# STATE OF HIMACHAL PRADESH v. UNION OF INDIA & ORS

- **Citation:** [2011] 11 S.C.R. 527
- **Court:** Supreme Court of India
- **Decided:** 2011-09-27
- **Bench:** R.V. Raveendran, A.K. Patnaik
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/state-of-himachal-pradesh-v-union-of-india-ors-27180
- **Pages:** 72

## Headnote

CONSTITUTION OF IND/A, 1950:
A
B
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
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
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
E
F
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.
8
Articles 131(b) and 363 - Suit - Plaintiff-State claiming
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 plaintiffState - 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:
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
A
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

## Text

_Characters 0–39,978 of 137,266. This is a partial read: ask again with offset=39978 for what follows._

[2011] 11 S.C.R. 527
STATE OF HIMACHAL PRADESH
v.
UNION OF INDIA & ORS.
(Original Suit No. 2 of 1996)
SEPTEMBER 27, 2011
[R.V. RAVEENDRAN AND A.K. PATNAIK, JJ.]
CONSTITUTION OF IND/A, 1950:
A
B
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
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
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
E
F
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.
8
Articles 131(b) and 363 - Suit - Plaintiff-State claiming
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 plaintiffState - 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:
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
A
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 plaintiffs 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 Reoganisation 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 :
1.
"Whether the suit is not maintainable being
barred by limitation, delay and !aches?"
D
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?"
4.
"Whether the suit was not maintainable under
Article 131 of the Constitution?"
5.
"Whether the suit does not disclose any cause
F
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
A
B
c
D
E
F
G
H
532
SUPREME COURT REPORTS
[2011] 11 S.C.R
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
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
& 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
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
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
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
determined as its entitlement?"
Decreeing the suit in part against defendant Nos. 2
and 3 (States of Punjab and Haryana), the Court.
STATE OF HIMACHAL PRADESH v. UNION OF INDIA 533
& ORS.
HELD:
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
A
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]
U.P. Jal Nigam & Anr. v. Jaswant Singh & Anr. 2006 (8)
Suppl. SCR 916 = (2006) 11 SCC 464 - cited
Issue No. 2:
D
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] [563B-G]
8
2.2 This Court, therefore, holds that the plaintiff will
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]
F
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.
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 BhakraNangal 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:
4. It is true that in view of Clause (2) of Article 262 of
D
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
use thereof, and actually relates to sharing of power
~1enerated in Bhakra-Nangal and Beas Projects and such
F
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]
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.
G
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
in Bhakra-Nangal and Beas Projects are not affected by
1 the Punjab Reorganisation Act, 1966, the plaintiff-State
has no legal right to claim a share of power from BhakraF
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
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
G
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 BhakraNangal and Beas Projects in terms of s. 78(1) of the
Punjab Reorganisation Act, 1966. [para 62] (582-B-D; 583B-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 policydecision 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.
D
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]
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 BhakraNangal 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 substations 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] [594H; 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 Chandigarh3.5%; 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 re8
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 ReH 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
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
2009 (1) SCR 992
cited
para 48
1960 SCR 605
relied on
para 52
AIR 1939 Federal Court 58
referred to para 56
(2006) 1 sec 1
cited
para 64
ORIGINAL JURISDICTION: Original Suit No. 2of1996.
Under Article 131 of the Constitution of India.
·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,
D
E
F
G
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 PartC 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, BhakraA
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 BhakraG
~ 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
A
8
c
548
SUPREME COURT REPORTS
[2011] 11 S.C R.
Bhakra-Nangal
Beas
Name of the
State/U.T
Unit I (Dehar) Unit II (Pong)
Rajasthan
15.22%
20%
58.50%
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
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
0
by letter dated 11.04.1994 and when 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. 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.
F
G
H
9. The plaintiff has accordingly claimed the following
reliefs:
(a) A decree declaring that the plaintiff State is entitled to
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
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
Beas Projects from the appointed day (01.11.1966) or
STATE OF HIMACHAL PRADESH v.