[Original Suit No. 3 of 2006]
R.M. LODHA, CJI.
1. This Court remains seized of the problem with regard to the water level of Mullaperiyar dam after it had solved on 27.02.2006 (Mullaperiyar Environmental Protection Forum[1]) because the Kerala State Legislature enacted the law immediately thereafter fixing and limiting Full Reservoir Level (FRL) to 136 ft. Mullaperiyar dam : 1886 Lease Agreement
2. Mullaperiyar dam – a masonry dam – was constructed pursuant to the Periyar Lake Lease Agreement dated 29.10.1886 (“1886 Lease Agreement”) across Periyar river. The construction continued for about eight years and was completed in 1895. The dam is situated at Thekkady District in Kerala and is owned and operated by the Government of Tamil Nadu. By the 1886 Lease Agreement between the Maharaja of Travancore and the Secretary of State for India in Council, the leased area as set out therein was granted on lease for 999 years from 01.01.1886. The length of the main dam is 1200 ft. (365.76 m.) and top of the dam is 155 ft. (47.24 m.). The top of solid parapet and maximum height of the dam from deepest foundation are 158 ft. (48.16 m.) and 176 ft. (53.64 m.), respectively. The FRL of the dam is 152 ft. (46.33 m.). The original spillway capacity of the dam was 10 vents of 36′ x 16′ (10.97 m. x 4.88 m.). The length of the Baby dam is 240 ft. (73.15 m.). 1979-1980 : Controversy about safety of the Dam
3. In 1979 with regard to the safety of the Mullaperiyar dam, the Government of Kerala wrote to the Tamil Nadu Government to take immediate steps to strengthen the dam. Simultaneously, the Kerala Government also requested the Central Government to depute a team from Central Water Commission (CWC) to inspect the dam and suggest strengthening measures.
4. In pursuance of the request from the Kerala Government, the then Chairman, CWC inspected the dam and held a meeting on 25.11.1979 in which the officers from Tamil Nadu and Kerala participated. In that meeting, three level measures,
(i) emergency,
(ii) medium and
(iii) long term, were suggested to strengthen the dam.
In the meantime, it was recommended that water level in the reservoir be kept at 136 ft. (41.45 m.)
5. In the second meeting held on 29.04.1980, it was opined that after the completion of emergency and medium-term strengthening measures, the water level in the reservoir can be restored up to 145 ft. (44.2 m.). 1998 :
Litigation begins
6. Tamil Nadu says that all measures – emergency, medium and long term as suggested by the CWC have been undertaken by it but despite that no consensus could be reached between the two State Governments (of Tamil Nadu and Kerala) to raise the water level in the Mullaperiyar reservoir beyond 136 ft. This led to the filing of number of writ petitions in the Kerala High Court as well as in the Madras High Court sometime in 1998 on the issue for and against raising of water level in the Mullaperiyar reservoir and the safety of the dam. As the controversy was pending before the two High Courts and there was likelihood of conflicting judgments, some transfer petitions were filed before this Court.
7. On 28.04.2000, in the transfer petitions, this Court desired Union Minister of Water Resources to convene a meeting of the Chief Ministers of Kerala and Tamil Nadu to amicably resolve the issue. The meeting was convened on 19.05.2000 but no consensus could be reached in the meeting as well. However, in that meeting, the Union Minister of Water Resources decided to constitute an Expert Committee to go into the details of the safety of the dam and advise him on raising of water level in the reservoir.
8. On 14.06.2000, the Expert Committee was constituted having the following terms of reference.
“(a) To study the safety of Mullaperiyar dam located on Periyar river in Kerala with respect to the strengthening of dam carried out by the Government of Tamil Nadu in accordance with the strengthening measures suggested by CWC and to report/advise the Hon’ble Minister of Water Resources on the safety of the dam.
(b) To advise the Hon’ble Minister of Water Resources regarding raising of water level in Mullaperiyar reservoir beyond 136 ft. (41.45 m) as a result of strengthening of the dam and its safety as at (a) above.”
9. After initial resistance, the Government of Kerala nominated one Member to the Expert Committee.
10. The Expert Committee gave its final report on 16.03.2001. While the matter was under consideration by the Expert Committee, it also gave certain interim directions. In its report, the Expert Committee had opined that water level in the Mullaperiyar reservoir could be raised to 142 ft. (43.28 m.) as that will not endanger the safety of the main dam, including spillway, baby dam and earthen bund.
First litigation before this Court
11. Despite the above recommendation from the Expert Committee, the Government of Kerala continued to resist raising of water level in the reservoir beyond 136 ft. It was then that a writ petition was filed by Mullaperiyar Environmental Protection Forum directly before this Court wherein diverse prayers were made. This Court also transferred the writ petitions which were pending before the Kerala High Court and Madras High Court to this Court.
