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

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& ORS. [A.K. PATNAIK, J.]

Pradesh to receive and utilize the power generated as a result 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 being enforced by the power of the State.

59Copy pinpoint59. 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 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

60Copy pinpoint60. 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 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 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

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61Copy pinpoint61. 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.

62Copy pinpoint62. 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 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 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.

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& 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 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 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

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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

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& 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

63Copy pinpoint63. 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

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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.

64Copy pinpoint64. 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

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& ORS. [A.K. PATNAIK, J.] that under Article 3 of the Constitution Parliament has power 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 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).

65Copy pinpoint65. 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

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66Copy pinpoint66. 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 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 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.

67Copy pinpoint67. The State Reorganisation Act, 1966 and, in particular H

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& ORS. [A.K. PATNAIK, J.] Section 78 thereof, does not also provide for grant of 12% free 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 answering the Issue No.9.

68Copy pinpoint68. 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 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 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

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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)

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& ORS. [A.K. PATNAIK, J.] Shri Kailash Chand Mahajan, A Chairman, . H. P. State Electricity Board, Vidyut Bhawan" B

69Copy pinpoint69. 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:

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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

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& 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

71Copy pinpoint71. 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

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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

72Copy pinpoint72. 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

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& ORS. [A.K. PATNAIK, J.] Projects on the basis of transfer of 7 .19% of the population of 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 the Plaintiff-State along with the transferred territory.

73Copy pinpoint73. 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 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 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 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.

74Copy pinpoint74. 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

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75Copy pinpoint75. 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 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 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.

76Copy pinpoint76. 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

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& ORS. [A.K. PATNAIK, J.] 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 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 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".

77Copy pinpoint77. 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:

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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

78Copy pinpoint78. 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.

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& ORS. [A.K. PATNAIK, J] Issue No. 11 A

79Copy pinpoint79. 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

80Copy pinpoint80. 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

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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.