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State of Himachal Pradesh Vs Union of India & Ors

CASE BRIEF

Decided On: 27/09/2011

Case Type: Civil

Bench: R.V. Raveendran, A.K. Patnaik

Plaintiff: State of Himachal Pradesh

Respondents: Union of India & Ors.

Statutes Referred: Constitution of India; Punjab Reorganisation Act, 1966; The Constitution (7th Amendment) Act, 1956; Himachal Pradesh and Bilaspur (New States) Act, 1954

Facts:

  • The construction of Bhakra Dam across the river Satluj was proposed in the year 1944 in the Bilaspur State. It would result in the submergence of a large territory of Bilaspur while benefitting the Province of Punjab.
  • The Raja of Bilaspur agreed to the proposal only on certain terms and conditions, including payment of royalties for generations of power from the water of the reservoir of the Dam, which was detailed in a draft agreement and was to be executed on his behalf and the Province of Punjab.
  • The formal agreement between the Raja of Bilaspur and the Province of Punjab could not be executed ultimately, owing to the cession of the Bilaspur State to the Dominion of India.
  • In 1954, Bilaspur and Himachal Pradesh were united to form a new State of Himachal Pradesh under the Himachal Pradesh and Bilaspur (New States) Act, 1954, continuing to be a Part-C State until becoming a Union Territory by the Constitution (7th Amendment) Act, 1956.
  • With the enactment of the Punjab Reorganisation Act, 1966, the erstwhile State of Punjab was bifurcated into Punjab and Haryana and transferred some of the territories to the Union Territory of Himachal Pradesh.
  • With effect from 25/1/1971, the Union Territory of Himachal Pradesh became a full-fledged State by the State of Himachal Pradesh Act, 1970, consisting of the erstwhile Part-C State of Bilaspur, the erstwhile Part-C State of Himachal Pradesh, and the transferred territories of State of Punjab.
  • While bringing benefits to the country and in particular the defendants Nos. 2, 3, 4, and 5, the construction of Bhakra Dam resulted in the submergence of 27,869 acres of land in the erstwhile Bilaspur State out of the total 41,600 acres.
  • Such submergence gave rise to loss of cultivated and uncultivated land to a total extent of 1,03,425 acres, trees and forests, Government building, towns, community buildings, well, springs and paths, bridges, roads, gardens, parks, ferries, telegraph lines, which subsequently resulted in unemployment, loss of revenue, loss of agricultural and trading activity, etc.
  • The Beas project is a multi-purpose scheme comprising of two units: Unit-I and Unit-II.
  • Unit-I was commenced in the 1960s when Himachal Pradesh was a Union Territory and this project included a diversion of water from river Beas at Pandow in District Mandi of Himachal Pradesh to river Satluj at Dehar, as a result of which a reservoir comprising of an area of 323 acres and a storage capacity of 33,240-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 District including prime and fertile land as a consequence of which, a large number of families were deracinated from their agricultural lands on which they were cultivating.
  • The plaintiff filed its claims concerning the Bhakra-Nangal and Beas Projects by letter dated 22/10/1969 before the Central Government and made several representations subsequently to the Central Government but the Central Government did not take steps to determine the rights of the plaintiff in respect of the Bhakra-Nangal and Beas Projects.
  • In the absence of any such final determination by the Central Government, the power generated in the Bhakra-Nangal and Beas Projects presently is being shared by an ad hoc arrangement. After deducting the power consumed for auxiliary 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:
Name of The State/U.T. Bhakra-Nangal Beas
Unit-I (Dehar) Unit-II (Pong)
Rajasthan 15.22% 20% 58.5%
The remaining 84.78% 80% 41.50%is shared under:
Punjab 54.50% 60% 60%
Haryana 39.50% 40% 40%
H.P. 2.5% 15MW Nil
U.T. Chandigarh 3.5% Nil Nil
  • The Central Government intimated its decision with a letter dated 11/04/1994 and failed to determine the lawful claim of the plaintiff and a joint meeting of all the 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. This gave rise to a cause of action and the plaintiff has claimed compensation from the Central Government as well for its failure to determine the plaintiff’s lawful claim in the power generated by the two projects.

