Tribunal 1991 (2) Suppl.
SCR 497 = 993 Supp (1) SCC 96(11); and State of Orissa v.
Government of India and Another 2009 (1) SCR 992 = (2009)
5 sec 492 - cited.
B Issue No. 5 :
5.1 As regards the cause of action, when oral and
documentary evidence have already been led by the
parties and arguments have been made, and when the
suit is finally being decided, it is not necessary for this
C Court to consider whether the plaint discloses a cause
of action and whether the suit is liable to be rejected
under Order 23 Rule 6(a) of the Supreme Court Rules,
1966. [para 51] [569-F-G]
D 5.2 So far as the plaintiff-State's legal right to the
utilization of power from Bhakra-Nangal and Beas
Projects is concerned, in 1959, when the agreement was
made between the States of Punjab and Rajasthan to
construct Bhakra-Nangal Project, as also in 1960-1961
E when these two States decided to collaborate and
undertake the execution of Beas Project, Himachal
Pradesh was a Union Territory and not a State; and the
executive and the legislative power over its water and
land in Entries 17 and 18 of List-II of the Seventh
Schedule to the Constitution vested in the Union of India.
F The submergence of the large areas of Himachal Pradesh
because of the construction of these Projects took place
due to decisions to which the Government of India was
a party and had executive and legislative power over
water and land in Himachal Pradesh by virtue of the
G provisions in Article 73(1) and Article 246(4) of the
Constitution. The Plaintiff-State, therefore, cannot have
any cause of action to make a claim to power from
Bhakra-Nangal and Beas Projects on the basis of
submergence of large areas of Himachal Pradesh. [para
H 53) [572-C-G)
STATE OF HIMACHAL PRADESH v. UNION OF INDIA 537
& ORS.
Babula/ Parate v. State of Bombay and another 1960 A
SCR 605 =AIR 1960 SC 51 - relied on
5.3 However, in the considered opinion of this Court,
the plaintiff had the statutory right u/s 78 of the Punjab
Reorganization Act, 1966 to the utilization of power and 8
also the constitutional .right to equal treatment vis-a-vis
the other successor States of the composite State of
Punjab and, as such, has cause of action to file and
maintain the suit as against defendant Nos. 2, 3 and 5.
Moreover, as u/s 78(1) of the Punjab Reorganisation Act, C
1966 the Central Government was required to determine
by an order the rights of the plaintiff to utilization of
power from Bhakra-Nangal and Beas Projects and it has
not done so, the plaintiff-State also has cause of action
to file the suit against defendant No.1. [para 54) [572-H;
573-E-H] D
State of Haryana v. State of Punjab and Another 2004
(2) Suppl. SCR849 = (2004) 12 sec 673 - cited.
5.4 Since defendant No.4 (State of Rajasthan) was E
11ever a part of composite State of Punjab and its rights
~nd liabilities including its rights to utilization of power
1
in Bhakra-Nangal and Beas Projects are not affected by
the Punjab Reorganisation Act, 1966, the plaintiff-State
has no legal right to claim a share of power from Bhakra- F
Nangal and Beas Projects from out of the share of power
cf the State of Rajasthan and, thus, had no cause of
action to file the suit against (defendant No.4). [para 54]
[573-C-F]
Issue No. 6 G
6.1 It is not correct to say that this Court has no
jurisdiction under Article 131 of the Constitution to
determine the share of the plaintiff to the power generated
in Bhakra-Nangal and Beas Projects. It is true thats. 78(1) H
538 SUPREME COURT REPORTS [2011] 11 S.C.R
A of the Punjab Reorganisation Act, 1966, provides that the
rights and liabilities of the successor States of the
composite State of Punjab will be fixed according to an
agreement between the successor States. But, in the
instant case, there is no such final agreement between
B the successor States with regard to the share of power
generated in Bhakra-Nangal and Beas Projects and there
is only a 'tentative, ad hoc or interim arrangement' arrived
at in the meeting held on 17.04.1967. Further, in spite of
the order dated 29.4.2010 passed by this Court directing
c the Union of India to make a final effort to bring all the
parties to the dispute to the negotiation table, no
agreement could be arrived at. It is in these circumstances
only that the Court has proceeded to hear and decide the
suit. [para 57] [577-D-H; 578-A-B]
D 6.2 Section 78(1) by its plain language states that all
rights and liabilities of the existing State of Punjab in
relation to Bhakra-Nangal and Beas Projects shall, on the
appointed day, be the rights and liabilities of the
successor States. It, thus, confers a legal right on
E Himachal Pradesh as a successor State in relation to
Bhakra-Nangal and Beas Projects. Clause (b) of sub-s. (3)
of s.78 further confirms that the rights of the successor
State such as the State of Himachal Pradesh includes the
right to receive and utilize the power generated as a result
F of Bhakra-Nangal and Beas Projects. Therefore, the
plaintiff had a legal right as a successor State of the
composite State of Punjab to receive and utilize the power
generated in Bhakra-Nangal and Beas Projects and this
right was capable of being enforced. [para 58) [578-C-F]
G
United Provinces v. Governor-General in Council AIR
1939 Federal Cour.t 58 - referred to.
6.3. Article 131 of the Constitution provides that this
Court has original jurisdiction in any dispute between the
H parties mentioned therein if and in so far as the dispute
STATE OF HIMACHAL PRADESH v. UNION OF INDIA 539
& ORS.
involves any question (whether of law or fact) on which A
the existence or extent of a legal right depends. Thus, this
Court has jurisdiction not only to decide any question on
which the existence of a legal right depends but also to
decide any dispute involving any question on which the
extent of a legal right depends. This Court, therefore, has B
the jurisdiction to decide the extent to which plaintiff-State
would be entitled to receive and utilize the power
generated in Bhakra-Nangal and Beas Projects. In this
view of the matter, the suit of the plaintiff is not barred by
the scheme of ss. 78 to 80 of the Punjab Reorganisation c
Act, 1966. [para 59] (579-C-E]
Issue No. 7:
7. It is evident from the record that allocation of rights
and liabilities to the constituents of the composite State D
of Punjab which took place at the meeting held on
17.04.1967 was purely 'tentative' and not final. The
documentary evidence before the Court clearly
establishes that the allocation of power to Himachal
Pradesh to the extent of 2.45% of the share of the power E
of the composite State of Punjab from both Bhakra- ~
Nangal and Beas Projects was 'tentative and ad hoc' and
not final. There is no final agreement between the
successor States of the composite State of Punjab with
regard to the rights and liabilities of the successor States F
including the right to the power generated in Bhakra-
Nangal and Beas Projects in terms of s. 78(1) of the
Punjab Reorganisation Act, 1966. [para 62] (582-B-D; 583-
B-C]
Issue No. 8: G
8.1 The claim of the plaintiff to 12% free power is not
based on any of its legal right, constitutional or statutory,
hut only on the decision referred to in the letter dated
2.2.07 .1985 of the Government of India, Ministry of H
540 SUPREME COURT REPORTS [2011] 11 S.C.R.
A Irrigation & Power, (Department of Power) to the
Chairman, H.P. State Electricity Board (Ext. P-55), which
is applicable to Central Sector Hydro-Electric Projects
and with effect from 12.02.1985 the Union Cabinet has
made this applicable to Joint Ventures between the Union
B and one or more State Governments for implementation
of Hydro-Electric Projects. This is purely a policy-
decision taken by the Government of India much after
Bhakra-Nangal and Beas Projects were executed and in
any case does not find place in any provision of law so
c as to confer a legal right on the plaintiff to claim the same.
Thus, the plaintiff-State is not entitled to 12% power
generated from Bhakra-Nangal and Beas Projects free of
cost from the date of commissioning of the Projects. [para
68-69) [587-C; 589-B-D]
D Ku/dip Nayar& Ors. v. Union of India & Ors. (2006) 7 SCC
1- cited
Issue No. 9:
E 9.1. The claim of the plaintiff to allocation of 7.19%
of the total power generated in Bhakra-Nangal and Beas
Project from 01.01.1996 is based on the Punjab
Reorganisation Act, 1966 and the State of Himachal
Pradesh Act, 1970. The language of s.78(1) of the 1966
Act shows that the right of the successor States in
F relation to Bhakra-Nangal and Beas Projects are rights
on account of their succession to the composite State of
Punjab on its reorganization. If the ratio of the population
of this transferred territory vis-a-vis the composite State
of Punjab was 7.19%, and the transferred territory as
G detailed in s. 5 of the Punjab Reorganisation Act, 1966
was not small, allocation of 7.19% of the share of power
of the composite State of Punjab generated in Bhakra-
Nangal and Beas Projects was only fair and equitable.
[para 74 and 76) [593-F-H; 594-F-H]
H
STATE OF HIMACHAL PRADESH v. UNION OF INDIA 541
& ORS.
9.2 The allocation of only 2.5% of the total share of A
the power of the composite State of Punjab generated in
the two Projects to Himachal Pradesh has been made on
the basis of actual consumption of power by the people
in the transferred territory and the location of the sub-
stations in the transferred territory. The summary of 8
discussion on 17.04.1967 (Ext. D-1/6) shows that the
allocation of power to Punjab is 54.5% of the total power
whereas the allocation of power to Haryana is 39.5% of
the total power available to the composite State of
Punjab. These allocations appear to have been done on c
the basis of the population ratio of the States of Punjab
and Haryana in the composite State, which were 54.84%
and 37.38% respectively. Thus, while the States of Punjab
and Haryana have been allocated power on the basis of
their population ratio, Himachal Pradesh has been 0
allocated power on "as is where is basis". [para 76] [594-
H; 595-A-C]
9.3 Equal treatment warranted. that the plaintiff-State
was allocated 7 .19% of the total power generated in
Bhakra-Nangal and Beas Projects (after excluding the E
power allocated to Defendant No.4 (State of Rajasthan)
from the appointed day as defined in the Punjab
Reorganisation Act, 1966, i.e. 01.11.1966. Considering the
fact that Chandigarh is the Capital of both the States of
Punjab and Haryana, these two States should meet the F
power requirements of the Union Territory of Chandigarh
out of their share. [para 77] [595-D-E]
9.4. This Court, accordingly, orders that the
entitlement of power of the constituents of the composite G
State of Punjab from Bhakra-Nangal and Beas Projects
will be: Himachal Pradesh - 7.19%; UT of Chandigarh-
3.5%; Punjab • 51.8%; Haryana • 37.51%. Therefore, the
entitlement of the plaintiff out of the total production will
be:
H
542 SUPREME COURT REPORTS [2011] 11 S.C.R.
A Project Entitlement in With effect from
total production
(i) Bhakra-Nangal 6.095% 01.11.1966
(7.19% of 84.78%) (date of re-
8 organisation)
(ii) Beas I
(7.19% of 80%) 5.752% From the date of
commencement of
Production
c (iii) Beas II
(7.19% of 41.5%) 2.984% From the date of
commencement of
Production
From this entitlement, what has been received by the
D plaintiff in regard to Bhakra-Nangal and Beas Projects,
has to be deducted for the purpose of finding out the
amount due to the plaintiff-State from the States of
Punjab and Haryana upto October, 2011. With effect from
November 2011, the plaintiff-State would be given its
E share of 7.19% as decreed in the judgment. [para 77 and
80] [595-D-H; 596-A-E; 597-H]
Issue No. 10:
10.1 The plaintiff has filed Statements I and Ill on the
F basis of its entitlement to 7 .19% of the total power
generated in Bhakra-Nangal and Beas Projects. These
statements, however, are disputed by the defendants in
their written statements. Defendant No.1-Union of India
will work out the details of the claim of the plaintiff-State,
G on the basis of the entitlements of the plaintiff, defendant
No. 2 and defendant No.3 in the tables in Paragraph 77
of the judgment as well as all other rights and liabilities
of the plaintiff-State, defendant No. 2 and defendant no.
3 in accordance with the provisions of the Punjab Re-
H organisation Act, 1966 and file a statement in this Court
STATE OF HIMACHAL PRADESH v. UNION OF INDIA 543
& ORS.
stating the amount due to the plaintiff from defendant A
Nos.2 and 3 up to October, 2011. [para 78and 80) [596·F·
H; 597-A·E·F]
Issue No. 11:
11. Since defendant Nos. 2 and 3 have utilized power B
in excess of what was due to them. under law, this Court
holds that the plaintiff-State will be
entitled to interest at
the rate of 6% on the amounts determined by the Union
of India to be due from defendant Nos.2 and 3. [para 79)
~97~ c
Case Law Reference:
2006 (8) Suppl. SCR 916 cited para 41
1951 SCR 474 relied on para 45
D
2006) 9 sec 591 relied on para 45
1991 (2) Suppl. SCR 497 cited para 48
2000 (3) SCR 301 cited para 48
2002 (1) SCR 227 relied on para 48 E
2009 (1) SCR 992 cited para 48
1960 SCR 605 relied on para 52
AIR 1939 Federal Court 58 referred to para 56
F
(2006) 1 sec 1 cited para 64
ORIGINAL JURISDICTION: Original Suit No. 2of1996.
Under Article 131 of the Constitution of India.
G
·Mohan Jain, ASG, A.K. Ganguly, J.S. Attri, C.S.
Vaidyanathan, Shyam Divan, R.S. Suri, L Nageshwar Rao,
Shambhu Prasad Singh, Naresh K Sharma, Vivek Singh Attri,
Deepak Jain, D.K. Thakur, S. Wasim A. Qadri, Yogita Yadav,
Mudrika Bansal, Kartik Ashok, Vibhav Misra, Subhash Kaushik,
H
544 SUPREME COURT REPORTS [2011] 11 S.C.R.
A Saima Bakshi, A.K. Sharma, Aruneswar Gupta, Manish
Raghav, Nikhil Singh, Kripa Shankar Prasad, V. Khandelwal,
Anil Hooda, Kamini Jaiswal, Ashok ·Kumar Singh, Sapan
Biswajit Meitei, Santosh Krishna, Divya Jyoti and Jyoti
Mendiratta for the appearing parties.