12. After hearing the parties, including the two states, this Court gave its decision on 27.02.2006 permitting the water level in the Mullaperiyar dam to be raised up to 142 ft. The State of Kerala and its officers were also restrained from causing any obstruction to the above. It was also observed that after the strengthening work was complete to the satisfaction of CWC, independent experts would examine the safety angle before the water level is permitted to be raised up to 152 ft. 2003 Act
13. Kerala Irrigation and Water Conservation Act, 2003 (for short, “2003 Act”) was enacted by Kerala legislature, which came into force on 18.09.2003. 2003 Act was enacted to consolidate and amend the laws relating to construction of irrigation works, conservation and distribution of water for the purpose of irrigation and levy of betterment, contribution and water cess on lands benefited by irrigation works in the State of Kerala and to provide for involvement of farmers in water utilisation system and for matters connected therewith or incidental thereto. 2003 Act was neither referred to nor relied upon by Kerala at the time of hearing in Mullaperiyar Environmental Protection Forum1. 2006 (Amendment) Act
14. On 18.03.2006, in less than three weeks of the decision of this Court in Mullaperiyar Environmental Protection Forum1, the Kerala State legislature amended 2003 Act by the Kerala Irrigation and Water Conservation (Amendment) Act, 2006 [for short, "2006 (Amendment) Act")][2].
15. In the Second Schedule, appended to the 2006 (Amendment) Act, the Mullaperiyar dam owned and maintained by Tamil Nadu is included as Item No. 1 where the height of the FRL has been fixed at 136 ft. Second litigation before this Court : Suit by Tamil Nadu
16. The State of Tamil Nadu immediately thereafter instituted the present suit under Article 131 of the Constitution of India against the State of Kerala. It is necessary to elaborate somewhat on facts as proceedings are in the nature of suit in original jurisdiction of this Court. The plaint avers that on coming into force of the States Reorganisation Act, 1956, (for short, “SR Act”), the State of Travancore – Cochin (Part – B, State) was formed. The State of Kerala (first defendant) is the successor in interest of the State of Travancore – Cochin. The State of Tamil Nadu is the successor in interest of the Governor in Council, Secretary of State for India. Tamil Nadu has, thus, pleaded that plaintiff and the first defendant are successors in interest of the original contracting parties of the 1886 Lease Agreement.
17. It is averred by Tamil Nadu that on 29.05.1970, two supplemental agreements were executed between it and Kerala. The two supplemental agreements did not change the basic character of the 1886 Lease Agreement. By first supplemental agreement, Tamil Nadu surrendered the fishing rights in the leased lands and also agreed to the upward revision of the rent of the leased land. The second supplemental agreement conferred on Tamil Nadu, the right to generate power and right to construct all facilities required for power generation. An additional extent of 42.7 acres was leased to Tamil Nadu for the said purposes and correspondingly Tamil Nadu was required to pay to Kerala a sum annually as specified in the agreement. Tamil Nadu claims that the two supplemental agreements have re-affirmed, re-asserted and ratified 1886 Lease Agreement, which was statutorily protected and continued by Section 108 of the SR Act. Grounds of challenge to 2006 (Amendment) Act
18. The challenge to 2006 (Amendment) Act to the extent it affects Mullaperiyar dam is laid in the plaint on diverse grounds, some of which are the following:
(a) The impugned legislation amounts to usurpation of judicial power inasmuch as Kerala State Legislature has arrogated to itself the role of a judicial body and has itself determined the questions regarding the dam safety and raising the water level when such questions fall exclusively within the province of the judiciary and have already been determined by this Court in its judgment dated 27.02.2006.
(b) 2006 Amendment Act is beyond the legislative competence of the State of Kerala insofar as it affects the Mullaperiyar dam in view of Section 108 of the SR Act which is a law made by Parliament under Articles 3 and 4 of the Constitution, which confer plenary power to traverse all legislative entries in all the three lists including Entry 17 List II.
(c) The impugned legislation, in its application to the Mullaperiyar dam, violates the rule of law and the federal structure and the separation of power under the Constitution. The Kerala State Legislature has taken the law in its own hands after the declaration of law by this Court. Kerala having participated in the adjudicatory process before this Court cannot become a Judge in its own cause and seek to reverse the decision of this Court because it has gone against it.
(d) The impugned legislation not only fixes and limits the FRL to 136 ft. in direct contravention of the judgment of this Court but also proceeds to authorise the Dam Safety Authority of Kerala – to disobey and disregard the decision of this Court by the following, among other provisions:
Section 62(1)(e) empowers the authority to direct the suspension or restriction of the functioning of any dam or decommissioning.
Section 62A(1) read with Second Schedule is a legislative judgment that the Mullaperiyar dam is endangered on account of its age, degradation, structural or other impediments and limits the water level to 136 ft.
Sub-section (2) prohibits increase of water level fixed in the Second Schedule notwithstanding any judgment, decree or order of any court or any other law or any treaty, contract, agreement, instrument or document except and in accordance with the provisions of the Act.
Sub-section (3) also contains a non-obstante clause and requires prior consent in writing of the authority for increasing storage capacity and for doing any act or work for such purpose.
Sub-section (4) directs any act or work for preparation by any executant to stop the work immediately and to apply for consent of the authority.
Section 68A protects the authority and any officer or employee from any suit, prosecution or other legal proceedings in respect of anything done under the Act and also ousts the jurisdiction of civil courts.
2006 (Amendment) Act is not a validation act but a mere device to defy, obstruct and nullify the judgment of this Court and constitutionally interfere with, restrict or extinguish the legal rights of Tamil Nadu as upheld by this Court. A Legislature cannot by mere declaration and enactment overrule and nullify a judicial decision. The direct object and effect of the impugned legislation is to overturn the judgment of this Court and to arrogate to Kerala the power to prevent Tamil Nadu from exercising its legal rights which have already been upheld by this Court.