Issues:

  • Whether the suit is not maintainable being barred by limitation, delay and laches? (Defendant Nos. 1 & 2)
  • Whether after the merger of the State of Bilaspur with the Dominion of India, plaintiff could still have any cause of action to file the present suit? (Defendant No. 4)
  • Whether the suit barred by reasons of Article 363 of the Constitution? (Defendant No. 4)
  • Whether the suit is not maintainable under Article 131 of the Constitution? (Defendant No.4)
  • 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 XXIII Rule 6(a) of the Supreme Court Rules, 1966. (Defendant Nos. 3 and4).
  • 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)
  • 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? (Defendant Nos. 1, 2 & 3)
  • 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)
  • Whether the State of Himachal Pradesh is entitled to 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)
  • 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 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 suit? (Plaintiff)
  • Whether the Plaintiff-State is entitled to the award of any interest on the amounts determined as its entitlement? (Plaintiff)

Contentions by the Parties:

Plaintiff’s Arguments:

  • Plaintiff State is entitled to a share of 12% of the total power generated, after reduction of auxiliary consumption and transmission charges, in Bhakra-Nangal and Beas Projects free of cost from the date of commissioning of the projects.
  • It holds the defendants 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.
  • Plaintiff State further contends that it is entitled to 7.19% of the power generated in the Bhakra-Nangal and Beas Projects from the appointed day (01.11.1966) or from the date of commissioning of the projects, whichever 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.
  • The plaintiff contends that a compensation/reimbursement of RS. 2,199.77 crore be given that the defendants are jointly and severally liable 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.

Defendants’ Arguments:

  • The suit as filed by the plaintiff is not maintainable under Article 131 of the Constitution of India.
  • The suit is barred, owing to 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 Government in case the successor States/Union Territories of the composite State of Punjab are unable to reach an agreement, and an agreement had in fact been arrived at by the 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, regarding the apportionment of the power generated by the Bhakra-Nangal and Beas Project and it mentioned that 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 Pradesh right from May, 1967.

Since the agreement dated 17.04.1967 has been arrived at within two years of the 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.

  • 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 are applicable to the concept of 12% free power from Hydro stations to the “Mother State” or “Home State”.
  • No legal agreement between the Raja of Bilaspur and the Province of Punjab regarding the Bhakra-Nangal Project for royalty/free power exists and all the obligations towards the erstwhile State of Bilaspur were fulfilled by the project authorities when the Bhakra Dam was conceived.

Judgement:

  • The suit is decreed in part against Defendant Nos. 2 and 3 and dismissed against Defendant Nos. 1, 4 and 5.
  • It is declared that the plaintiff is entitled 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 as, if the ratio of the population of this transferred territory was 7.19% and the transferred territory as detailed in Section 5 of the Punjab Reorganisation Act, 1966 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.
  • Defendant No. 1 is ordered to work out the details of the claim of Plaintiff-State based on such entitlements of the Plaintiff, Defendant No.2 and Defendant No.3 as stated in the judgement as well as other rights and liabilities of the Plaintiff-State, Defendant No.2 and Defendant No.3 following the provisions of the Punjab Reorganisation Act, 1966 and file a statement in this Court within six months from the day of the judgement, stating the amounts due to the Plaintiff-State from Defendant Nos. 3 and 4.
  • A 6% interest shall be imposed upon the amount found to be due to the Plaintiff-State 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 until payment is fulfilled by Defendant Nos. 2 and 3.
  • As decreed in this judgement, with effect from November 2011, the Plaintiff-State would be given its share of 7.19%.
  • The Plaintiff-State will be entitled to a cost of Rs. 5 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 prepared and filed by the Defendant No.1 as ordered for verification of the statements and for making the final decree.

Conclusion:

The purposes of the Bhakra-Nangal and the Beas Projects were to benefit the entire composite State of Punjab including the transferred territory which became part of Himachal Pradesh, and no State shall be the recipient to anything that falls short of equitability under the law.

Prepared by Soumya Banerjee