B
The Judgment of the Court was delivered by
A. K. PATNAIK, J.' 1. This dispute between the State of
Himachal Pradesh (Plaintiff), on the one hand, and the Union
of India (defendant No.1 ), State of Punjab (defendant No.2),
c State of Haryana (defendant No.3), State of Rajasthan
(defendant No.4) and Union Territory of Chandigarh (defendant
No.5), on the other·hand, under Article 131 of the Constitution
of India relates to the power generated in the Bhakra-Nangal
and Beas Projects.
D The Case of the Plaintiff (State of Himachal Pradesh) in
the plaint
2. The Bhakra dam across the river Satluj was proposed
in the year 1944 in the Bilaspur State. The construction of
E Bhakra dam was to result in submergence of a large territory
of the Bilaspur State but would benefit the Province of Punjab.
Hence, the Raja of Bilaspur agreed to the proposal for
construction of the Bhakra dam only on certain terms and
conditions detailed in a draft agreement which was to be
F executed on behalf of the Raja of Bilaspur and the Province of
Punjab. These terms and conditions included payment of
royalties for generation of power from the water of the reservoir
of the Bhakra dam. The formal agreement between the Raja
of Bilaspur and the province of Punjab, however, could not be
executed as the Bilaspur State ceded to the Dominion of India
G in 1948. When the Constitution of India was adopted in the year
1950, Bilaspur and Himachal Pradesh were specified as Part-
C States in the First Schedule to the Constitution. In 1954,
Bilaspur and Himachal Pradesh were united to form a new
State of Himachal Pradesh under the Himachal Pradesh and
H
t
STATE OF HIMACHAL PRADESH v. UNION OF INDIA 545
& ORS. (A.K. PATNAIK, J.]
Bilaspur (New States) Act, 1954. The new State of Himachal A
Pradesh, however, continued to be a Part-C State until it
became a Union Territory by the Constitution (7th Amendment)
Act, 1956. In 1966, Parliament enacted the Punjab
Reorganisation Act, 1966 which bifurcated the erstwhile State
of Punjab to two States, Punjab and Haryana, and transferred B
some of the territories of the erstwhile State of Punjab to the
Union Territory of Himachal Pradesh. With effect from
25.01.1971, this Union Territory of Himachal Pradesh became
a full fledged State by the State of Himachal Pradesh Act, 1970.
The new State of Himachal Pradesh thus constitutes (i) the c
erstwhile Part-C State of Bilaspur; (ii) the erstwhile Part-C State
of Himachal Pradesh and (iii) the transferred territories of State
of Punjab.
3. The construction of Bhakra dam has brought about lot
of benefits to the country.and in particular the defendants Nos. D
2, 3, 4 and 5, but it has resulted in submergence of 27869
(twenty seven thousand eight hundred and sixty nine) acres of
!and in the erstwhile Bilaspur State out of the total 41600 (forty
one thousand six hundred) acres. 3/4th of the reservoir of the
8hakra Dam is located in the erstwhile Part-C State of Bilaspur, E
now part of the State of Himachal Pradesh. '?uch submergence
and reservoir of water over large areas of land in the State of
Himachal Pradesh have meant loss of cultivated and
uncultivated land to a total extent of 103425 acres, trees and
f.:>rests, towns, Government buildings,_ community buildings, F
wells, sprin!!IS and paths, gardens, parks, road, bridgl:!s,
telegraph lines, ferries and these in their turn have resulted in
unemployment, loss of agricultural and trading activity, loss of
revenue, etc. These losses must be compensated by the
defendants Nos. 2, 3, 4 and 5. G
4. The river Beas originates in District Kullu of Himachal
Pradesh and the Beas Project is a multi-purpose scheme
comprising two units: Unit-I and Unit-II. Unit-I was commenced
in 1960's when Himachal Pradesh was a Union Territory and
H
\
546 SUPREME COURT REPORiS [2011] 11 S.C.R.
A was being administered by the Government of India and this
project involved diversion of water from river Beas at Randoh
in District Mandi of Himachal Pradesh to river Satluj at Dehar.
As a result of the diversion of water from river Beas at Pandoh,
a reservoir comprising an area of 323 (three hundred & twenty
B three) acres and a storage capacity of 33240 (thirty three
thousand two hundred and forty) acre feet have been created.
Unit-II of the project involved the construction of Pong Dam
across river Beas at Pong and the construction of the Pong
Dam has caused submergence of more t~an 65050 (sixty five
c thousand & fifty) acres of land in Kangra District including prime
and fertile agricultural land. Consequently, a large number of
families have been uprooted from their homes and fertile
agricultural land which they were cultivating and these families
need to be rehabilitated. Although Units-I and II of Beas Project
D are located in the State of Himachal Pradesh, benefits of the
two units have accrued to defendants Nos. 2, 3, 4 and 5.
5. The plaintiff is therefore entitled to its due share of power
generated in the Bhakra-Nangal a 1d Beas Projects. Under the
scheme for apportionment of assets and liabilities between the
E successor States in the Punjab Reorganisation Act, 1966 the ·
assets and liabilities are to be transferred to the successor
States in proportion to the population ratio distributed between
the successor States/Union Territories. As 7.19% of the total
population of the composite State of Punjab was transferred
F along with the territories transferred to the plaintiff under the
P4njab Reorganisation Act, 1966, the plaintiff was entitled to
7 .19% of the total power generated in the Bhakra-Nangal and
Beas Projects. This was also the recommendation of Shri K.S.
Subrahmanyam, former Chairman of the Central Electrical
G Authority in his report dated 29.06.1979. Moreover, the Union
of India has agreed in principle that the "mother State" which
houses.a hydro-electric power project by bearing the reservoir
of water required for generation of hydro-electric power shall
be entitled to at least 12% of total power generated from such
H project free ~f cost. Since plaintiff is the mother State in which
STATE OF HIMACHAL PRADESH v. UNION OF INDIA 547
& ORS. [A.K. PATNAIK, J.] I
the reservoirs of the two hydro-electric power projects, Bhakra- A
Nangal and Beas Projects were located, plaintiff was entitled
to supply of 12% of the total power generated in the two
projects free of cost.
6. The legal right of the plaintiff to its share of power B
generated in the Bhakra-Nangal and Beas Projects has been
acknowledged by Section 78 of the Punjab Reorganisation Act,
1966 titled "Rights and Liabilities in regard to Bhakra-Nangal
and Beas Projects". Sub-section 1 of Section 78 states that
notwithstanding anything contained in the Punjab
Reorganisation Act, 1966 but subject to Sections 79 and 80 C
thereof, all rights and liabilities of the existing State of Punjab
in relation to Bhakra-Nangal and Beas Projects shall on the
appointed day (01.11.1966) be the rights and liabilities of the
successor States in such proportion as may be fixed and
subject to such adjustments as may be made by agreement D
entered into by the successor States after consultation with the
Central Government or, if no such agreement is entered into
within two years of the appointed day, as the Central
Government may by order determine having regard to the
purposes of the project. Accordingly, the plaintiff filed its claims E
with respect to the Bhakra-Nangal and Beas Projects by letter
/ dated 22.10.1969 before the Central Government and made
,, several subsequent repres-entations thereafter to the Central
Government from time to time but the Central Government for
-: ::me reason or the other did not take steps to determine finally F
,•he rights of the plaintiff in respect of the Bhakra-Nangal and
Beas Projects.
7. In the absence of the any such final determination by the
Central Government, the power generated in the Bhakra- G
~ Jangal and Beas Projects presently is being shared by an ad
hoc arrangement. After deducting the power consumed for
e.uxiliary purposes and the transmission losses, the balance of
the power generated in the two projects is presently
apportioned on ad hoc basis is given as under:
H
548 SUPREME COURT REPORTS [2011] 11 S.C R.
A Bhakra-Nangal Beas
Name of the
State/U.T Unit I (Dehar) Unit II (Pong)
Rajasthan 15.22% 20% 58.50%
8 The remaining 84.78% 80% 41.50%
is shared as under:
Punjab 54.50% 60% 60%
Haryana 39.50% 40% 40%
H.P. 2.5% 15MW Nil
c U.T. Chandigarh 3.5% Nil Nil
8. The cause of action for filing the suit arose when the
Central Government ultimately failed to determine the lawful
claim of the plaintiff and intimated its decision in this regard
by letter dated 11.04.1994 and when a joint meeting of all the
0
parties under the aegis of the Principal Secretary of the Prime
Minister held on 30.08.1995 failed to arrive at any agreement
with tangible results. For failure on the part of the Central
Government to determine the share of the plaintiff in the power
E generated in the two projects, the plaintiff has claimed
compensation from the Central Government also.
9. The plaintiff has accordingly claimed the following
reliefs:
(a) A decree declaring that the plaintiff State is entitled to
F a share of 12% of the net power generated (total power
available after deduction of auxiliary consumption and
transmission losses) in Bhakra-Nangal and Beas Projects
free of cost from the date of commissioning of the projects
and further a decree declaring that the defendants are
G jointly and severally liable to compensate and reimburse
the money value of the power to the plaintiff State as per
statements II and IV annexed to the plaint;
(b) A decree declaring that the plaintiff State is entitled to
7 .19% of the power generated in the Bhakra-Nangal and
H
Beas Projects from the appointed day (01.11.1966) or
STATE OF HIMACHAL PRADESH v. UNION OF INDIA 549
& ORS. [A.K. PATNAIK, J.]
from the date of commissioning of the projects, whichever A
is later, out of the share of the then composite State of
Punjab on account of the transfer of population to the
plaintiff State under the Punjab Reorganisation Act, 1966
and a further decree declaring that the defendants are
jointly and severally liable to compensate or reimburse the B
plaintiff State for the difference between 7 .19% of its share
out of the share of the then composite State of Punjab and
the power received by the plaintiff State under the ad hoc
and interim arrangement from the two projects with effect
from the appointed day or the commissioning of the c
projects, whichever is later as per statements I and Ill
annexed to the plaint;
(c) A decree for a sum of Rs.2199.77 (two thousand one
. hundred ninety nine decimal seven) crores in favour of the
plaintiff and against the defendants jointly and severally as . D
compensation/reimbursement for their failure of supply to
the plaintiff 12% and 7.19% share of the power generated
in the two projects, being the total of the statements I and
IV;
(d) A decree for interest, pendente lite and future at the E
prevailing bank rates till the realization of amount in full;
(e) Costs of the suit;
(f) Other further reliefs as may be deemed fit and proper
in the circumstances of the case. F
Written Statement of Defendant No.1 (Union of India)
10. The Bhakra-Nangal Project was completed in 1963
and the Beas Project was completed in 1977 and the suit filed
by the plaintiff in 1996 claiming damages from defendant No.1 G
was hopelessly barred by limitation.
11. By. an agreement executed on 13.01.1959, the
composite State of Punjab and the State of Rajasthan agreed
for the construction of the Bhakra dam across the river Satluj
H
550 SUPREME COURT REPORTS [2011] 11 S.C.R.
/
A as well as other ancillary works and the object of this Bhakra-
Nanga I Project was to generate hydro-electric power and to
improve irrigation facilities for their respective States and also
agreed to fund and derive benefits from the Bhakra-Nangal
Project in the ratio of 84.78% and 15.22% respectively.
B Accordingly, the share of the power generated in the Bhakra-
Nangal Project of the State of Rajasthan was 15.22% and the
share of the power of composite State of Punjab was 84. 78%.
After the reorganisation of Punjab in 1966, the representatives
of the successor States/Union Territories, namely Punjab,
c Haryana, Chandigarh and Himachal Pradesh agreed at a
meeting held on 17.04.1967 in presence of the Secretary,
Ministry of Irrigation and Power, Government of India that the
share of power ofthe four successor States/Union Territories
out of the share of power of the composite State of Punjab from
the two projects would be as follows:
0
Punjab 54.5%
Haryana 39.5%
Chandigarh 3.5%
E Himachal Pradesh 2.5%
This agreement was incorporated in the minutes of the meeting
held on 17.04.1967 which were circulated by the letter dated
27.04.1967 of the defendant No.1 to all concerned. This
F agreement between the successor States/Union Territories
dated 17.04.1967 constitutes a statutory agreement in terms
of Section 78(1) of the Punjab Reorganisation Act, 1966 and
will hold the field unless replaced by a consensual agreement
between the successor States/Union Territories.
G 12. The Beas Project was also funded by the composite
State of Punjab and the State of Rajasthan as would be clear
from the notification dated 17.06.1970 of the Ministry of
Irrigation and Power, Government of India and the benefits of
power from the Beas Project were allocated between the
H composite State of Punjab and State of Rajasthan in proportion
STATE OF HIMACHAL PRADESH v. UNION OF INDIA 551
& ORS. [A.K. PATNAIK, J.]
to the ratio of the costs borne by the two States. After the A
reorganisation of composite State of Punjab, the Government
of India, Ministry of Energy, Department of Power by D.O. Letter
dated 30.03.1978 has allowed supply of 15MW power to
Himachal Pradesh from the Dehar Power Plant of the Beas
Project on ad hoc basis. B
13. The plaintiff lodged its claim to 7 .19% share of the total
power generated from the Bhakra-Nangal and Beas Projects
in its letter dated 22.10.1969 but by letter dated 22.03.1972,
Ministry of Irrigation and Power, Government of India informed
the plaintiff that the allocation of power made at the meeting C
on 17.04.1967 of the representatives of the successor States/
Union Territories of the composite State of Punjab will not be
modified. The Subrahmanyam Report recommending 7.19% of
the total share of power generated from Beas Project for the
plaintiff has not been accepted by the defendant No.1 and was D
not binding on defendant No.1 and the other defendants.
14. The formula of 12% free power to the mother State
bearing hydro-electric power project is applicable only in
respect of Central Sector Hydro Projects and is not applicable
to the Bhakra-Nangal and Beas Projects and this has been E
clarified in the D.O. Letter dated 11.04.1994 of the Ministry of
Power, Government of India to the Chief Minister of the plaintiff
State and has also been reiterated in the D.O. Letter dated
28.06.1995 of the Ministry.