19. On the above grounds, Tamil Nadu has sought two-fold relief,
(i) to declare the 2006 (Amendment) Act passed by the Kerala legislature as unconstitutional in its application to and effect on the Mullaperiyar dam and
(ii) to pass a decree of permanent injunction restraining the first defendant from applying and enforcing the impugned legislation interfering with or obstructing the plaintiff from increasing the water level to 142 ft. and from carrying out the repair works as per the judgment of this Court dated 27.02.2006 in W. P. (Civil) No. 386 of 2001 with connected matters. The Union of India has been impleaded as defendant no. 2 in the suit.
Defence by Kerala
20. Kerala has traversed the claim of Tamil Nadu on merits and has also raised objections about the maintainability of the suit. Kerala’s defence is that the 1886 Lease Agreement for 999 years lapsed under the provisions of Section 7(1)(b) of the Indian Independence Act, 1947 (“Act of 1947″). From 1947 to 26.01.1950, the lease was continued as a temporary lease on annual basis. After 26.01.1950, even the temporary continuation of the lease came to an end. The possession of the land held and continued by the then Government of Madras and now Tamil Nadu, after 26.01.1950 has no juridical basis.
21. Kerala states that 1886 Lease Agreement, on the basis of which Tamil Nadu has laid its claim, is an unconscionable contract because of its duration (999 years) as well as the fact that the lease conveys for a small rent a vital resource of Kerala. The lease was obtained by the Secretary of State for India in England obviously by holding threat of paramountcy over Maharaja of Travancore, who was his vassal.
22. As regards the two supplemental agreements of 1970, Kerala states that these agreements have not been executed in terms of mandatory provisions of Article 299 of the Constitution and, therefore, they do not constitute contracts in the eye of law. In any event, these agreements do not bind the State legislature at all.
23. About 2006 (Amendment) Act, it is stated that Kerala legislature enacted the Act regulating the storage levels of 22 dams listed in the Second Schedule read with Section 62A (1), as these dams fall entirely within the territory of Kerala and these dams are considered to be endangered on account of their age, degeneration, degradation, structural or other impediments. Kerala states that such law is perfectly valid. Under Section 62A(3) of the 2006 (Amendment) Act, the FRL can be increased beyond 136 ft. after obtaining prior consent of the Dam Safety Authority headed by a retired Judge of the High Court. If Tamil Nadu approaches under Section 62A(3), Kerala reserves its right to oppose such plea by demonstrating how such increase would lead to spread of backwater beyond the contour line of 155 ft. and how the flora and fauna including ecology would be destroyed. The impact of increased storages on the safety of the dam will also be demonstrated before the Dam Safety Authority. This was not the matter that was required to be considered by this Court in the previous case, since in that case, the focal issue was the implications of the increase in height upon the safety and integrity of the dam. 2006 (Amendment) Act creates a working mechanism to deal with a problem like displacement of those whose lands are likely to be affected by the backwater effect.
24. The competency of Kerala legislature to enact the 2006 (Amendment) Act is sought to be justified by relying upon Entries 17 and 18 of List II (State List) and Entries 17, 17-A and 17-B of the Concurrent List of the Seventh Schedule to the Constitution. Kerala also states that it is competent for the Kerala legislature to modify the terms of the lease in public interest (if the lease has survived as contended by the Tamil Nadu), as the lease inherited under Article 295 of the Constitution does not bind the legislature of the state and that it is always open to the legislature to modify such conditions by law.
25. As regards structure of the Mullaperiyar dam, Kerala’s stand is that it is not constructed entirely with rubble masonry in lime mortar. The front and rear faces are constructed of uncoursed rubble masonry in lime mortar. The hearting (center core) is of lime surkhi concrete, therefore, dam cannot be considered as homogeneous masonry dam under any circumstances. In view of Kerala, a dam could never have been intended to remain for long years without decommissioning at some point of time. For this background, people in Kerala living in the downstream region of the Mullaperiyar dam have raised serious apprehensions against the safety of the structure.
26. Kerala has denied that river Periyar is an inter-state river. It has asserted that river Periyar is an intra-state river as it rises in Quilon District in Kerala and traverses only through the territory of Kerala before falling into the Arabian sea. The total catchment of Periyar basin is 5398 sq. km. of which only about 113 or 114 sq. km. lie within the territory of Tamil Nadu. Even this small catchment of 113 sq. km. lying in Tamil Nadu, is in the downstream region of the Mullaperiyar dam. Therefore, no water from this catchment is contributed to the kitty of Mullaperiyar dam.
27. As regards the earlier judgment of this Court, Kerala’s stand is that the judgment concluded the issue relating to safety of the people and degradation of the environment, apart from issue arising from Article 363 of the Constitution. The doctrine of res judicata or constructive res judicata has no relevance to the question of powers on the Kerala legislature to regulate the storage level of the Mullaperiyar dam in larger public interest by legislation. Kerala states that the impugned legislation removes the legal basis of the judgment, i.e., the right of Tamil Nadu to store water up to 142 ft. in Mullaperiyar reservoir. The legislature is competent to remove the basis of any judgment and, therefore, it is not permissible for Tamil Nadu to claim any right to store water at Mullaperiyar dam beyond 136 ft. Kerala has assailed the findings and conclusions in the earlier judgment dated 27.02.2006 on all possible grounds.
