Explained: Punjab Vs Himachal In Supreme Court Over Shanan Hydropower Project

The 99-year lease agreement of the project expired in March 2024, setting the groundwork for a Supreme Court battle between the two states.

Shimla: Himachal Pradesh is battling to regain control of the profitable Shanan Power Project, which Punjab has controlled since 1925. The conflict has been simmering for over a century. The 99-year lease expired in March 2024, setting the groundwork for a Supreme Court battle between the two states. ETV Bharat examines the implications of this dispute for the two states and the country as a whole.

Lease Agreement Of 1925

In 1925, during British rule, an agreement was signed between the King of Mandi and the then-British government. This project was on a 99-year lease, and Punjab used to operate it, but it expired in March 2024. The Himachal government has approached the Supreme Court to get its rights over the project.

Punjab and the neighbouring state of Haryana have requested the court to hear their side in the dispute. Haryana argues that it has also been a part of the Punjab Reorganisation Act. In such a situation, it also becomes an important party and should be heard. The apex court will likely hear the case in the first fortnight of January 2025.

Himachal CM Sukhwinder Singh Sukhu has already presented his side in the court and also met former Haryana CM and current Union Energy Minister Manohar Lal Khattar, who assured him that the Centre would remain neutral in the dispute.

More About 99-Year-Old Pact

The Shanan project established in Joginder Nagar of Mandi district is pre-independence. During British rule, Raja Jogendra Sen of the princely state of Mandi had provided land for the Shanan powerhouse. According to the agreement made in 1925, the lease period was fixed for 99 years, and after the completion, this powerhouse was to be given to the government of that land (land under the Mandi princely state) where it was established.

When the country became independent in 1947, Himachal Pradesh was a part of Punjab and got separated on April 1, 1948, but was given statehood in 1971. At that time, during the Punjab Reorganisation Act, the Shanan Power House remained under the ownership of the Punjab Government and was transferred to it only for management.

The Shanan Power House established on the Uhal River had a capacity of only 48 MW in the year 1932. Later, the Punjab Electricity Board increased its production capacity. Fifty years after the power plant was started, in 1982, the project became capable of producing 60 MW of power. Now its capacity has been increased by an additional 50 MW, and now it is a total project of 110 MW.

Notice To Punjab In September 2023

Since the Punjab government did not want to let go of this lucrative project after the lease period was over, it went to the Supreme Court in this matter. The Punjab government filed a petition to keep the project in its ownership. Following this, the Himachal government also applied and questioned the maintainability of the petition of the Punjab government, prompting the SC to issue a notice to the Punjab government in September 2023.

The Himachal government has said in its application that the suit filed by the Punjab government is neither legally correct nor maintainable. It argued that the land on which this project was built during British rule is in Himachal. “At that time the agreement was made between two parties. That agreement of the lease period cannot be challenged. The Punjab government was never a party to the agreement for the lease of the land. In such a situation, this legal effort of the Punjab government against the real owner of the land of the project is not right,” the petition by the Himachal government reads.

Advocate General of Himachal government Anoop Ratan said that the Supreme Court has prima facie considered the application of Himachal correct. “Under Article 131, if there is a treaty between two parties, no legal case can be filed against it in the Supreme Court,” he added.

Punjab Government’s Argument In SC

First, Himachal has to fight a legal battle with Punjab; now Haryana has also asked for a hearing in the Supreme Court. In the recent hearing, Himachal has termed the Haryana government's demand to be heard as unfair and argued that the area of the Shanan Project has never been a part of the transferred territory.

In such a situation, the Haryana government has no local standing in this case. Himachal claims in the Supreme Court that the area of the Shanan Power Project does not fall in the territory transferred from Punjab, so the Punjab Reorganisation Act will not be applicable in this area. Based on this act, the Punjab government has filed a petition in the Supreme Court under Article 131 of the Constitution.

Himachal Government’s Response

In response, Himachal has said that the Punjab government is not a signatory in the original lease agreement, so a petition cannot be filed using the article of the Constitution against the real owner of the land.

Right now Punjab has to file a reply to this argument of Himachal in the Supreme Court. CM Sukhu's energy advisor, Ramsubhag Singh, is present in Delhi and is determined to ensure success for Himachal in this fight. In October 2024, the CM had said that Punjab should become the “big brother” and hand over the Shanan power plant to Himachal.

"Himachal's case on the Shanan power plant is very strong. Himachal will get it sooner or later," said former Finance Secretary KR Bharti.

Senior media worker Dhananjay Sharma said, "Since the lease agreement has been completed and the project is to be given to the state on whose land it is built, hence Himachal's case is strong."

However, now it remains to be seen when the Himachal government gets a sigh of relief in the Shanan project case because the matter is about earning 200 crores annually.