F
15. Under Section 78 of the Punjab Reorganisation Act,
1966, the claims of the successor States/Union Territories to
the power generated in the Bhakra-Nangal and Beas Projects
· can be settled either by agreement between the successor
States/Union Territories or by the decision of the Central G
Government and not by the court. The dispute raised by the
plaintiff regarding distribution of electricity from hydro projects
between the plaintiff and defendants No. 2, 3, 4 and 5 is an
extremely sensitive issue and experience of controversy
surrounding the Cauvery dispute between Tamil Nadu,
H
552 SUPREME COURT REPORTS [2011] 11 S.C.R.
A Karnataka, Pondicherry and Kerala clearly demonstrates that
there are grave risks which may give rise to agitation and
eventual politicization with regard to river water system, irrigation
and electricity and this is an important aspect which has to be
borne in the background while dealing with the present dispute.
B The suit is not maintainable under Article 131 of the Constitution.
Written statement by Defendant No. 2 (State of Punja!ll
16. The suit as filed by the plaintiff is not maintainable under
Article 131 of the Constitution and the plaintiff has no cause of
c action to file the suit. In terms of Section 78( 1) of the Punjab
Reorganisation Act, 1966, the representatives of the successor
States/Union Territories of the composite State of Punjab have
at a meeting held on 17.04.1967 agreed to share the power
of the composite State of Punjab from the two projects at the
following percentages:
0
Punjab 54.5o/o
Haryana 39.5%
Chandigarh 3.5%
E Himachal Pradesh - 2.5%
This agreement dated 17.04.1967 has· been entered into within
the two years period specified in Section 78(1) of the Act and,
therefore, the Central Government has no power to intervene
F in the matter.
17. The financial liabilities of Bhakra and Beas Projects
are being shared by the States of Punjab and Haryana. The
Central Government had taken a decision µnper Section 54(3)
of the Punjab Reorganisation Act, 1006 that _all liabilities
G towards the loans incurred prior to the Punjab Reorganisation
Act, 1966 on the two projects are to be borne by the States of
Punjab and Haryana. The decision of the Central -G~vernment
in this regard has been conveyed to the concerne~ State
Governments in the letter dated 12.03.1967 of the Government
H . of India, Ministry of Finance, Department of Economic Affairs,
STATE OF HIMACHAL PRADESH v. UNION OF INDIA 553
& ORS. [A.K. PATNAIK, J.]
New Delhi. A
18. On 27.06.1961, the Lt. Governor, Himachal Pradesh,
had written to the Chief Minister of Punjab that Himachal
Pradesh should be given guaranteed preference in the
allotment of power generated from the Power House to be set
up at Salappar (Dehar) - Unit No.1 of Beas Project. After B
finding out the anticipated firm demand of power from the
Salappar (Dehar) Power House, the State of Punjab in its
communication dated 10.08.1962 agreed to allot 15 M.W.
power to Himachal Pradesh within one year of the
commissioning of the two units of these projects. c
19. The· decision of the Union Cabinet taken on
12.02.1985 that 12% of power generated at Bhakra and Beas
Projects will be supplied to the "Home State" is applicable to
only Central Sector Hydro-Electric Power Projects financed by D
the State Government and is not applicable to Bhakra and
Beas Projects, which are not Central Projects financed by the
Central Government. Moreover, the Central Government's
decision dated 12.02.1985 does not apply to the Central Sector
Hydro-Electric Power Projects in respect of which sanction for
investment had been granted prior to 12.02.1985 and sanction E
for investment in Bhakra and Beas Projects was much prior to
12.02.1985.
20. Population alone cannot be considered as the basis
for sharing of power because the connected supply to the F
consumers in the successors States/Union Territories of the
composite State of Punjab has to be maintained. Any increase,
therefore, in the quota of power to Himachal Pradesh at the cost
of the Sta!e of Punjab would mean further hardship to the
consumers in the State of Punjab, which is. already facing a
G
serious power crisis.
21. Punjab being a down-stream riparian State of the rivers
Satluj and Beas is entitled to utilize the water flowing from the
two rivers and the plaintiff was free to utilize the up-stream water
in the two rivers in the manner it liked. But since it did not have H
554 SUPREME COURT REPORTS [2011] 11 S.C.R.
A the resources to do so, the States of Punjab, Haryana and
Rajasthan have invested in the constr.uction of the two projects.
By the two projects, Himachal Pradesh has not lost anything in
the process, except that the land located in the Himachal
Pradesh has been acquired for the projects and more than
B adequate compensation has been paid to the owners of the
land and reasonable arrangements have also been made for
their resettlement. Moreover, the creation of big reservoir has
provided Himachal Pradesh the facilities of fish, farming and
increase in tourism potential.
· C Written statement by Defendant No. 3 (State of Haryana)
22. The suit is barred because of the provisions of Section
78 of the Punjab Reorganisation Act, 1966, under which the
right to receive and utilize power from the Bhakra-Nangal and
Beas Projects can only be determined by the Central
D Government in case the successor States/Union Territories of
the composite State of Punjab are unable to reach an
agreement.
23. An agreement has in fact been arrived at by the
E successor States/Union Territories of the composite State of
Punjab on 17 .04.1967 at a meeting taken by the Secretary,
Ministry of Irrigation and Power, Government of India, to share
the power generated by the Bhakra-Nangal and Beas Projects
at the following percentages and of the share of power of the
F composite Punjab State:
Punjab 54.5%
Haryana 39.5%
Chandigarh 3.5%
G
Himachal Pradesh 2.5%
Accordingly, only 2.5% of the total power generated in the two
projects out of the share of the composite State of Punjab, has
been made available to the successor State of Himachal
H Pradesh right from May, 1967. Since the agreement dated
STATE OF HIMACHAL PRADESH v. UNION OF INDIA 555
& ORS. [A.K. PATNAIK, J.]
17.04.1967 has been arrived at within two years of the A
appointed date mentioned in the Punjab Reorganisation Act,
1966, the Central Government ceased to have any power under
Section 78 of the Punjab Reorganisation .Act, 1966 to
determine the dispute.
24. The concept of 12% free power from Hydro stations B
to the "Mother State" or "Home State" is applicable to only
Central Sector Projects commissioned after 07.09.1990 subject
to the condition mentioned in the letter dated 01.11.1990 of
Department of Power, Government of India and is not
applicable to jointly owned State Sector Projects such as C
Bhakra-Nangal and Beas Projects, commissioned much earlier
than 07.09.1990.
25. The Bhakra Dam was conceived with the consent of
the Raja of Bilaspur and all obligations towards the erstwhile D
State of Bilaspur were fulfilled by the project authorities. No
legal agreement between the Raja of Bilaspur and the Province
of Punjab in respect of Bhakra-Nangal Project for royalty/free
power exists.
26. There is no provision in the Punjab Reorganisation Act, E
1966 providing for sharing of power generated in the Bhakra- .
Nangal and Beas Projects on the basis of the transferred
population ratio and therefore the claim of the plaintiff to 7.19%
of the total power generated in the two projects is not legally
tenable. The Bhakra-Nangal and Beas Projects were F
constructed pursuant to an agreement between the State of
Punjab and the State of Rajasthan and the State of Himachal
Pradesh which came to existence much later was entitled to
_power as per the provisions incorporated in the Punjab
Reorganisation Act, 1966. G
27. The Department of Power, Government of India, in its
D.O. Letter dated 30.03.1978 to the Chairman, B.B.M.B.
conveyed the decision of Government of India that the plaintiff
be supplied 15 M.W. of power generated from Beas Power
Plant and this supply was to be on ad hoc basis, at Bus Bar H
556 SUPREME COURT REPORTS [2011] 11 S.C.R.
A rates, pending final decision about its share of power which was
to be examined separately. Subsequently, by letter dated
16.08.1983 of the Department of Power, Government of India,
the Chairman, B.B.M.B. has been informed that the quantum
of benefits from Bhakra-Nangal and Beas Projects presently
B allocated to Himachal Pradesh will remain unaltered until a final
decision is taken.
Written statement of the Def.endant No.4 (State of
Rajasthan)
C 28. Under an agreement made on 15.08.1948 between
the then Governor General of India and the Raja of Bilaspur,
the administration of Bilaspur State was transferred to the
Dominion Government of India and in lieu thereof the Raja of
Bilaspur received a compensation of Rs.70,000/- annually as
D privy purse free of tax. By a notification dated 20.07.1949 the
Governor General of India ordered that on and from 01.08.1949
the territory of State of Bilaspur. which had merged in the
Dominion of India, would be administered as if it was Chief
Commissioner's Province. On the commencement of the
Constitution of India, the territory of Chief Commissioner's
E Province became a Part-C State and continued to be
administered through the Chief Commissioner by the
Government of India. Hence, it is absolutely irrelevant that about
3/4th of the total area of the reservoir of Bhakra Dam fell within
the State of Bilaspur. With the construction of the Bhakra-
F Nangal Project, overall development took place in the area and
as a result new infrastructural facilities were built in the project
area such as new roads, new bridges, new township, new
schools and colleges, fisheries, tourism, etc. and all these
benefited. the local populace of the then Part-C State of
G Bilaspur. It is, therefore, not correct that the then Part-C State
of Bilaspur, which now formed as a part of Plaintiff-State, has
only suffered on account of the submergence caused by the
construction of the Bhakra Dam.
29. There was no agreement as such between the then
H
STATE OF HI MAC HAL PRADESH v. UNION OF INDIA 557
& ORS. [A.K. PATNAIK, J.]
State of Punjab and the Raja of Bilaspur with regard to the A
construction of the Dam and unless the draft agreement was
finally approved, settled and signed by the parties, no rights
could be claimed by the State of Bilaspur under the alleged
draft agreement.
30. During the construction of the Bhakra-Nangal Project,
B
the predecessor State or Union Territory of the Plaintiff never
raised the grievances now put forth by the Plaintiff and the
grievances now put forth in the plaint are only an after-thought
and are imaginary. In fact, all persons affected by the
construction of the Bhakra-Nangal Project have been C
compensated, a new township of Bilaspur has been
constructed, proper compensation has been paid for
acquisition of land and the beneficiary States have even.
provided for the rehabilitation of the oustees of the Bhakra-
Nangal Project in Sirsa and Hissar Districts and rehabilitation D
of oustees of the Beas Project in Indira Gandhi Pariyojana.
31. The share of the State of Rajasthan in the power
generated in the Bhakra-Nangal Project is 15.22% and Unit-I
of Beas Project is 20% and Unit-II of Beas Project is 58.50%
E
and these allocations of share are not interim or ad hoc but are
final. The one-man Committee headed by Shri K. S.
Subrahmanyam was not constituted after consultation with the
State of Rajasthan and hence the recommendation of this
Committee has no relevance so far as the State of Rajasthan
is concerned. In any case, the report. of Shri K. S. F
Subrahmanyam is not a legally admissible document. The claim
of 12% of the total power generated in Bhakra-Nangal and
Beas Projects on the basis of the Plaintiff being the "Mother
State" is baseless. Both the projects, Bhakra-Nangal and Beas
Projects, are the State Projects conceived planned, G
constructed, developed and operated and are being
maintained by the participating States, namely the State of
Rajasthan and the composite State of Punjab, and these two
States as partners of the projects have been sharing power
from the two projects on the basis of agreements executed H
558 SUPREME COURT REPORTS [2011] 11 S.C.R.
A between them.
32. The dispute raised in the suit relates to the share of
water and generation of power from the use of water in inter-
state rivers and this Court has no jurisdiction under Article 131
of the Constitution to decide the dispute.
B
33. This Court has no jurisdiction over the dispute which
arises out of an agreement entered into or executed before the
commenc~ment of the Constitution by a Ruler of an Indian State
by virtue of the bar under Article 363 of the Constitution.
C Written statement of the Defendant No.5 (Union Territory
of Chandigarh)
34. The suit is hopelessly barred by time inasmuch as the
Bhakra-Nangal Project was completed in 1963 and the Beas
Project was completed in 1977 and the suit has been filed in
0
the year 1996.
35. Under Section 78(1) of the Punjab Reorganisation Act,
1966, the rights and liabilities of the successor States/Union
Territories of the composite State of Punjab in relation to the
E Bhakra-Nangal and Beas Projects are to be fixed by an
agreement entered into by the successor States/Union
Territories after consultation with the Central Government or. if
no such agreement is entered into within two years of the
appointed day, by an order of the Central Government having
F regard to the purposes of the project. Hence this suit filed by
the plaintiff claiming rights in the power generated in the
Bhakra-Nangal and Beas Projects is not maintainable under
the provisions of the Punjab Reorganisation Act, 1966.
36. An agreement has in fact been arrived at in relation to
G Bhakra-Nangal Project by the representatives of the successor
States/Union Territories of the composite State of Punjab at a
meeting held on 17.04.1967 under the Chairmanship of the
Secretary, Ministry of Irrigation and Power, Government of India,
and as per this agreement the share of power of Himachal
H Pradesh from the Bhakra-Nangal and Beas Projects is 2.5%
STATE OF HIMACHAL PRADESH v. UNION OF INDIA 559
& ORS. [A.K. PATNAIK, J.]
of the total share of the composite State of Punjab and this A
agreement is binding on all parties including the plaintiff and
the plaintiff is estopped from seeking any relief including
damages dehors the agreement.
37. In relation to the Beas Project, the Central Government
has also allowed a supply of 15 MW power to Himachal B
Pradesh from Dehar Power Plant on ad hoc basis by letter
dated 30.03.1978 of the Ministry of Energy, Department of
Power, Government of India and this arrangement has been
ratified by the Bhakra Beas Management Board .at its 76th
meeting held on 28.09.1978. C
38. If there is no agreement between the successor States/
Union Territories of the composite State of Punjab and if there
is no final order of the Central Government determining the
rights and liabilities of the successor States/Union Territories
of the composite State of Punjab, the only legal proceeding
0
which can be initiated is for directing the Central Government
to pass a statutory order under Section 78(1) of the Punjab
Reorganisation Act, 1966 and there is no scope for any legal
proceedings for recovery of damages towards the share of
electricity of the Plaintiff. E
Issues:
39. After considering the pleadings of the parties, on
08.03.1999 this Court framed a large number of issues.