28. Kerala has raised the objection about maintainability of the present suit under Article 131 of the Constitution of India. According to Kerala, because the basis of claim made by Tamil Nadu lies in the 1886 Lease Agreement which is a contractual right leading to civil dispute, if any, but it is not in dispute in the constitutional context as required under Article 131 of the Constitution of India. Kerala’s further case is that 1886 Lease Agreement was executed between the Maharaja of Travancore and Secretary of State for India in England and as such the agreement is in the nature of treaty and act of state, the enforcement of which is barred by proviso to Article 131 of the Constitution. Tamil Nadu, therefore, cannot seek enforcement of 1886 lease deed before this Court.
29. Kerala has also challenged the report of the Expert Committee for assessing the structural safety of the dam that was relied upon by this Court in its judgment on 27.02.2006. Kerala says that both the interim report and final report submitted by the Expert Committee are riddled with inconsistencies and the views of the Committee do not constitute an authoritative opinion. Kerala has denied that storages at Mullaperiyar dam beyond 136 ft. will not pose any danger.
30. Kerala states that the storage at Mullaperiyar dam beyond 136 ft. would not be required to meet the irrigation requirement of 2,08,144 acres in 5 southern districts of Tamil Nadu, although the irrigation originally planned was not more than 1.5 lakh acres. Kerala has denied the contention of Tamil Nadu that due to non-restoration of FRL from 136 ft., Tamil Nadu’s irrigation is getting suffered. According to Kerala, Tamil Nadu was able to irrigate more area with Mullaperiyar water, even after lowering the water level to 136 ft.
31. Kerala has, thus, prayed that suit filed by Tamil Nadu be dismissed with costs. Issues
32. On 13.12.2007, the Court framed the following issues for consideration in the suit:
“1. Whether the suit is maintainable under Article 131 of the Constitution of India.
2.
(a) Whether the Kerala Irrigation and Water Conservation (Amendment) Act 2006 is unconstitutional and ultra vires, in its application to and effect on the Mullai Periyar Dam?
(b) Whether plaintiff is entitled to a permanent injunction restraining the first defendant from applying and enforcing the Kerala Irrigation and Water Conservation (Amendment) Act, 2006 with reference to Mullai Periyar Dam?
3. Whether the rights of the plaintiff, crystalised in the Judgment dated 27.02.2006 passed by this Court in WP(C) No. 386/2001 can be nullified by a legislation made by the Kerala State Legislature?
4.
(a) Whether the judgment dated 27.2.2006 of this Court in WP(C) No. 386/2001 operated as res judicata, in respect of all or any of the defences set up by the first defendant in its written statement?
(b) Whether the pleas relating to validity and binding nature of the deed dated 29.10.1886, the nature of Periyar River, structural safety of Mullai Periyar Dam etc. raised by the first defendant in its defence, are finally decided by the judgment of this Court dated 27.2.2006 in WP(C) No. 386/2001, and consequently first defendant is barred from raising or reagitating those issues and pleas in this suit, by the principle of res judicata and constructive res judicata?
5. Whether the suit based on a legal right claimed under the lease deed executed between the Government of the Maharaja of Travancore and the Secretary of State for India on 29.10.1886, is barred by the proviso to Article 131 of the Constitution of India?
6. Whether the first defendant is estopped from raising the plea that the deed dated 29.10.1886 has lapsed, in view of subsequent conduct of the first defendant and execution of the supplemental agreements dated 29.05.1970 ratifying the various provisions of the original Deed dated 29.10.1886.
7. Whether the lease deed executed between the Government of the Maharaja of Travancore and Secretary of State for India on 29.10.1886 is valid, binding on first defendant and enforceable by plaintiff against the first defendant.
8. Whether the first defendant is estopped from contending that Periyar River is not an inter-State river.
9. Whether the offer of the first defendant, to construct a new dam across River Periyar in the downstream region of Mullai Periyar Dam would meet the ends of justice and requirements of plaintiff.
10. Whether the first defendant can obstruct the plaintiff from increasing the water level of Mullai Periyar Dam to 142 ft. and from carrying out repair works as per the judgment dated 27.2.2006 of this Court in WP(C) No. 386/2001.
11. To what relief is the plaintiff entitled to?” Documentary and oral evidence by the parties
33. The admission/denial of documents tendered by the parties was completed on 16.05.2008. Documents Ex. P1 to Ex. P44 tendered by Tamil Nadu were admitted by Kerala and documents Ex. D1 to D17 tendered by Kerala were admitted by Tamil Nadu. Tamil Nadu’s documents Ex. XP1 to XP4 and Kerala’s documents Ex. XD1 to XD24 were denied by the other side.
