Summary of the Order/Judgment
The Punjab Reorganisation Act, 1966 provided that the assets and liabilities were to be transferred to the successor States in proportion to the population ratio distributed between the successor States/Union Territories. Section 78 of the Act further provided that notwithstanding anything contained in the 1966 Act but subject to Sections 79 and 80 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 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. In the absence of any final determination by the Central Government, the power generated was being shared among the States by an ad hoc arrangement.
This suit was filed under Article 131 of the Constitution of India by Himachal Pradesh for a declaration that it was entitled to a share of 12% of the net power generated in the Bhakra-Nangal and Beas Projects free of cost from the date of commissioning of the projects based on a letter of the Ministry of Irrigation and Power. It also sought a decree declaring that it was entitled to 7.19% of the power generated in the Bhakra-Nangal and Beas Projects from the appointed day 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 Himachal Pradesh under the 1966 Act.
The Court held that the dispute does not relate to a dispute in relation to inter state river water or the use thereof but to the sharing of power generated in the Bhakra-Nangal and the Beas Projects. Thus, its jurisdiction would not be barred under section 11 of the Inter State River Water Disputes Act, 1956. It was further held that the formula of making 12% free power from the energy generated by a power station was purely a policy-decision taken by the Government of India much after the Bhakra-Nangal Project and Beas Project were executed. It did not find place in any provision of law so as to confer a legal right on Himachal Pradesh to claim the same.
It was further observed that the Central Government was required to determine the rights and liabilities of the successor States “having regard to the purposes of the Projects”. The purpose of the Bhakra-Nangal and the Beas Projects was 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-à-vis the composite State of Punjab was 7.19% and the transferred territory as detailed in Section 5 of the Punjab Reorganisation Act, 1966 extracted above was not small, allocation of 7.19% of the share of power of the composite State of Punjab generated in the Bhakra-Nangal and Beas Projects was fair and equitable.