Thereafter, the plaintiff examined three witnesses, namely, Shri F
A.K. Gosw~mi, the Chief Secretary of the State of Himachal
Pradesh, Dr. Y.K. Murthy, Ex-Chief Engineer-cum-Secretary
(MPP & Power) to the Government of Himachal Pradesh, and
Shri Prabodh Saxena, Deputy Commissioner to the
Government of Himachal Pradesh. The Defendant No.2 G
examined one witness, namely, Shri Romesh Chandra Bansal,
Consultant of Punjab State Electricity Board on Inter State
Disputes) and Defendant No.3 examined one witness, namely,
Shri Jia Lal Jain, Chief Accounts Officer in Haryana State
Electricity Board. The parties have also produced a large H
560 SUPREME COURT REPORTS (2011] 11 S.C.R.
A number of documents, which have been marked as Exhibits.
40. At the hearing of the suit, the learned counsel for the
parties did not press all the issues framed by this Court on
08.03.1999 and confined their arguments to some of the
issues. These issues are rearranged and renumbered as
B follows:
"01. Whether the suit is not maintainable being barred by
limitation, delay and laches? (Defendant Nos. 1 & 2)
02. Whether after the merger of the State of Bilaspur with
C the Dominion of India, plaintiff could still have any cause
of action to file the present suit? (Defendant No. 4)
03. Whether the suit barred by reasons of Article 363 of
the Constitution? (Defendant No. 4)
D 04. Whether the suit is not maintainable under Article 131
of the Constitution? (Defendant No.4)
05. Whether the suit does not disclose any cause of action
against the Defendant Nos. 3 and 4 and therefore liable
to be rejected under Order XX.Ill Rule 6(a) of the Supreme
E Court Rules, 1966. (Defendant Nos. 3 and 4).
06. Whether the suit is not maintainable by virtue of the
scheme of the Punjab Reorganisation Act, 1966 in general
and provisions of Sections 78 to 80 of the said Act in
particular? (Defendant Nos. 1 & 2)
F
07. Whether in the discussions held on 17th April, 1967,
any agreement was reached between the party States as
regards their share in power generated (rights to receive
and to utilize the power generated) in the Bhakra Project?
G (Defendant Nos. 1, 2 & 3)
08. Whether the Plaintiff-State is entitled to 12% of the net
power generated in Bhakra-Nangal & Beas Projects free
of cost from the date of commissioning of the projects?
(Plaintiff)
H
STATE OF HIMACHAL PRADESH v. UNION OF INDIA 561
& ORS. [A.K. PATNAIK, J.]
09. Whether the State of Himachal Pradesh is entitled to A
an allocation of 7.19% in addition to 12% free power as
claimed above, of the total power generated in Bhakra-
Nangal & Beas Projects from the date of commissioning
of the Projects or the appointed date (01.11.1966)?
(Plaintiff) B
10. Whether the plaintiff is entitled to a decree for a sum
of Rs.2199.77 crores against the. defendants jointly and
severally, as compensation/reimbursement for their failure
to supply to the plaintiff 12% and 7.19% shares (on
account of distress caused/surrender of rights to generate C
power and on account of transfer of population to the
plaintiff State respectively in the power generated in these
projects upto the date of the filing of the present suit and
such further sums as may be determined, as entitlement
of the plaintiff.for the period subsequent to the filing of the D
suit? (Plaintiff)
11. Whether the Plaintiff-State is entitled to the award of
any interest on the amounts determined as its entitlement?
(Plaintiff)"
E
We may now deal with each of these issues separately.
Issue No.1 ,
41. Mr. Mohan Jain, learned Additional Solicitor General
appearing for Defendant Nos. 1 and 5, submitted that the
F
Bhakra-Nangal Project was completed in 1963 and the Beas
Project was completed in 197'7, whereas the suit has been filed
in the year 1996 and, therefore, the suit is belated and barred
by limitation. Mr. C.S. Vaidyanathan, learned senior counsel
appearing for Defendant No.4, cited the decision in U. P. Jal
Nigam·& Anr. v. Jaswant Singh & Anr. [(2006) .11 SCC 464) G
in which this Court has held that a party would not be entitled
to relief if he has not been vigilant in invoking the protection of
his rights and has acquiesced with the changed situation. He
submitted that in the· present case, the Plaintiff-State has
acquiesced in the Bhakra-Nangal and Beas Projects and the H
562 SUPREME COURT REPORTS [2011] 11 S.C.R.
A sharing of power from the two projects by Plaintiff and the
Defendant Nos. 2 and 5 in certain proportions since several
decades and has filed the suit only in the year 1996.
42. We are unable to accept the contention that the suit is
barred by limitation. Article 131 of the Constitution does not
8 prescribe any period of limitation within which a State or the
Union of India has to file a dispute in this Court. No other
provision of law has been brought to our notice prescribing the
period within which a dispute under Article 131 of the
Constitution can be instituted by a State against any other State
C or the Union of India. Moreover, as we will indicate hereinafter
in this judgment, there has been no final allocation of share of
power from the Bhakra-Nangal Project and the Beas Project
to the Plaintiff-State as yet and whatever allocations of power
from the two projects to the Plaintiff-State have been made are
D only adhoc or interim. Until a final decision was taken with
regard to allocation of power to the Plaintiff-State from the two
projects, the claim of the Plaintiff-State to appropriate allocation
of power from the two projects was live and cannot be held to
be stale or belated. Our answer to Issue No.1, therefore, is that
E the suit was not barred by limitation, delay and !aches.
Issue No. 2
43. The second Issue is whether after the merger of the
State of Bilaspur with the Dominion of India, the Plaintiff could
F still have any cause of action to file the present suit. A copy of
the Bilaspur Merger Agreement dated 15.08.1948 has been
produced on behalf of Defendant No.4 and marked as Ext. D-
4/1-A. Article 1 of the Bilaspur Merger Agreement dated
15.08.1948 reads as follows:
G "The Raja of Bilaspur hereby cedes to the Dominion
Government full and exclusive authority, jurisdiction and
powers for and in relation to the governance of the State
and agrees to transfer the administration of the State to
the Dominion Government on twelfth day of October, 1948
H (hereinafter referred to as 'the said day').
STATE OF HIMACHAL PRADESH v. UNION OF INDIA 563
& ORS. [A.K. PATNAIK, J.]
As from the said day the Dominion Government will be A
competent to exercise the said powers, authority and
jurisdiction in such manner and through such agency as it
may think fit."
It is thus clear that by the Bilaspur Merger Agreement dated
15.08.1948 the Raja of Bilaspur ceded to the Dominion B
Government full and exclusive authority, jurisdiction and powers
for and in relation to the governance of the State and agreed
to transfer the administration of the State to the Dominion
Government on 12.10.1948. Thereafter, the Government of
India, Ministry of Law, issued a notification dated 20.07.1949 C
(Ext. D-4/2-A) in exercise of its powers under Section 290-A
of the Government of India Act, 1935 making the States Merger
(Chief Commissioners Provinces) Order. 1949, which came
into force from 01.08.1949. Under this States Merger (Chief
Commissioners Provinces) Order, 1949. Bilaspur was to be D
administered in all respects as if it was a Chief Commissioner's
Province. Under the Constitution of India also initially Bilaspur
continued to be administered as the Chief Commissioner's
Province and was included in the First Schedule of the
Constitution as a Part-C State. Under Article 294 (b) all rights, E
liabilities and obligations of the Government of the Dominion
of India, whether arising out of any contract or otherwise,
became the rights, liabilities and obligations of the Government
of India. These provisions of the Bilaspur Merger Agreement
dated 15.08.1948 (Ext.D-4/1-A), the States Merger (Chief F
Commissioners Provinces) Order, 1949, the First Schedule of
the Constitution and Article 294 (b) of the Constitution make iV
clear that Bilaspur became the part of the Dominion of India
and thereafter was administered as a Chief Commissioner's
Province by the Government of India and all rights of the Raja G
of Bilaspur vested in the Government of India.
44. We, therefore, hold that the Plaintiff will not have any
cause of action to make any claim on the basis of any right of
Raja of Bilaspur prior to the merger of Bilaspur State with the
Dominion of India. The pleadings in the plaint and the reliefs H
564 SUPREME COURT REPORTS [2011] 11 S.C.R.
A claimed therein, however, show that the Plaintiffs case is not
founded only on the rights of Raja of Bilaspur prior to its merger
with the Dominion of India. The Plaintiffs claim to the share of
power generated in the Bhakra-Nangal ·and Beas Projects is
also based on Section 78 of the Punjab Reorganisation Act,
B 1966 and the rights of the State of Himachal Pradesh under
the Constitution. The claim of the Plaintiff-State to share of
power from the Bhakra-Nangal and Beas Projects in the suit
insofar as it is based on provisions of the Punjab
Reorganisation Act, 1966 and the provisions of the Constitution
c are not affected by the merger of the State of Bilaspur with the
Dominion of India. Issue No. 2 is answered accordingly.
Issue No, 3
45. Issue No. 3 relates to the bar of the suit under Article
D 363 of the Constitution. Mr. Vaidyanathan, learned counsel for
the Defendant No.4 submitted that the suit was barred under
the proviso to Article 131 of the Constitution and Article 363 of
the Constitution. In support of this contention, he relied on State
of Seraike/la and Others v. Union of India and Another [AIR
1951 SC 253). Mr. Nageshwar Rao, learned counsel for -
E Defendant No.3 also raised this contention and relied on State
of Orissa v. State of A.P. [(2006) 9 SCC 591).
46. Articles 131 and 363 of the Constitution are quoted
herein below:
F "131. Original Jurisdiction of the Supreme Court -
Subject to the provisions of this Constitution, the Supreme
Court shall, to the exclusion of any other court, have
original jurisdiction in any dispute-
(a) between the Government of India and one or more
G States; or
(b) between the Government of India and any State or
States on one side and one or more other States on the
other; or .
H (c) between two or more States,
;STATE OF HIMACHAL PRADESH v. UNION OF INDIA 565
& ORS. [A.K. PATNAIK, J.]
if and in so far as the dispute involves any question A
(whether of law or fact) on which the existence or extent of
a legal right depends:
[Provided that the said jurisdiction shall not extend to a
dispute arising out of any treaty, agreement, covenant,
engagement, sanad or other similar instrument which, B
having been entered into or executed before the
commencement of this Constitution, continues in operation
after such commencement, or which provides that the said
jurisdiction shall not extend to such a dispute.]
c
363. Bar to interference by courts in disputes arising
out of certain treaties, agreements, etc. -
(1) Notwithstanding anything in this Constitution but subject
to the provisions of article 143, neither the Supreme Court
nor any other court shall have jurisdiction in any dispute D
arising out of any provision of a treaty, agreement,
covenant, engagement, sanad or other similar instrument
which was entered into or executed before the
commencement of this Constitution by any Ruler of an
Indian State and. to which the Government of the Dominion · E
of India or any of its predecessor Governments was a party
and which has or has been continued in operation after
such commencement, or in any dispute in respect of any
right accruing under or any liability or obligation arising out
of any of the provisions of this Constitution relating to any F
such treaty, agreement, covenant, engagement, sanad or
other similar instrument.
(2) In this article-
(a) "Indian State" means any territory recognized before the G
commencement of this Constitution by His Majesty or the
Government of the Dominion of India as being such a
State; and
(b) "Ruler" includes the Prince, Chief or other person
recognised before such commencement by His Majesty or H
566 SUPREME COURT REPORTS [2011) 11 S.C.R.
A the Government of the Dominion of India as the Ruler of
any Indian State."
4 7. The language of the proviso to Article 131 of the
Constitution makes it clear that the jurisdiction of this Court
B under Article 131 shall not extend to a dispute arising out of
any treaty, agreement, covenant, engagement. sanad or other
similar instrument which, having been entered into or executed
before the commencement of the Constitution, continues in
operation after such commencement, or which provides that the
said jurisdiction shall not extend to such a dispute. Hence, there
C is a clear bar for this Court to exercise jurisdiction under Article
131 of the Constitution to decide a dispute arising out of any
treaty, agreement, covenant, engagement, sanad or other
similar instrument which, having been entered into or executed
before the commencement of the Constitution, continues in
D operation after such con:imencement. Clause (1) of Article 363
of the Constitution quoted above also states that
notwithstanding anything in the Constitution, the Supreme Court
shall have no jurisdiction in any dispute arising out of any
provision of a treaty, agreement, covenant, engagement, sanad
E or other similar instrument which were entered into or executed
before the commencement of the Constitution by any Ruler of
an Indian. State or to which the Government of the Dominion of
India or any of its predecessor Governments was a party and
which has or has been continued in operation after such
F commencement, or in any dispute in respect of any right
accruing under or any liability or obligation arising out of any
of the provisions of this Constitution relating to any such treaty,
agreement, covenant, engagement, sanad or other similar
instrument. These being the clear constitutional provisions,
.G obviously this Court will have no jurisdiction under Article 131
of the Constitution to decide any dispute arising out of any
agreement or covenant between the Raja of Bilaspur and the
Government of the Dominion of India. The only agreement
proved to have been executed by the Raja of Bilaspur and the
H Government of the Dominion of India before the
STATE OF HIMACHAL PRADESH v. UNION OF INDIA 567
& ORS. [A.K. PATNAIK, J.]
commencement of the Constitution is the Bilaspur Merger A
Agreement (Ext. D-4/1A) and on a close examination of the
provisions of the Bilaspur Merger Agreement dated
15.08.1948, we find that there are no provisions therein which
have any relevance to the claim of the Plaintiff to the share of
the Plaintiff to the power generated in the Bhakra-Nangal and 8
Beas Projects. The draft agreement dated 07 .07 .1948,
however, has provisions in clause 13 for allocation of power to
the Bilaspur State, but this draft agreement is not proved to have
been executed on behalf of the parties thereto and cannot
constitute a basis for allocation of power to the Plaintiff-State. C
However, we have already held that the claim of the Plaintiff-
State is based also on the Punjab Reorganisation Act, 1966
and the provisions of the Constitution and such claim is not
barred under Article 363 of the Constitution. This issue is
answered accordingly.