34. As regards oral evidence, Tamil Nadu produced R. Subramanian (PW-1) as the sole witness. On the other hand, Kerala produced five witnesses, V.K. Mahanudevan (DW-1), K. Jayakumar (DW-2), Dr. A.K. Gosain (DW-3), Dr. Dhrubajyoti Ghosh (DW-4) and M.K. Parameswaran Nair (DW-5). Reference to the 5-Judge Constitution Bench
35. Initially, the matter was heard by a three-Judge Bench. On 10.11.2009, matter was referred to the Constitution Bench as some of the issues framed in the suit involved decision on certain substantial questions of law concerning interpretation of the Constitution and in particular:
(i) Articles 3 and 4 read with Article 246 of the Constitution;
(ii) Article 131 read with Article 32 of the Constitution (in the context of res-judicata); iii) Proviso to Article 131 read with Articles 295 and 363 of the Constitution and the effect of the Constitution (26th Amendment) Act, 1971; and
iv) The effect of decision of this Court in Mullaperiyar Environmental Protection Forum1 in the context of afore-referred constitutional provisions. Constitution of the Empowered Committee (EC)
36. A very important development occurred when the matter was taken up initially by the Constitution Bench. It was felt by the Constitution Bench that examination of all aspects of the matter including safety of Mullaperiyar dam by an Empowered Committee (EC) may help the Court in deciding the matter effectively. Accordingly, on 18.02.2010, the Constitution Bench directed the Central Government to constitute an EC under the Chairmanship of Dr. A.S. Anand, former Chief Justice of India and comprising of two members nominated by the States of Kerala and Tamil Nadu and two renowned technical experts. The EC was requested to hear parties to the suit on all issues that may be raised before it, without being limited to the issues that have been raised before the Court in the matter and furnish a report as far as possible within six months from its constitution. It was left open to the EC to frame its own procedure and issue appropriate directions as to the hearings as well as venue of its sittings and it was also left to the EC to receive such further evidence as it considered appropriate. It was, however, clarified that the legal and constitutional issues including validity of the 2006 Amendment Act, are matters that would be considered by the Court.
37. The EC submitted status reports from time to time. The time for giving final report was extended also. The report was submitted by the Empowered Committee finally on 23.04.2012. General observation
38. As a general observation, before we embark upon the discussion on diverse issues, it must be stated, that a suit of this nature cannot and ought not to be decided with very technical approach insofar as pleadings and procedure are concerned. A suit filed in original jurisdiction of this Court is not governed by the procedure prescribed in Civil Procedure Code save and except the procedure which has been expressly made applicable by the Supreme Court Rules. It is also important to bear in mind that the contest between the states is to be settled in the large and ample way that alone becomes the dignity of litigants concerned (State of Andhra Pradesh[3]). Unfortunately, there is a sharp conflict over each and every aspect of the subject matter between the contesting states.
Even in respect of the report submitted by the EC chaired by a former Chief Justice of this Court, one nominee each of the two states who are former judges of this Court and two renowned technical experts, the two states have different views although EC has submitted its report after a very tedious and minute consideration of facts on the safety of the Mullaperiyar dam, which embraced the reports of tests, investigation and technical studies carried out through the three apex organizations, besides through other specialist organizations of the Government of India and specialist expert agencies and also after site appraisal. Moreover, the investigations, tests and technical studies were directed to be carried out by the EC in association with the representatives of both the States. Issue Nos. 1, 5, 6 and 7.
39. These four issues are interrelated inasmuch as two of these issues relate to validity and binding nature of 1886 Lease Agreement and the effect of 1970 supplemental agreements and the other two issues concern maintainability of suit under Article 131, if 1886 Lease Agreement is held valid, binding and enforceable. Extensive arguments have been addressed to us by the learned senior counsel for the two contesting states in respect of these issues. However, it must be noted immediately that Kerala did not dispute the position that under Section 177 of the Government of India Act, 1935 existing contracts made by the Secretary of State prior to 1935 (made for the purposes of the Government of a Province) would have effect as if they were made on behalf of that Province. In view of this admitted position by Kerala, we shall first see whether 1886 Lease Agreement was an existing contract made for the purposes of the Government of Province of Madras on the commencement of 1935 Act. 1886 Lease Agreement – whether an existing contract under 1935 Act
40. The Madras Presidency (Fort St. George) was established by the Pitts Act, 1784. Thereafter, by the Government of India Act, 1858, the territories under the Government of East India Company were transferred for being vested in Her Majesty. Under this enactment, the Secretary of State in Council was empowered to enter into contracts. By the 1859 (Amendment) Act, the British Parliament authorised the Governor in Council of Fort St. George to enter into contracts referred to as Secretary of State in Council. 1886 Lease Agreement was entered into between the Secretary of State in Council and Maharaja of Travancore under this provision. Government of India Act, 1919 did not alter the position with regard to the 1886 Lease Agreement since Presidency of Fort St. George was treated as Province for the purposes of local government. By virtue of Section 46 of the 1935 Act, the Presidency of Fort St. George which was deemed to be a Province under 1919 Act became Governor’s Province of Madras.
41. Section 177 of the 1935 Act, omitting the unnecessary part reads, “…..any contract made before the commencement of Part III of this Act by, or on behalf of, the Secretary of State in Council shall, as from that date – (a) if it was made for the purposes which will after the commencement of Part III of this Act be purposes of the Government of a Province, have effect as if it had been made on behalf of that Province…” By virtue of this provision, the existing contracts of the Secretary of State in Council would have the effect as if they had been made on behalf of the Province. When we see 1886 Lease Agreement in light of Section 177 of the 1935 Act, there remains no doubt at all that lease that was executed by the Secretary of State in Council for the Presidency of Madras (Madras Province) had the effect as if it had been made on behalf of the Presidency of Madras or for that matter Madras Province. To put it differently, by legal fiction created under Section 177(1)(a), the Presidency of Madras (Madras Province) became lessee under the 1886 Lease Agreement. We have, therefore, no hesitation in accepting the submission of Mr. Vinod Bobde, learned senior counsel for Tamil Nadu that by virtue of Section 177 of the 1935 Act, as from the commencement of the 1935 Act, the Government of the Province of Madras is deemed to be substituted as the lessee in the 1886 Lease Agreement. Effect and impact of events between 18.07.1947 and 26.01.1950
42. In light of the above holding, we have to see the effect and impact of certain events that occurred between 18.07.1947 (when Act of 1947 was enacted by British Parliament) and 26.01.1950 (the date of commencement of Constitution).
