SC Asks AG To Find An Amicable Settlement To Himachal Pradesh's 20-Year Old Dispute With Centre, Haryana and Punjab [Read Order]

The long-pending Original Suit filed in 1996 by Himachal Pradesh against the Centre, and its neighbours, Punjab and Haryana, seeking its entitlements following the completion of Bhakra-Nangal and Beas Projects, came up for hearing before  the Supreme Court bench of Justices R.K.Agrawal and Abhay Manohar Sapre, on September 21.

Finding the matter nowhere near resolution, the bench asked the Attorney General, K.K.Venugopal, to use his good offices, to mediate and find an amicable settlement regarding the liability of the payment of Punjab and Haryana to Himachal Pradesh.

“The respective States may depute some responsible officer on the date to be fixed by K.K.Venugopal for this purpose. List this matter after six weeks”, the order said.

Background

The Bhakra dam across the river Satluj was proposed in 1944 in the Bilaspur princely State in present day Himachal Pradesh.  The construction of Bhakra dam was to result in submergence of a large territory of Bilaspur, but would benefit the Province of Punjab.  Hence the then 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 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 in 1948.  When the Constitution of India was adopted in 1950, Bilaspur and Himachal Pradesh were specifified as Part-C States in the First Schedule to the Constitution.   In 1954, Bilaspur and Himachal Pradesh were united to form a new State of Himachal Pradesh under the Himachal Pradesh and Bilaspur (New States) Act, 1954.

Himachal Pradesh was first a Part-C State, then a Union Territory, and then became a full-fledged State in 1970.  The construction of Bhakra dam resulted in submergence of 27869 acres of land in the erstwhile Bilaspur State, now part of Himachal Pradesh.   Three-fourths of the reservoir of the Bhakra Dam is located in the erstwhile Part-C State of Bilaspur, now part of Himachal Pradesh.    The 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 forests, towns, Government buildings, etc.   And this 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”, the Supreme Court held in its judgment on September 27, 2011.   The defendants are Union of India, Punjab, Haryana and Union Territory of Chandigarh.

In the case of Beas Project, the construction of Pong Dam across river Beas at Pong caused submergence of more than 65050 acres of land in Kangra district including prime and fertile agricultural land.   Although the Project is located in Himachal Pradesh, its benefits have accrued to the neighbouring States.

Therefore, the Supreme Court, in 2011, directed Punjab and Haryana to share 7.19 per cent of power produced at Bhakra Nangal and Beas power projects with HP.  The Court substantially raised HP’s share of electricity from the Bhakra Nangal project with retrospective effect from 1966 and from the date of commissioning of Units I and II of Beas Project.  Till  2011, HP was getting 2.5 per cent of power from the B-N project.  The State’s share was raised following the exclusion of Rajasthan for the purposes of calculation.  Chandigarh’s share was frozen at 3.5 per cent, while Punjab and Haryana were to get 51.8 per cent and 37.51 per cent respectively.

 The court also imposed a cost of Rs.5 lakh each on Punjab and Haryana.

The present dispute is over Himachal Pradesh’s claim for compensation of Rs.2199.77 crore from the five defendants [Union of India, Punjab, Haryana, Union Territory of Chandigarh and Rajasthan], and 12 per cent share in power generated by Bhakra Nangal and Beas power projects free of cost under the Punjab Reorganisation Act, 1966.

The Supreme Court held in 2011 that HP was not entitled to get 12 per cent free power from the  Centre n the basis of the projects located within its territory as claimed by it.  The Supreme Court had held that compensation to HP would carry six  per cent interest from 1966 in the case of B-N project, and from the date of commissioning  of Beas Phase I and II Projects.

Punjab and Haryana took the stand that Himachal Pradesh is also liable to 7.19 per cent of the total cost incurred in the establishment of the projects in question.

In 2013, the Centre informed the Supreme Court that Punjab and Haryana  would have to pay a compensation of Rs.1497.39 crore to HP for short supply of electricity from Bhakra and Beas projects since 1966.   Alternatively, the Centre suggested Punjab and Haryana could compensate HP by allotting additional energy over a period of 30 years if they had any difficulty in making cash payment.

The Centre had also suggested that Punjab and Haryana would share the burden in the ratio of 58: 42.   Paying the compensation through additional allocation of power would serve the dual purpose of compensating HP as well as lessening the impact on the people of Punjab and Haryana, the Centre maintained in 2013.

Read the Order here