D
Issue No. 4
48. Issue No. 4 has been raised by the Defendant No.4
(State of Rajasthan) and its case is that the suit is actually a
dispute with regard to use of water in· inter state rivers, namely,
Satluj and Beas, and is barred under Arti<?le 262 (2) of the E
·Constitution. Mr. Vaidyanathan, learned counsel appearing for
the DefendantNo.4, submitted that the case of the Plaintiff is
that on account of the use of water of the two inter state rivers
for generation of hydro-electric power in the Bhakra-Nangal and
Beas Projects, the Plaintiff has lost its entitlement to beneficial F
use of the water. He cited decisions of this Court in Re:
Cauvery Water Disputes Tribunal [1993 Supp (1) SCC 96(11),
State of Kamataka v. State of A.P. and Others [(2000) 9 SCC
572], State of Haryana v. State of Punjab and Another [(2002)
2 SCC 507] and State of Orissa v. Government of India and G
Another [(2009) 5 SCC 492] in support of his submissions that
a suit which is really a dispute relating to the use of water of
an inter-state river is barred under clause (2) of Article 262 of
the Constitution read with Section 11 of the Inter-State Water
Disputes Act, 1956. H
568 SUPREME COURT REPORTS [2011] 11 S.C.R.
A 49. Clause (2) of Article 262 of the Constitution provides
that notwithstanding anything in the Constitution, Parliament
may by law provide that neither the Supreme Court nor any other
court shall exercise jurisdiction in respect of any such dispute
or complaint relating to waters of inter state rivers or river
B valleys. Parliament has in fact made the Inter-State Water
Disputes Act, 1956 and has also provided in Section 11 of this
Act that neither the Supreme Court nor any other court shall have
jurisdiction or exercise jurisdiction in respect of any water
dispute which may be referred to a Tribunal under the Act. In
C State of Karnataka v. State of A.P. and Others (supra) a
Constitution Bench of this Court held in Para 24 at pages 604,
605 and 606 that when a contention is raised that a suit filed
under Article 131 of the Constitution is barred under Article
262(2) of the Constitution read with Section 11 of the Inter-State
Water Disputes Act, 1956, what is necessary to be found out
D is whether the assertions made in the plaint and the relief
sought for, by any stretch of imagination, can be held to be a
water dispute so as to oust the jurisdiction of this Court under
Article 131 of the Constitution and on examining the assertions
made in the plaint and the relief sought for by the Plaintiff-State,
E the Constitution Bench took the view that the suit in that case
could not be held to b~ barred under Article 262 of the
Constitution read with Section 11 of the Inter-State Water
Disputes Act, 1956. This decision in State of Kamataka v. State
of Andhra Pradesh was followed by this Court in State of
F Haryana v. State of Punjab and Another (supra) and it was
held that the question of maintainability of the suit has to be
decided upon the assertions made by the Plaintiffs and the
relief sought for, and taking the totality of the same and not by
spinning up one paragraph of the plaint and then deciding the
G matter. Applying this test to the present case, we find on a
reading of the assertions made in the entire plaint as well as
the reliefs claimed therein by the Plaintiff that the dispute does
not relate to a dispute in relation to inter state river water or
the use thereof, and actually relates to sharing of power
H generated in the Bhakra-Nangal and the Beas Projects and
STATE OF HIMACHAL PRADESH v. UNION OF INDIA 569
& ORS. [A.K. PATNAIK, J.]
such a dispute was not barred under clause (2) of Article 262 A
of the Constitution read with Section 11 of the Inter-State Water
Disputes Act, 1956.
Issue No. 5
50. Mr. Nageshwar Rao, learned counsel for Defendant B
No.3 and Mr. Vaidyanathan, learned counsel for Defendant
No.4 submitted that Article 131 of the Constitution is clear that
this Court will have the original jurisdiction in a dispute between
the parties mentioned therein "if and ·insofar as the dispute
involves any question (whether of law or fact) on which the c
· existence or extent of a legal right depends". They argued that
unless the Plaintiff-State establishes its legal right to the share
of power from the Bhakra-Nangal and Beas Projects, the suit
of the Plaintiff is not maintainable under Article 131 of the
Constitution. They submitted that Order XXlll Rule 6(a) of the D
Supreme Court Rules, 1966 states that a plaint shall be
rejected where it does not disclose any cause of action and in
this case since the plaint does not disclose a legal right in
favour of the Plaintiff-State to its share of power from the
Bhakra-Nangal and Beas Projects, the plaint is liable to be E
rejected. In support of this contention, Mr. Rao and Mr.
Vaidyanathan relied on the decision of this Court in State of
Haryana v. State of Punjab and Another [(2004) 12 SCC 673].
51. At this stage, when oral and documentary evidence
have already been led by the parties and arguments have been F
made by the learned counsel for the parties and when we are
going to finally decide the suit, it is not necessary for us to
consider whether the plaint discloses a cause of action and is
liable to be rejected under Order XXlll Rule 6(a) of the Supreme
Court Rules, 1966. We have to however consider whether on G
the pleadings of the parties and on the evidence adduced by
the parties, the Plaintiff-State has established a legal right to
the utilization of power from the Bhakra-Nangal and Beas
Projects. After examining the pleadings of the parties and the
evidence adduced on behalf of the parties, we find that under H
570 SUPREME COURT REPORTS [2011] 11 S.C.R.
A the Bilaspur Merger Agreement dated 15.08.1948, the State
of Bilaspur merged with the Dominion of India and was
administered as the Chief Commissioner's Province and was
included as a Part-C State is the First Schedule of the
Constitution. In 1954 Bilaspur and Himachal Pradesh however,
B were united to form a new State of Himachal Pradesh under
the Himachal Pradesh and Bilaspur (New States) Act, 1954.
This new State of Himachal Pradesh continued to be a Part-C
State until it became a. Union Territory by the Constitution (7th
Amendment) Act, 1956. It is when Himachal Pradesh was a
c Union Territory that the State of Punjab and the State of
Rajasthan entered into an agreement on 13.01.1959 (Ext.D-1/
3) to collaborate in the construction of a Dam across the river
Sutlej at Bhakra and other ancillary works executed u.nder the
Bhakra-Nangal Project for the improvement of irrigation and
D generation of Hydro-electric power and as per the terms and
conditions of this agreement, the power generated in Bhakra-
Nangal Project was to be shared between Punjab and
Rajasthan in the ratio of 84.78% and 15.22% respectively. The
plaintiff's case in the plaint is that the construction of the Bhakra
Dam across the river Satluj has resulted in submergence of
E large areas of Himachal Pradesh and its rights have been
affected by the construction of the Bhakra Dam. According to
Mr. Ganguli, learned counsel appearing for the Plaintiff, the legal
rights of the plaintiff which have been affected by the
construction of the Bhakra-Nangal Project are the (a) natural
F right to the beneficial use of the water: (b) rights under the
agreement executed with the Raja of Bilaspur and (c)
constitutional rights of Himachal Pradesh over its water and land
under Entries 17 and 18 of List-II of the Seventh Schedule to
the Constitution: (d) the statutory rights under Section 78 of the
G Punjab Reorganisation Act, 1966 and (e) the right to equal
treatment in matter of utilization of power from the Bhakra-
Nangal and Beas Projects.
52. We have already held while answering Issue No.2 that
H after Bilaspur became part of the Dominion of India, the Plaintiff
STATE OF HIMACHAL PRADESH v. UNION OF INDIA 571
& ORS. [A.K. PATNAIK, J.]
cannot make any claim to power on the basis of the rights of A
the Raja of Bilaspur prior to the merger of the Bilaspur State
with the Dominion of India. So far as the rights of a State or
Union Territory over its_ water and land are concerned, none of
the constituent units of the Indian Union were sovereign and
independent entities before the Constitution and after the B
commencement of the Constitution the constituent units have
only such rights as are conferred on them by the provisions of
the Constitution. As has been held by this Court in Babula/
Parate v. State of Bombay and another (AIR 1960 SC 51)
cited by Mr. Shyam Diwan, learned counsel for the Defendant c
No.2:
"None of the constituent units of the Indian Union was
sovereign and independent in the sense the American
colonies or the Swiss Cantons were before they formed
their federal unions. The Constituent Assembly of India, D
deriving its power from the sovereign people, was
unfettered by any previous. commitment in evolving a
constitutional pattern suitable to the genius and
requirements of the Indian people as a whole." (At Page
55 of AIR' 1960) E
In 1959, as we have noticed, Himachal Pradesh which included
the erstwhile State of Bilaspur was a Union Territory and not a
State. The executive and the legislative power over water and
land in Entries 17 and 18 of List-II of the Seventh Schedule to
the Constitution vested in 1959 in the Union of India (Defendant. F
No.1). This will be clear from Article 73(1) of the Constitution,
which provides that subject to the provisions of the Constitution,
the executive power of the Union shall extend to the matters with
respect to which Parliament has power to make laws and from
ArticlEY246(4) of the Constitution which states that Parliament G
has J)J>wer to make laws with respect to any matter for any part
of the territory of India not included in a State notwithstanding
tha('sl.Jch matter is a matter enumerated in the State List. In
other words, in 1959 when the agreement was made between
the States of Punjab and Rajasthan to construct the Bhakra H
572 SUPREME COURT REPORTS [2011) 11 S.C.R.
A Dam across the river Satluj which would have the effect of
submerging large areas within Himachal Pradesh, it is the
Union of India which had the right over the water and land in
Himachal Pradesh and if the Union of India has, in exercise of
its constitutional powers acquiesced in the construction of the
B Dam at Bhakra over river Satluj, the Plaintiff-State can have no
cause of action to make a claim to power from the Bhakra-
Nangal Project on the basis of submergence of large areas of
Himachal Pradesh on account of the construction of the Bhakra
Dam.
C 53. We further find that in 1960-1961 when Himachal
Pradesh was a Union Territory, the State of Punjab and the
State of Rajasthan decided to collaborate and undertake the
execution of Beas Project including all connected works in
Punjab, Rajasthan and Himachal Pradesh. The Government of
D India, Ministry of Irrigation and Power, also adopted a resolution
on 10.02.1961 (Ext.D-1 /7) constituting the Beas Control Board
for ensuring efficient, economical and early execution of the
Beas Project (comprising Unit-I - Beas Satluj Link and Unit-II
the Dam at Pong) and there were the representatives of the
E States of Punjab, Rajasthan and the Himachal Pradesh
Administration and the Government of India in the Beas Control
Board. Thus, the submergence of the large areas of Himachal
Pradesh because of the construction of the Beas Project took
place due to decisions to which the Government of India was
F a party and when Himachal Pradesh was a Union Territory and
the Union of India had executive and legislative power over
water and land in Himachal Pradesh by virtue of the
constitutional provisions in Article 73(1) and Article 246(4) of
the Constitution. The Plaintiff-State therefore cannot have any
G cause of action to make a claim to power from the Beas Project
on the basis of submergence of large areas of Himachal
Pradesh.
54. In our considered opinion, however, the Plaintiff had
the statutory right under Section 78 of the Punjab Reorganisation
H Act, 1966 to the utilization of power and also the constitutional
STATE OF HIMACHAL PRADESH v. UNION OF INDIA 573
& ORS. [AK. PATNAIK, J.]
right to equal treatment vis-a-vis the other successor States of A
the composite State of Punjab and the Plaintiff has cause of
action in the suit to make a claim to the utilization of power from
the Bhakra-Nangal and Beas Projects on the basis of such
statutory right and constitutional right and we shall advert to the
statutory right and the constitutional right of the plaintiff when B
we deal with the remaining issues. On a perusal of the Punjab
Reorganisation Act, 1966, however, we find that the provisions
of this Act deal with the rights of the successor States of the
composite State of Punjab and it is by reference to the
provisions of the Punjab Reorganisation Act, 1966 that the c
Plaintiff-State has claimed equal rights to power from the
Bhakra-Nangal and Beas Projects. The Defendant No.4 (State
of Rajasthan) was never a part of composite State of Punjab
and its rights and liabilities including its rights to utilization of
power in the Bhakra-Nangal and Beas Projects are not affected D
by the Punjab Reorganisation Act, 1966. Hence, on the basis
of the statutory right and the constitutional right of the plaintiff
to utilization of power from the Bhakra-Nangal and Beas
Projects from out of the share of composite State of Punjab
prior to the Punjab Reorganisation Act, 1966, the Plaintiff-State . E
has no cause of action to file a suit against the State of
Rajasthan. In other words, since the Plaintiff-State has no legal
right to claim a share of power from the Bhakra-Nangal and
Beas Projects from out of the share of power of the State of
Rajasthan, the Plaintiff had no cause of action to file the suit
against the State of Rajasthan (Defendant No.4), but since the F
Plaintiff-State has a legal right to utilization of power out of the
total share of power of the composite State of Punjab from the
Bhakra-Nangal and Beas Projects as a successor State, the
Plaintiff has cause of action to file the suit and to maintain the
suit as against Defendant Nos. 2, 3 and 5. Moreover, as under G
Section 78(1) of the Punjab Reorganisation Act, 1966 the
Central Government was required to determine by an order the
rights of the plaintiff to utilization of power from the Bhakra-
Nangal and Beas Projects and the Central Government has not
done so, the Plaintiff-State has cause of action to file the suit H
574 SUPREME COURT REPORTS [2011) 11 S.C.R
A against the Defendant No.1. Issue No.5 is answered
accordingly.
Issue Nos. 6
55. For deciding issue No. 6, a reference to Section 78
B of the Punjab Reorganisation Act, 1966 is necessary.
"78. Rights and liabilities in regard to Bhakra-Nangal
and Beas Projects (1) Notwithstand-ing anything
contained in this Act but subject to the provisions of
sections 79 and 80, all rights and liabilities of the existing
c State of Punjab in relation to Bhakra-Nangal Project and
Beas Project shall, on the appointed day, be the rights and
liabilities of the successor States ih such proportion as may
be fixed, and subject to such adjustments as may be made,
by agreement entered into by the said States after
D consultation with the Central Government or, if no such
agreement is entered into within two years of the
appointed day, as the Central Government may by order
determine having regard to the purposes of the Projects :
Provided that ttie order so made by the Central
E
Government may be varied by any subsequent agreement
entered into by the successor States after consultation with
the Central Government.