42.1. On 18.07.1947, a bulletin was issued by the Maharaja of Travancore State denouncing all agreements.
42.2. On 22.07.1947, the Dewan of Travancore is said to have stated in his notes submitted to the Maharaja that in his discussion with the Viceroy, he had unequivocally denounced the 1886 Lease Agreement and that the Viceroy had accepted the good sense underlying the denouncement.
42.3. On 10.08.1947, in his letter, Mr. C.C. Desai, Additional Secretary gave an assurance that all agreements would be renegotiated.
42.4. On 12.08.1947, Instrument of Accession was executed by the Ruler of Travancore declaring that Travancore has acceded to the Dominion of India. 42.5. Following Instrument of Accession, on 12.08.1947 itself, a standstill agreement was entered into between State of Travancore and the Dominion of India.
42.5. On 14.08.1947, India (Provisional Constitution) Order, 1947 was promulgated whereby, inter alia, Section 177 of the 1935 Act was omitted.
42.6. On 15.08.1947, Act of 1947 came into effect.
42.7. On 24.05.1949, the two States – Travancore and Cochin – merged together. Whether 1886 Lease Agreement lapsed?
43. Mr. Harish N. Salve, learned senior counsel for Kerala, in view of the above events submits that 1886 Lease Agreement lapsed and did not survive on and from 15.08.1947.
44. By Act of 1947, the provisions were made for setting up in India of two Indian dominions to be known respectively as India and Pakistan from 15.08.1947. Section 7 of Act of 1947 reads as follows :
“7. Consequences of the setting up of the new Dominions.-
(1) As from the appointed day-
(a) His Majesty’s Government in the United Kingdom have no responsibility as respects the government of any of the territories which, immediately before that day, were included in British India;
(b) the suzerainty of His Majesty over the Indian States lapses, and with it, all treaties and agreements in force at the date of the passing of this Act between His Majesty and the rulers of Indian States, all functions exercisable by His Majesty at that date with respect to Indian States, all obligations of His Majesty existing at that date towards Indian States or the rulers thereof, and all powers, rights, authority or jurisdiction exercisable by His Majesty at that date in or in relation to Indian States by treaty, grant, usage, sufferance or otherwise; and
(c) there lapse also any treaties or agreements in force at the date of the passing of this Act between His Majesty and any persons having authority in the tribal areas, any obligations of His Majesty existing at that date to any such persons or with respect to the tribal areas, and all powers, rights, authority or jurisdiction exercisable at that date of His Majesty in or in relation to the tribal areas by treaty, grant, usage, sufferance or otherwise: Provided that, notwithstanding anything in paragraph (b) or paragraph (c) of this sub-section, effect shall, as nearly as may be continued to be given to the provisions of any such agreement as is therein referred to which relate to customs, transit and communications, posts and telegraphs, or other like matters, until the provisions in question are denounced by the ruler of the Indian State or person having authority in the tribal areas on the one hand, or by the Dominion or Province or other part thereof concerned on the other hand, or are superseded by subsequent agreements.
(2) ………………………..”
45. As noted above, Act of 1947 came into effect from 15.08.1947. Section 7 deals with the consequences of the setting up of the new dominions. Clause (b) of sub-section (1) of Section 7 declares that suzerainty of His Majesty over the Indian States lapses. On lapsing of suzerainty, it provides for lapsing of all treaties and agreements in force between His Majesty and the Rulers of Indian States from that date. Proviso appended to sub-section (1), however, continues such agreements unless the provisions in such agreement are denounced by the Ruler of the Indian State or are superseded by a subsequent agreement.
46. It is the contention of Mr. Harish N. Salve that firstly, 1886 Lease Agreement lapsed by virtue of main provision of Section 7(1)(b) of the Act of 1947 as it comprehends all treaties and agreements and secondly, the Maharaja of Travancore denounced all agreements including 1886 Lease Agreement.
47. It is true that Section 7(1)(b) of Act of 1947 Act uses the expression “all treaties and agreements” but, in our opinion, the word “all” is not intended to cover the agreements which are not political in nature. This is clear from the purpose of Section 7 as it deals with lapsing of suzerainty of His Majesty over the Indian States and the consequence of lapsing of suzerainty. Obviously, the provision was not intended to cover the agreements and treaties other than political. We, accordingly, hold that Section 7(1)(b) concerns only with political treaties and agreements.
48. The nature of 1886 Lease Agreement being not political is already concluded by this Court in 2006 judgment (Mullaperiyar Environmental Protection Forum1). This Court has held therein – and we have no justifiable reason to take a different view – that 1886 Lease Agreement is an ordinary agreement being a lease agreement and it is wholly non- political in nature.
49. There is, thus, no merit in the contention advanced on behalf of Kerala that 1886 Lease Agreement lapsed under the main provision of Section 7(1)(b) of 1947 Act.