(2) An agreement or order referred to in sub-section (1)
F shall, if there has been an extension or further development
of either of the projects referred to in that sub-section after
the appointed day, provide also for the rights and liabilities
of the successor States in relation to such extension or
further development.
G (3) The rights and liabilities referred to in sub-sections (1)
and (2) shall include-
(a) the rights to receive and to utilise the water
available for distribution as a result of the projects,
and
H
STATE OF HIMACHAL PRADESH v. UNION OF 575
INDIA & ORS. [A.K. PATNAIK, J.]
(b) the rights to receive and to utilise the power A
generated as a result of the projects. but shall not
include the rights and liabilities under any contract
entered __ into before the appointed day by the
Government of the existing State of Punjab with any
person or authority other than Government. B
(4) In this section and in sections 79 and 80-
(A) "Beas Project" means the works which are either under
construction or are to be constructed as components of the
Beas-Sutlej Link Project (Unit I) and Pong Dam Project on c
the Beas river (Unit II) including-
(i) Beas-Sutlej Link Project (Unit I) comprising-
(a)Pandoh Dam and works appurtenant thereto.
(b) Pandoh-Baggi Tunnel, D
(c) Sundernagar-Hydel Channel,
(d) Sundernagar-Sutlej Tunnel,
(e) By-pass Tunnel,
E
(f)four generating units each of 165 M.W. capacity
at Dehar Power House on the right side of Sutlej
river,
(g) fifth generating unit of 120 M.W. capacity at
Bhakra Right Bank Power House, F
(h) transmission lines,
(i) Balancing Reservoir;
(ii) Pong Dam Project (Unit II) comprising-
G
(a) Pong Dam and works appurtenant thereto,
(b) Outlet Works,
(c) Penstock Tunnels,
H
576 SUPREME COURT REPORTS [2011] 11 S.C.R.
A (d) Power plant with four generating units of 60
M.W.each;
(iii) such other works as are ancillary to the works
aforesaid and are of common interest to more than one
State;
B
(B) "Bhakra-Nangal Project" means-
(i) Bhakra Dam, Reservoir and works appurtenant
thereto;
c (ii) Nangal Dam and Nangal-Hydel Channel;
(iii) Bhakra Main Line and canal system;
(iv) Bhakra Left Bank Power House, Ganguwal
Power House and Kotla Power House,
switchyards, sub-stations and transmission lines;
D
(v) Bhakra Right Bank Power House with four units
of 120 M.W. each."
56. Mr. Shyam Diwan, leaned counsel appearing for the
Defendant No.2, submitted that Section 78(1) of the Punjab
E Reorganisation Act, 1966 starts with the non-obstante clause
"Notwithstanding anything contained in this Act". He argued that
considering these opening words in 'Section 78 of the Punjab
Reorg~nisation Act, 1966, no other provisions of the Act should
be looked into by the Court and the rights and liabilities of the
F successor State of the composite State of Punjab in regard to
Bhakra-Nangal and Beas Projects have to be decided with
reference to the provisions of Section 78 only. He submitted
that Section 204(u) of the Government of India Act, 1935 was
the provision corresponding to Article 131 of the Constitution
G and interpreting the said Section 204(u) of the Government of
India Act, 1935 the Federal Court has held in United Provinces
v. Governor-Genera/ in Council [AIR 1939 Federal Court 58]
that the term 'legal right' used in Section 204 means a right
recognized by law and capable of being enforced by the power
H of a State. He submitted that under Section 78 (1) of the Punjab
STATE OF HIMACHAL PRADESH v. UNION OF INDIA 577
& ORS. [A.K. PATNAIK, J.]
Reorganisation Act, 1966, there is no right of the Plaintiff-State A
to the power generated in the Bhakra-Nangal and Beas
Projects except what is agreed upon by the successor States
or determined by the Central Government and hence the right
of the Plaintiff, if any, is not enforceable in Court. He finally
submitted that even if this Court holds that the Plaintiff has a B
legal right to a share of power generated in the Bhakra-Nangal
and Beas Projects, this Court can only direct the Central
Government to determine the share of Himachal Pradesh and
cannot itself determine the share of Himachal Pradesh. Mr.
Mohan Jain, learned Additional Solicitor General, learned c
counsel appearing for Defendant No.1, also made similar
submissions.
57. We are not in a position to accept the submissions of
learned counsel appearing on behalf of the Defendant Nos. 1
and 2 that this Court has no jurisdiction under Article 131 of D
the Constitution to determine the share of the Plaintiff to the
power generated in the Bhakra-Nangal and Beas Projects.
Section 78(1) of the Punjab Reorganisation Act, 1966, it is true,
provides that the rights and liabilities of the successor States 1
of the composite State of Punjab will be fixed according to an E
agreement between the successor States. But, as we will
discuss under Issue No.7, there is no such final agreement
between the successor States with regard to the share of power
gene~a,ted in the Bhakra~Nangal and Beas Projects and there
is only a 'tentative, ad hoc or interim arrangement' arrived at F
in the meeting held on 17.04.1967. We may add here that even
when this suit was pending before this Court, an order was
passed by this Court on 29.04.2010 directing the Union of India
to make a final effort to bring all the parties to the dispute to
the negotiating table and by acting as a meaningful mediator G
attempt to find a solution which is mutually acceptable to all the
parties and the case was adjourned for three months to enable
the parties to arrive at a mutually acceptable solution with the
guidance of the Union Government, but an affidavit was filed
in the Court on behalf of the Central. Government stating that a H
578 SUPREME COURT REPORTS [2011] 11 S.C.R.
A Secretary level meeting was held with the stakeholder States
but a settlement could not be arrived at, as the stakeholder
States stuck to their respective claims. It is in these
circumstances only that the Court has proceeded to hear and
decide the suit.
B 58. We have also perused the decision of the Federal
Court in United Provinces v. Governor-General in Council
(supra) cited by Mr. Diwan and we find that Sulaiman and
Varadachariar, JJ. have taken a view that the term 'legal right'
used in Section 204 of the Government of India Act, 1935
C means a right recognized by law and capable of being enforced
by the power of a State, but not necessarily in a Court of Law.
Section 78(1) by its plain language states that all rights and
liabilities of the existing State of Punjab in relation to Bhakra-
Nangal Project and Beas Project shall, on the appointed day,
o be the rights and liabilities of the successor States. This
provision in Section 78 is enough to confer a legal right on
Himachal Pradesh as a successor State in relation to Bhakra-
Nangal and Beas Projects. Clause (b) of Sub-section (3) of
Section 78 further provides that the riljhts and liabilities referred
E to in sub-section (1) shall include the rights to receive and
utilize the power generated as a result of the projects. This
provision in Section 78 further confirms that the rights of the
successor State such as the State of Himachal Pradesh
includes the right to receive and utilize the power generated as
a result of the Bhakra-Nangal and Beas Projects. The fact that
F the rights and liabilities of the successor States were to be ~~~d
by an agreement to be entered into by the successor States
after consultation with the Central Government does not affect
the legal right of the State of Himachal Pradesh to receive and
utilize the power generated as a result of Bhakra-Nangal and
G Beas Projects. Similarly, the fact that in the absence of any
agreement within two years as stipulated in sub-section (1) of
Section 78 the Central Government was empowered to
determine by an order the right and liabilities of the successor
States does not affect the legal right of the State of Himachal
H
STATE OF HIMACHAL PRADESH v. UNION OF INDIA 579
& ORS. [A.K. PATNAIK, J.]
Pradesh to receive and utilize the power generated as a result A
of the Bhakra-Nangal and Beas Projects. We have, therefore,
no doubt in our mind that the Plaintiff had a legal right as a
successor State of the composite State of Punjab to receive
and utilize the power generated in the Bhakra-Nangal and Beas
Projects and this right was recognized by law and capable of B
being enforced by the power of the State.
59. Article 131 of the Constitution provides that this Court
has original jurisdiction in any dispute between the parties
mentioned therein if and in so far as the dispute involves any
question {whether of law or fact) on which the existence or extent C
of a legal right depends. Hence, this Court has jurisdiction not
only to decide any question on which the existence of a legal
right depends but also to decide any dispute involving any
question on which the extent of a legal right depends. We,
therefore, have the jurisdiction to decide the extent to which D
Plaintiff-State would be entitled to receive and utilize the power
generated in the Bhakra-Nangal and Beas Projects. In other
words, the suit of the Plaintiff is not barred by the scheme of
Sections 78 to 80 of the Punjab Reorganisation Act, 1966.
Issue No.6 is answered accordingly. E
Issue No.7
60. Mr. Mohan J~in, the Additional Solicitor General
appearing for Defendant No.1 and Mr. Shyam Diwan, learned
-counsel for Defendant No.2, submitted that Section 78 of the
Punjab Reorganisation Act, 1966, provides that the rights and F
liabilities in regard to Bhakra-Nangal and Beas Projects of the
successor States of the composite State of Punjab shall be in
such proportion as may be fixed by an agreement entered into
by the successor States after consultation with the Central
Government or, if no such agreement is entered into within two G
years of the appointed day, as the Central Government may by
order determine having regard to the purposes of the Projects.
They submitted that the rights and liabilities of the successor
States in regard to Bhakra-Nangal Project have already been
fixed by the agreement dated 17.04.1967. H
580 SUPREME COURT REPORTS [2011) 11 S.C.R.
A 61. Mr. A.K. Ganguli, learned counsel for the Plaintiff, on
the other hand, submitted that no agreement whatsoever in
terms of Section 78(1) of the Punjab Reorganisation Act, 1966
has been arrived at between the parties and the agreement
dated 17 .04.1967 is only 'tentative, ad hoc or provisional
B arrangement' pending final determination of rights and liabilities
of the successor States of the composite State of Punjab. He
submitted that the Plaintiff did not accept the tentative, adhoc
or provisional arrangement made on 17.04.1967 and lodged
its claim with the Central Government in its letter dated
c 27.10.1969 marked as Ext. P-12 claiming share to the extent
of 7 .19% of the total benefrts from Bhakra-Nangal and Beas
Projects, but the Central Government did not decide the claim
of the Plaintiff-State and hence the Plaintiff had no option but
to file the suit under Article 131 before this Court.
D 62. We have gone through the evidence and we find that
by a letter dated 12.03.1967 of the Government of India,
Ministry of Finance, Department of Economic Affairs,
addressed to the Secretaries, Finance Department of the
Government of Punjab and Haryana, marked as Ex.P-4, liability
E for the loan taken by the composite State of Punjab from the
Central Government for Bhakra-Nangal and Beas Projects have
been allocated 'provisionally' among the successor States of
Punjab and Haryana in the ratio of 53:47 (for Bhakra Loans)
and 60:40 (for Beas Project) for the purpose of repayment of
F principal and payment of interest. In the said letter (Ex.P-4) it
is clearly stated that the allocation is a 'purely an ad hoc and
temporary arrangement' and will be subject to re-adjustment
later when the final allocation of the debt is made in terms of
the provisions of Section 54(3) of the Punjab Reorganisation
G Act, 1966. The summary of discussions held in the room of the
Secretary, Ministry of Irrigation and Power on 17.04.1967
regarding the formation of two separate Electricity Boards for
Haryana and Punjab and related matters have been circulated
by a memorandum dated 27.04.1967 of the Government of
H India, Ministry of Irrigation and Power, marked as Ex.D-1/6.
STATE OF HIMACHAL PRADESH v. UNION OF INDIA 581
& ORS. [AK. PATNAIK, J.]
Para 3 of the summary discussions which records the alleged A
agreement between the successor .States with regard to
allocation of assets and liabilities in relation to the Bhakra-
Nangal Project and the Beas Project is extracted hereinbelow:
"Shri Nawab Singh stated that a decision on the tentative
8
allocation of assets and liabilities of Punjab and Haryana
had been taken earlier on the basis of 58% : 42%. Now
the shares of the Union Territories of Himachal Pradesh
and Chandigarh had to be decided. He further stated that
at a meeting held in this regard recently an agreement had C
been reached on the allocation of a share of 3.5% to
Chandigarh and 2.5% to Himachal Pradesh and the
remaining, ratio of 58:42. On this basis, the shares of the
four constituents would become as under:
Punjab 54.5% D
Haryana 39.5%
Chandigarh 3.5%
Himachal Pradesh 2.5%
E
The above percentages were agreed to the Power Houses,
sub-stations, Transmission Lines will, of course, be owned
on the basis of location etc. as per distribution shown in
Annexure-1. It was further decided that the depreciation
accrued and loans raised for any particular fixed asset F
would be allocated along with the asset itself as per
Annexure-1 and that the distribution systems and other small
lengths of transmission lines, sub-stations etc. not included
in the list will go to the successor States on location basis."
It will be clear that the decision on the 'tentative' allocation of G
asset and liabilities of Punjab and Haryana had been taken first
and this was 58% for Punjab and 42% for Haryana and the
shares of Chandigarh and Himachal Pradesh were determined
at the. meeting held on 17.04.1967 and the resultant allocation
was 54% for Punjab, 39% for Haryana, 3.5% for Chandigarh H
582 SUPREME COURT REPORTS [2011] 11 S.C.R.
A and 2.5% for Himachal Pradesh. The record of the discussions
for allocation of shares of the 4 constituent of the composite
State of Punjab shows that the basis for distribution was
location of the power houses, sub-stations, transmission lines
etc. Along with the record of discussion, the list of fixed assets
B 'tentatively' allocated to the Haryana Electricity Board, Punjab
Electricity Board, Union Territory of Himachal Pradesh and
Union Territory of Chandigarh were annexed. Similarly, the list
showing 'tentative' apportionment of financial assets and
liabilities as agreed in the meeting held on 17.04.1967 was also
c annexed. It thus appears that allocation of rights and liabilities
to the constituents of the composite State of Punjab which took
place at the meeting held on 17 .04.1967 was purely 'tentative'
and not final. This is confirmed in the letter dated 29.05.1967
of the Government of India, Ministry of Irrigation and Power,
marked as Ex.P-7, addressed to the Secretaries to the
0
Government of Punjab, Haryana and Rajasthan on the subject
'Financial Arrangements for .Bhakra and Beas Projects', in
which it is reiterated that the allocation was purely on ad hoc
and tentative basis and was to be without prejudice to the rights
of Governments of Punjab and Haryana and was subject to re-
E adjustment later when final allocation of debt liability is made
and the ratio in which capital and reserve expenditure in
respect of the project is decided in terms of the provisions of
Section 54(3) of Punjab Reorganisation Act, 1966. We also find
from the evidence that by a letter dated 20.03.1978 addressed
F by the Ministry of Energy, Government of India to Shri Shanta
Kumar, Chief Minister of Himachal Pradesh, 15 MW of power
has been allotted on 'ad hoc basis' to Hi'machal Pradesh
pending a final decision of the concerned States if Himachal
Pradesh was agreeable to the proportionate cost of the project.
G In an another subsequent letter dated 16.08.1983 of the
Government of India, Ministry of Energy (Department of Power)
to the Chairman, Bhakra Beas Management Board, marked as
Ex.P-48, it is expressly stated:
"The quantum of benefits from Bhakra and Beas projects
H
STATE OF HIMACHAL PRADESH v. UNION OF INDIA 583
& ORS. [A.K. PATNAIK, J.]
presently allocated to these two areas on an ad hoc basis A
will remain unaltered until a final decision is taken on the
sharing of the rights and liabilities of all the successor
states in the two projects."
The documentary evidence before the Court, therefore, clearly
establishes that the allocation ot power to Himachal Pradesh B
to the extent of 2.45% of the share of the power of the
composite State of Punjab from both Bhakra and Beas Projects
was 'tentative and ad hoc' and not final. There is, in other
words, no final agreement between the successor States of the
composite State of Punjab with regard to the rights and C
liabilities of the successor States including the right to the power
generated in the Bhakra and Beas Projects in terms of Section
78(1) of the Punjab Reorganisation Act, 1966. Issue No.7 is
answered accordingly.
D
Issue No.8
63. Mr. Ganguli, learned counsel for the Plaintiff, submitted
that the territorial integrity of Bilaspur State could not be affected
by submergence on account of construction of Bhakra Dam
without the consent of the Bilaspur State and the Raja of E
Bilaspur while giving such consent, incorporated in the draft
agreement various conditions such as payment of royalty and
. transfer of power to Bilaspur as a consideration for construction
of the Bhakra Dam. He submitted that as the Bilaspur State
became part of Himachal Pradesh and the State of Himachal F
Pradesh as the Mother State bears the reservoir of Bhakra-
Nangal Project, Himachal Pradesh is the Mother State vis-a-
vis the Bhakra-Nangal Project. He submitted that similarly as
Himachal Pradesh bears the reservoir of the Beas Project,
Himachal Pradesh is also the "Mother State" vis-a-vis the Beas G
Project. He submitted that the Union Government has taken a
decision that the Mother State or the Home State where a
hydro-electric power project is located, will be supplied 12%
of the power generated by the power station free of cost and
this will be evident from the letter dated 22.07.1985 of the
H
584 SUPREME COURT REPORTS [2011] 11 S.C.R.
A Government of India, Ministry of Irrigation & Power (Department
of Power) to the Chairman, H. P. State Electricity Board, which
has been produced and marked as Ext. P-55. He submitted
that the Himachal Pradesh Assembly accordingly adopted a
resolution on 13.03.1984 making a demand to the Union of India
B to give to Himachal Pradesh 12% free power from Bhakra,
Dehar and Pong power projects in lieu of use of water and land
of Himachal Pradesh for generation of electricity and
accordingly the Chief Minister of Himachal Pradesh addressed
a letter on 18.06.1984 forwarding a copy of the resolution of
c the Himachal Pradesh Assembly claiming 12% free supply of
power to Himachal Pradesh from Bhakra, Dehar and Pong
power projects, but this claim of Himachal Pradesh has not
been accepted by the Central Government. Mr. Ganguli referred
to the letter dated 19.02.1968 of Shri Y. S. Parmar to Dr. K. L.
D Rao, Union Minister of Irrigation & Power, marked as Ext. P-8,
to show how in the case of other projects, namely, the Periyar
Project in the Madras State and the Muchkund Project in
Orissa State benefits have been given to the State whose
resources are affected on account of the construction of hydro-
electric project. He also referred to the views of the Vice-
E Chairman of the Central Water and Power Commission in his
communication dated 02.05.1968, marked as Ext. P-10,
suggesting that the Himachal Pradesh should be made an
active partner of the Hydro-Electric Project borne by it by paying
to Himachal Pradesh the annual royalties based on actual
F utiliza.tion of the water, power rights. He argued that all these
materials clearly show that Himachal Pradesh is entitled to
12% free power from the Bhakra-Nangal and Beas Projects by
virtue of it being the Mother State or the Home State and by
virtue of loss of its land and water on account of the Bhakra
G and Beas Projects.
64. Mr. Shyam Diwan, learned counsel for the Defendant
No.2, submitted that this claim of the Plaintiff to 12% free power
is based upon a notion that Himachal Pradesh has some pre-
existing or natural rights over its land and water. He submitted
H
STATE OF HIMACHAL PRADESH v. UNION OF INDIA 585
& ORS. [A.K. PATNAIK, J.]
that under Article 3 of the Constitution Parliament has power A
to form a new State, increase the area of any State, diminish
the area of any State, alter the boundaries of any State and alter
the name of any State and, therefore, States in India are not
indestructible and the territorial integrity of the States can be
destroyed by Parliament by law. He argued that the whole B
notion of Himachal Pradesh having any rights over its land and
water apart from what is given by Parliament by law is thus alien
to the Indian Constitution. He submitted that the State of
Himachal Pradesh cannot have any right dehors the Punjab
Reoganisation Act, 1966 made under Article 3 of the C
Constitution. In support of this submission, he relied on the
decisions of this Court in Babula/ Parate v. State of Bombay
and another (supra) and Ku/dip Nayar& Ors. v. Union of India
&ors. ((2006) 1 sec 1).
65. We find that under the provisions of Article 3 of the D
Constitution, Parliament has the power to form a new State by
separation of territory from any State or by uniting two or more
States or parts of States or by uniting any territory to a part of
any State, increase the area of any State, diminish the area of
any State, alter the boundaries of any State and alter the name E
of any State, but under Article 3, Parliament cannot take away
the powers of the State Executive or the State Legislature in
respect of matters enumerated in List-II of the Seventh
Schedule to the Constitution. This has been made clear in the
speech of Dr. B. R. Ambedkar in the Constituent Assembly F
quoted in Para 52 of the decision of this Court in Ku/dip Nayar
v. Union of India & Ors. (supra). Relevant portion from the
speech of Dr. B.R. Ambedkar is quqted hereinbelow:-
" .... The basic principle of federalism is that the legislative
and executive authority is partitioned between the Centre G
and the States not by any law to be made by the Centre
but by the Constitution itself. This is what Constitution does.
The States under our Constitution are in no way dependent
upon the Centre for their legislative or executive authority.
The Centre and the States are coequal in this matter. ... ." H
586 SUPREME COURT REPORTS [2011] 11 S.C.R.
A 66. We have however held, while answering Issue No.2,
that pursuant to the Bilaspur Merger Agreement, the States
Merger (Chief Commissioners Provinces) Order, 1949,
inclusion of the Bilaspur State as a Part-C State in the First
Schedule of the Constitution and Article 294(b) of the
B Constitution, the Raja of Bilaspur lost all rights first to the
Dominion of India and thereafter to the Government of India and
that the Plaintiff, therefore, could not have any cause of action
to make any claim on the basis of any right of Raja of Bilaspur
prior to the merger of the Bilaspur State with the Dominion of
c India. The Plaintiff, therefore, cannot claim any free power
because of loss of land and water by the Raja of Bilaspur. We
have also held while answering Issue No.5 that in 1959 when
the States of Punjab and Rajasthan agreed to construct the
Bhakra Dam, Himachal Pradesh was a Union Territory and the
D executive and legislative power over water and land under
Entries 17 and 18 of List-II of the Seventh Schedule to the
Constitution vested in the Union of l11dia and the Union of India
in exercise of its constitutional powers acquiesced in the
construction of the Dam at Bhakra over river Satluj. We have
E also held while answering to Issue No.5 that in 1960-1961 when
the Himachal Pradesh was a Union Territory, the States of
Punjab and Rajasthan also decided t6 collaborate and
undertake the execution of the Beas Project and the
Government of India, Ministry of Irrigation & Power, in fact,
adopted a resolution on 10.02.1961 constituting the Beas
F Control Board for early execution of the Beas Project. Thus, at
the time of the Bhakra-Nangal Project and the Beas Project
were executed, Himachal Pradesh was not a full fledged State
having the rights and powers under Articles 162 and 246 (3)
of the Constitution over its land and water under Entries 17 and
G 18 of List-II of the Seventh Schedule to the Constitution and it
was the Union of India which had such rights and powers over
the land and water in Himachal Pradesh by virtue of the
provisions of Article 73 and Article 246(4) of the Constitution.
67. The State Reorganisation Act, 1966 and, in particular
H
STATE OF HIMACHAL PRADESH v. UNION OF INDIA 587
& ORS. [A.K. PATNAIK, J.]
Section 78 thereof, does not also provide for grant of 12% free A
power to the State of Himachal Pradesh. It only provides for
the rights and liabilities of Himachal Pradesh as a successor
State of the Composite State of Punjab and wha.t would be such
rights and liabilities of Himachal Pradesh as a successor State
of the Composite State of Punjab will be discussed while B
answering the Issue No.9.
68. The claim of the Plaintiff to 12% free power therefore
is not based on any legal right of the Plaintiff, constitutional or
statutory, but only on the decision of the Government of India
referred to in the letter dated 22.07.1985 of the Government of C
India, Ministry of Irrigation & Power, (Department of Power) to
the Chairman, H.P. State Electricity Board (Ext. P-55) which
is extracted hereinbelow in extenso:-
"K. Padmabhaiah
D
Jt. Secretary
Government of India
Ministry of Irrigation & Power
(Department of Power)
(Sanchai aur Vidyut Mantralaya E
New Delhi the 22nd July 1985
D.O.No. 53/3/79-DDH
Dear Shri Mahajan,
I am glad to inform you that the formula for sharing F
of power and benefits from Central Sector Hydro Electric
Projects has been modified by the Cabinet on 12.02.1985.
The revised formula is reproduced below for your
information:-
(a) 15% of the generation capacity should be kept as G
unallocated at the disposal of the Central Govt. to be
distributed within the Region or outside, depending upon
overall requirements.
(b) The "Home State", i.e. where the project is located will H
588 SUPREME COURT REPORTS [2011) 11 S.C.R.
A be supplied 12% of power from the energy generated by
the power station, free of cost. The "energy generated"
figures for the purpose will be calculated at the bus bar
level, i.e. after discounting the auxiliary consumption but
without taking into account the transmission line losses
8 and
(c) The remaining power (73%) would be distributed
between the States of region (including the Home State)
on the basis of Central Assistance given to various States
in the region during the last five years and on the basis of
c consumption of electricity in the States in the region in the
last five years, the two factors being given equal
weightage.
2. This revised formula would be applicable in respect of
those Central Sector Hydro Electric Projects in whose case
D
sanction for investment decision is issued after
12.02.1985.
3. The Cabinet has also approved the concept of Joint
ventures between the Union and one or more State
E Government for implementation of hydro-electric projects
in such projects, the partner State/States would be entitled
to the supply of quantity of power proportionate to their
investment, at bus bar rates, after supply of 12% free
power to the Home State. The Centre's share of power
F would be distributed from such projects as per the formula
for Central Sector Hydro Electric Projects, i.e. 15% to be
reserved with the Centre as unallocated share and the
balance to be distributed between the States of the region
on the basis of two factors enumerated in (c) of para (1)
above.
G
With regards,
Yours faithfully,
Sd/-
H {K. Padmanabhaiah)
STATE OF HIMACHAL PRADESH v. UNION OF INDIA 589
& ORS. [A.K. PATNAIK, J.]
Shri Kailash Chand Mahajan, A
Chairman, .
H. P. State Electricity Board,
Vidyut Bhawan"
B
69. It will be crystal clear from the aforesaid letter dated
22.07.1985 that the formula of supply of 12% free power from
the energy generated by a power station to the Home State is
applicable to Central Sector Hydro-Electric Projects and with
effect from 12.02.1985 the Union Cabinet has made this
applicable to Joint Ventures between the Union and one or C
more State Governments for implementation of Hydro-Electric
Projects and as per this formula after supply of 12% free power
to the Home State, the remaining power is to be distributed to
the partner States proportionate to their investment. This formula
of making 12% free power from the energy generated by a D
power station is purely a policy-decision taken by the
Government of India much after the Bhakra-Nangal Project and
Beas Project were executed and in any case does not find
place in any provision of law so as to confer a legal right on
the Plaintiff to claim the same. Our answer to Issue No.8 is that E
the Plaintiff-State is not entitled to 12% power generated from
the Bhakra-Nangal and Beas Projects free of cost from the date
of commissioning of the Projects.