50. Now, for consideration of the other limb of the argument addressed to us by Mr. Harish N. Salve that even otherwise, the Maharaja of Travancore denounced all agreements including 1886 Lease Agreement, it is necessary to refer to the proviso appended to Section 7(1)(b). The expression “denounced by the Ruler of the Indian State” in the proviso appended to Section 7, in our opinion, refers to unambiguous, unequivocal and express denouncement. Kerala has not produced any material or document to show that there was express denouncement of that nature by the Ruler of Travancore insofar as 1886 Lease Agreement is concerned. We do not think that the bulletin issued on 18.07.1947 clearly or finally denounced the 1886 Lease Agreement.
51. Moreover, to be a valid and effective denouncement of the agreement between the Ruler and His Majesty such denouncement must be made after 1947 Act came into effect. Admittedly, there is no denouncement of 1886 Lease Agreement by the Travancore Ruler after 15.08.1947.
52. The relevant portion of the standstill agreement dated 12.08.1947 reads as follows: “Agreement between the State of Travancore and the Dominion of India Whereas it is to the benefit and advantage of the Dominion of India as well as of the Indian States that existing agreements and administrative arrangements in the matters of common concern, should continue for the time being, between the Dominion of India or any part thereof and the Indian States : Now therefore it is agreed between the Travancore State and the Dominion of India that:-
1. (1) Until new agreements in this behalf are made, all agreements and administrative arrangements as to matters of common concern now existing between the Crown and any Indian State shall, in so far as may be appropriate, continue as between the Dominion of India or as the case may be, the part thereof and the State.
(2) In particular, and without derogation from the generality of sub-clause (1) of this clause the matters referred to above shall include the matters specified in the Schedule to this Agreement.”
53. It is argued by Mr. Harish N. Salve that the standstill agreement, which is between parties different from those who had executed the 1886 Lease Agreement, is a fresh agreement which brought into force, for the time being, contractual obligations between the Maharaja of Travancore and the Dominion of India. As the parties were different and the Act of 1947 provided for the lapse of the British suzerainty over the Princely States, the question of continuance of 1886 lease agreement does not arise. In any case, learned senior counsel for Kerala argues that standstill agreement could not survive after the deletion of Section 177 of the 1935 Act. We find no merit in these arguments. The standstill agreement is not a fresh agreement between Dominion of India and State of Travancore as suggested by Mr. Harish N. Salve. The standstill agreement was intended for the benefit of the parties who were parties to the agreements and arrangements, which were matters of common concern existing between the Crown and the State of Travancore. In the background of Instrument of Accession, it became necessary to have some arrangement so that the existing agreements and arrangements between the Crown and the Indian States continued. We do not think that standstill agreement is political in nature as contended on behalf of Kerala.
54. The argument that standstill agreement could not survive after the deletion of Section 177 with effect from 15.08.1947 by virtue of India (Provisional Constitution) Order, 1947 is also without substance. Section 177 was deleted because it could no longer work and because Dominion of India was to come into being with provinces as part of the Dominion and there was to be no Secretary of State in Council. We are in agreement with Mr. Vinod Bobde, learned senior counsel for Tamil Nadu that deletion of Section 177 was prospective and it did not affect the deeming that had already taken place in 1935. The standstill agreement, in our view, cannot be said to have been wiped out by the deletion of Section 177.
55. Mr. Harish N. Salve is right in submitting that under Section 177 existing contracts made by the Secretary of State prior to 1935 would have effect as if they were made on behalf of the concerned Province and by virtue of this provision, the Province of Madras was a beneficiary of standstill agreement but he does not seem to be right when he says that this situation changed on 14.08.1947 when the India (Provisional Constitution) Order, 1947 was issued and the standstill agreement arrived at on 12.08.1947 ceased to be for the benefit of Province of Madras. As stated by us earlier, the deletion of Section 177 is prospective and did not undo what had already taken place. This also negates the argument of Mr. Salve that the rights of the Crown, which were enjoyed by the Province of Madras under Section 177, on deletion of the said Section had come to an end as there was no successor to the Crown.
56. The argument that there is no successor of Crown is irrelevant because by virtue of Section 177, the Government of Province of Madras had already become lessee in the 1886 Lease Agreement by deeming in 1935 itself. The standstill agreement continued 1886 Lease Agreement between the Province of Madras and the State of Travancore. 1886 Lease Agreement did not lapse under the main provision of Section 7(i)(b) of the Act of 1947. There was no unequivocal and unambiguous denouncement of 1886 Lease Agreement by the Ruler of Travancore under proviso to Section 7(i)(b). The Province of Madras was beneficiary of the standstill agreement. Surely, deletion of Section 177 has not affected the rights of Province of Madras.