Dlssue No.9
F
70 .. The claim of the Plaintiff to allocation of 7.19% of the
total power generated in Bhakra-Nangal and Beas Project from
01.01.1996 is based on the Punjab Reorganisation Act, 1966
and the State of Himachal Pradesh Act, 1970. We have already
extracted Section 78 of the Punjab Reorganisation Act, 1966, G
while answering Issue No. 6. The other provisions of the Punjab
Reorganisation Act, 1966, which are relevant for deciding this
issue, are extracted herein below:
H
590 SUPREME COURT REPORTS [2011] 11 S.C.R.
A "Section 2(b) "appointed day" means the 1st day of
November, 1966;
8 (f) "existing State of Punjab" means the State of Punjab
as existing immediately before the appointed day;
(i) "population ratio", in relation to the States of Haryana
and Punjab and the union, means the ration of 37.38 to
c 54.84 to 7.78;
(m) "successor state", in relation to the existing State of
Punjab means the State of Punjab or Haryana, and
includes also the Union in relation to the Union rerritory of
Chandigarh and the transferred territory;
D
(n) "transferred territory" means the territory which on the
appointed day is transferred from the existing State of
Punjab to the Union territory of Himachal Pradesh;
Section 5. Transfer of territory from Punjab to
E Himachal Pradesh. - (1) On and from the appointed day,
· there shall be added to the Union territory of Himachal
Pradesh the territories in the existing State of Punjab
comprised in-
(a) Simla, Kangra, Kulu and lahul and Spiti districts;
F
(b) Nalagarh tehsil of Ambala district;
(c) Lohara, Amb and Una kanungo circles of Una·tehsil of
Hoshiarpur district;
(d) the territories in Santokhgarh kanungo circle of Una
G
tehsil of Hoshiarpur district specified in Part I of the Third
Schedule;
(e) the territories in Una tehsil of Hoshiarpur district
specified in part II of the Third Schedule; and
H
STATE OF HIMACHAL PRADESH v. UNION OF INDIA 591
& ORS. [A.K. PATNAIK, J.]
(f) the territories of Dhar Kalan Kanungo circle of Pathankot A
tehsil of Gurdaspur district specified in Part Ill of the Third
Schedule,
and thereupon the said territories shall cease to form part
of the existing State of Punjab.
B
(2) The territories referred to in clause (b) of sub section
(1) shall be included in, and form part of Simla district.
(3) The territories teferred to in clauses (c), and (d) and
(e) of sub-section (1) shall be included in and form part of
Kangra district, and C
(i) the territories referred to in clauses (c). and (d) shall form
a separate ,tehsil known as Una tehsil in that district and
in that tehsil the territories referred to in clause (d) shall
form a seperate kanungo circle known as the Santokhgarh
kanungo circle; and D
(ii) the territories referred to in clause (e) shall form part
of the Hamirpur tehsil in the said district.
(4) The territories referred to in clause (f) of sub-section
(1) shall be included in, and form part of the Bhattiyat tehsil E
of Chamba district in the Union territory of Himachal
Pradesh and in that tehsil, the villages Dalhousie and
Balun shall be included in, and form part of Banikhet
kanungo circle and the village Bakloh shall form part of
Chowari kanungo circle." F
71. The State of Himachal Pradesh Act, 1970 ther~after
established the New State of Himachal Pradesh comprising the
territories which were comprised in the existing Union Territory
of Himachal Pradesh. In exercise of the powers conferred on G
the Central Government under Section 38 of the State of
Himachal Pradesh Act, 1970, the Central Government has
passed an order dated 07 .07 .1972 called 'the State of
Himachal Pradesh (Transfer of Assets and Liabilities) Order,
1972'. Para 7 of this Order, which is relevant and is extracted
H
592 SUPREME COURT REPORTS [2011] 11 S.C.R
A hereinbelow:
"For th«;! purposes of paragraphs 5 and 6 of this order the
provisions of Section 2 of the Punjab Reorganisation Act,
1966 (31 of 1966), shall have effect as if: (i) for clause (i),
the following clauses had been substituted namely:
B
(i) "Population ratio" in relation to the States of Haryana,
Punjab and Himachal Pradesh and the Union means the
ratio of 37.38 to 54.84 to 7.10 to 0.59%".
(ii) For clause (m), the following clause had been
c substituted namely:
(m) "Successor State" in relation to the existing State
Punjab means the State of Punjab or the State of Haryana
or the State of Himachal Pradesh and includes also the
Union, in relation to the Union Territory of Chandigarh."
D
72. Mr. Ganguli, learned counsel for the Plaintiff, submitted
that it will be clear from clause (i) of para 7 of the State of
Himachal Pradesh (Transfer of As :;ets and Liabilities) Order,
1972 that the population ratio in relation to the States of
E Haryana, Punjab and Himachal Pradesh and the Union Territory
of Chandigarh is Haryana: 37.38%, Punjab: 54.84, Himachal
Pradesh: 7.19% and Chandigarh: 0.59%. He argued that on
the basis of such population ratio, the Plaintiff is, therefore,
entitled to 7 .19% of the total power generated in the Bhakra-
F Nangal and Beas Projects as a successor State of the
composite State of Punjab. He submitted that the allocation of
only 2.5% of the power from Bhakra-Nangal and Beas Projects
to the State of Himachal Pradesh as compared to the
allocation of 54.5% to Punjab and 39.5% to Haryana and 3.5%
G to Chandigarh, is in violation of the right of the Plaintiff-State
to' equal treatment. He submitted that the Plaintiff has, therefore,
sent by the letter dated 22.10.1969, produced and marked as
Ext. P-12, to the Joint Secretary, Government of India, Ministry
of Home Affairs, New Delhi, claiming a share to the extent of
H 7.19% of the total benefits from the Bhakra-Nangal and Beas
STATE OF HIMACHAL PRADESH v. UNION OF INDIA 593
& ORS. [A.K. PATNAIK, J.]
Projects on the basis of transfer of 7 .19% of the population of A
the composite Punjab State to Himachal Pradesh along with
1 the transferred territory, but the Central Government has not
passed any order as yet granting the Plaintiff its share of 7 .19%
1 of the power generated from the Bhakra-Nangal and Beas
Projects on the basis of the ratio of population transferred to B
the Plaintiff-State along with the transferred territory.
73. Mr. Mohan Jain, learned ASG appearing for the
Defendant No.1 and Mr. Shyam Diwan appearing for Defendant
No.2, on the other hand, submitted that since there was an
agreement between the successor States arrived at in the C
meeting held on 17 .04.1967 and this agreement was entered
into within two years stipulated in Section 78(1) of the Punjab
Reorgansiation Act, 1966 and was binding on the parties, the
Plaintiff-State is not entitled to 7 .19% of the share of power
generated in Bhakra-Nangal and Beas Projects. They further D
submitted that Section 78(1) of the Punjab Reorgansiation Act,
1966 is clear that the rights and liabilities of the successor State
of the composite Punjab State in relation to Bhakra-Nangal and
Beas Projects are to be settled by agreement within two years
or by an order passed by the Central Government if no such E
agreement is entered into within two years and, therefore, this
Court cannot consider the claim of the Plaintiff to a share. of
7 .19% of the power generated in the two Projects.
74. The language of Section 78(1) shows that the right of
the successor States in relation to Bhakra-Nangal and Beas F
Projects are rights on account of their succession to the
composite State of Punjab on the reorganization of the
composite State of Punjab. The language of Section 78 further
makes it clear that if no agreement is entered into between the
States within two years of the appointed day, the Central G
Government was required to determine the rights and liabilities
of the successor States "having regard to the purposes of the
Projects". Hence, the purposes of the Bhakra-Nangal and Beas
Projects will have to be kept in mind while deciding the share
of the successor States. H
594 SUPREME COURT REPORTS [2011] 11 S.C.R.
A 75. The purposes of the Bhakra-Nangal Project, as evident
from the agreement dated 13.01.1959 between the State of
Punjab and the State of Rajasthan, were "improvement or
irrigation and generation of Hydro-electric power". Clause 9(2)
of the agreement dated 13.01.1959 (Ext. D-1/3) provides that
B the shares of the Punjab and Rajasthan in the stored water
supplies was to be 84.78% and 15.22% respectively and clause
32 of this agreement provides that each party shall contribute
to the capital cost of the electrical portion of the project in
proportion to the share of either party in the stored water supply.
C Thus, the capital cost contributed by the composite State of
Punjab for construction of the Hydro-electric project of Bhakra-
Nangal was 84.78% and this capital cost was borne by the
composite State of Punjab as a whole including the transferred
territory which formed part of the State of Himachal Pradesh.
Similarly, we find on a reading of the record of decisions arrived
D at the inter-State Conference on development and utilization of
the waters of the rivers Ravi and Beas held on 25.01.1955
marked as Ext. D-4/10 as well as the minutes of the 6th
meeting of the Beas Central Board held on 13.12.1963 marked
as Ex. D-4/15 that 85% of the capital cost of Unit-I and 32% of
E the capital cost of Unit-II of Beas Project were to be met by the
composite State of Punjab as a whole including the transferred
territory which formed part of the State of Himachal Pradesh.
76. The purposes of the Bhakra-Nangal and the Beas
F Projects, therefore, were to benefit the entire composite State
of Punjab including the transferred territory which became part
of Himachal Pradesh. If the ratio of the population of this
transferred territory vis-a-vis the composite State of Punjab was ~
7.19% and the transferred territory as detailed in Section 5 of
G the Punjab Reorganisation Act, 1966 extracted above was not
small, allocation of only 7 .19% of the share of power of the
composite State of Punjab generated in the Bhakra-Nangal and
Beas Projects was only fair and equitable. The allocation of
only 2.5% of the total share of the power of the composite State
of Punjab generated 1n the two Projects to Himachal Pradesh
H
STATE OF HIMACHAL PRADESH v. UNION OF INDIA 595
& ORS. [A.K. PATNAIK, J.]
has been made on the basis of actual consumption of power A
by the people in the transferred territory and the location of the
sub-stations in the transferred territory. The summary of
discussion held in the room of the Secretary, Ministry of
Irrigation and Power, on 17.04.1967 (Ext. D-1 /6) shows that the
allocation of power to Punjab is 54.5% of the total power B
whereas the allocation of power to Haryana is 39.5% of the total
power available to the composite State of Punjab. These
allocations appear to have been done on the basis of the
population ratio of Punjab and Haryana in the composite State,
which were 54.84% and 37.38% respectively. Thus, while c
States of Punjab and Haryana have been allocated power on
the basis of their population ratio, Himachal Pradesh has been
allocated power on "as is where is basis".
77. Equal treatment warranted that the Plaintiff-State was
allocated 7 .19% of the total power generated in the Bhakra- D
Nangal and Beas Projects (after excluding the power allocated
to the Defendant No.4 - State of Rajasthan) from the appointed
day as defined in the Punjab Reorganisation Act, 1966, i.e.
01.11.1966. Considering the fact that Chandigarh is the Capital
of both Punjab and Haryana, these two States should meet the E
power requirements of the Union Territory of Chandigarh out of
their share. We accordingly order that the entitlement of power
of the constituents of the composite State of Punjab from the
Bhakra-Nangal and Beas Projects will be at the following
percentages: F
Himachal Pradesh 7 .19%
UT of Chandigarh 3.5%
Punjab 51.8%
G
Haryana 37.51%
Therefore, the entitlement of the Plaintiff out of the total
production will be as under:
H
596 SUPREME COURT REPORTS [2011) 11 S.C.R.
A Project Entitlement in With effect from
total production
(i) Bhakra-Nangal 6.095% 01.11.1966
(7.19% of 84.78%) (date of re-
B
organisation)
(ii) Beas I 5.752% From the date of
(7.19% of 80%) commencement of
Production
c (iii) Beas II 2.984% From the date of
(7.19% of 41.5%) commencement of
Production
From the above entitlement, what has been received by the
D Plaintiff in regard to Bhakra-Nangal and Beas I have to be
deducted for the purpose of finding out the amount due to the
Plaintiff-State from the States of Punjab and Haryana upto
October, 2011.
E Issue No. 10
78. On the basis of its entitlement to 7.19% of the total
power generated in the Bhakra-Nangal and Beas Projects, the
Plaintiff has filed Statements I and Ill. These statements,
however, are disputed by the Defendants in their written
F statements. The Defendant No.1-Union of India will have to work
out the details of the claim of the Plaintiff-State on the basis of
the entitlements of the Plaintiff, Defendant No.2 and Defendant
No.3 in the tables in Paragraph 77 above as well as all other
rights and liabilities of the Plaintiff-State, the Defendant Nos. 2
G and 3 in accordance with the provisions of the Punjab
Reorganisation Act, 1966 and file a statement in this Court
stating the amount due to the Plaintiff from Defendant Nos.2
and 3 upto October, 2011.
H
STATE OF HIMACHAL PRADESH v. UNION OF INDIA 597
& ORS. [A.K. PATNAIK, J]
Issue No. 11 A
79. Since the Defendant Nos. 2 and 3 have utilized power
in excess of what was due to them under law, we also hold that
the Plaintiff-State will be entitled to interest at the rate of 6%
on tile.amounts determined by the Union of India to be due from
Defendant Nos.2 and 3. B
80. Reliefs:
(i) The suit is decreed in part against Defendant Nos. 2
and 3 and dismissed against Defendant Nos. 1, 4 and 5.
(ii) It is hereby declared that the Plaintiff-State is entitled
c
to 7.19% of the power of the composite State of Punjab from
the Bhakra-Nangal Project with effect from 01.11.1966 and
from Beas Project with effect from the dates of production in
Unit I and Unit II.
D
(iii) It is ordered that Defendant No.1 will work out the
details of the claim of the Plaintiff-State on the basis of such
entitlements of the Plaintiff, Defendant No.2 and Defendant
No.3 in the tables in Paragraph 77 of this judgment as well as
all other rights and liabilities of the Plaintiff-State, Defendant E
No.2 and Defendant No.3 in accordance with the provisions of
the Punjab Reorganisation Act, 1966 and file a statement in
this Court within six months from today stating the amounts due
to the Plaintiff-State from Defendant Nos. 3 and 4.
(iv) On the amount found to be due to the Plaintiff-State F
for the period from 01.11.1966 in the case of Bhakra-Nangal
Project and the amount found due to the Plaintiff-State for the
period from the dates of production in the case of Beas Project,
the Plaintiff-State would be entitled to 6% interest from
Defendant Nos. 2 and 3 till date of payment. G
(v) With effect from November 2011, the Plaintiff-State
would be given its share of 7.19% as decreed in this judgment.
(vi) The Plaintiff-State will be entitled to a cost of Rs. 5
H
598 SUPREME COURT REPORTS [2011] 11 S.C.R.
A lakhs from Defendant No.2 and a cost of Rs.5 lakhs from
Defendant No.3.
The matter will be listed after six months along with the
statements to be prep~red and filed by the Defendant No.1 as
ordered for verification of the statements and for making the
B final decree.
R.P. Matter adjourned.
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