57. Relying upon Babu Ram Saksena[4], it is vehemently argued by Mr. Harish N. Salve, learned senior counsel for Kerala that upon merger of two states – Travancore and Cochin – in 1949 all treaties entered into by the Rulers of erstwhile states lapsed. His submission is that the standstill agreement, whether it was an independent agreement or in continuation of 1886 Lease Agreement, came to an end in light of the legal position exposited in Babu Ram Saksena4. Learned senior counsel in this regard also relied upon the decision of this Court in State of Himachal Pradesh[5]. Babu Ram Saksena
58. Let us carefully consider Babu Ram Saksena4. The facts in Babu Ram Saksena4 were as follows: Babu Ram Saksena was a member of Uttar Pradesh Civil Service and served Tonk State in various capacities. It was alleged that during service, he helped the Nawab of Tonk in obtaining the sanction of the Government of India to the payment of Rs.14,00,000/- to the Nawab out of State treasury for the discharge of his debts, and induced the Nawab by threats and deception to pay him, in return for such help, sums totaling Rs.3,00,000/- on various dates. Dr. Babu Ram Saksena was charged with the offences under Sections 383, 575 and 420 of the Indian Penal Code. These offences were extraditable offences under the Indian Extradition Act, 1903 (for short, ’1903 Act’). The warrant was issued under Section 7 of the 1903 Act to the District Magistrate, Nainital, where the accused was residing after reverting to the service of the Uttar Pradesh Government, to arrest and deliver him up to the District Magistrate of Tonk. The accused raised defences on merits as well as to the validity of the warrant and challenged the jurisdiction of the Magistrate at Nainital to take cognizance of the matter and arrest the appellant.
The High Court overruled all the objections and dismissed the application for the release of the appellant. The matter was carried to this Court. Inter alia, the contention on behalf of the appellant before this Court was that the treaty entered into between the British Government and the Tonk state on 28.01.1869, although declared by Section 7 of the 1947 Act, to have lapsed as from 15.08.1947 was continued in force by the standstill agreement entered into on 08.08.1947; that that treaty exclusively governed all matters relating to extradition between the two states, and that, inasmuch as it did not cover the offences now charged against the appellant, no extradition of the appellant could be demanded or ordered.
The Attorney General, on the other hand, responded by contending that the standstill agreement entered into with various Indian States were purely temporary arrangements designed to maintain the status quo ante in respect of certain administrative matters of common concern pending the accession of those States to the Dominion of India and they were superseded by the instrument of Accession executed by the Rulers of those states.
Tonk having acceded to the Dominion on 16.08.1947, the standstill agreement relied on by the appellant must be taken to have lapsed as from that date. Secondly, the treaty was no longer subsisting and its execution became impossible, as the Tonk State ceased to accede politically and as such sovereignty as it possessed was extinguished, when it covenanted with certain other states, with the concurrence of the Indian Government “to unite and integrate their territories in one state, with the common executive, legislature and judiciary, by the name of the United State of Rajasthan”, the last of such covenants which superseded the earlier ones, having been entered into on 13.03.1949.
Lastly, it was argued by the Attorney General that the treaty was still in operation as a binding executory contract and its provisions were in no way derogated from by the application of Section 7 of the 1903 Act in the extradition warrant issued under that Section and the arrest made in pursuance thereof were legal and valid and could not be called in question under Section 491 of the Code of Criminal Procedure.
59. It is important to note that in Babu Ram Saksena4, two opinions have been given by this Court, one by Patanjali Sastri, J. and the other by Mukherjea, J. Insofar as Patanjali Sastri, J. is concerned, His Lordship did not give any opinion on the first two contentions raised by the Attorney General. This is clear when Patanjali Sastri, J. said, “As we are clearly of the opinion that the appellant’s contentions must fail on this last ground, we consider it unnecessary to pronounce on the other points raised by the Attorney General especially as the issues involved are not purely legal but also of a political character, and we have not had the views of the accused concerned on those points”.
Having said that, Patanjali Sastri, J. considered the question whether extradition under Section 7 of the 1903 Act for an offence which is not extraditable under the treaty is, in any sense, a derogation from the provisions of the treaty which provides for the extradition of offenders for certain specified offences committed in the respective territories of the high contracting parties.
59.1. In the other opinion given by Mukherjea, J. as regards the question, how far was the Extradition Treaty between the Tonk State and the British Government affected by reason of the merger of the Tonk State along with eight other States in view of a covenant entered into by the Rulers of these nine States, into the United State of Rajasthan, it has been held that as a result of amalgamation or merger, a State loses its full and independent power of action over the subject matter of a treaty previously concluded, the treaty must lapse. Mukherjea, J. noted Article 6 of the merger and the general opinion of the international jurists that when a State relinquishes its life as such through incorporation into or absorption by another State either voluntarily or as a result of conquest or annexation, the treaties of the former are automatically terminated. Mukherjea, J. observed as follows:
“……………..The result is said to be produced by reason of complete loss of personality consequent on extinction of State life. The cases discussed in this connection are generally cases where independent States have ceased to be such through constrained or voluntary absorption by another with attendant extinction of the former’s treaties with other States. Thus the forceable incorporation of Hanover into the Prussian Kingdom destroyed the previous treaties of Hanover. The admission of Texas into the United States of America by joint resolution extinguished the Treaties of the Independent Republic of Texas. The position is the same when Korea merged into Japan. According to Oppenheim, whose opinion has been relied upon by Sir Alladi, no succession of rights and duties ordinarily takes place in such cases, and as political and personal treaties presuppose the existence of a contracting State, they are altogether extinguished. It is a debatable point whether succession takes place in cases of treaties relating to commerce or extradition but here again the majority of writers are of opinion that they do not survive merger or annexation”
59.2. The above observations of Mukherjea, J. were based on the two renowned books, (one) Hyde on International Law, Vol. III, Pg. 1529 and (two) Oppenheim on International Law, Vol. I, Pg. 152.
59.3. Dealing with the covenant under consideration, Mukherjea, J. went on to state as follows: “The remarks quoted above do not, however, seem quite appropriate to a case of the present description. Here there was no absorption of one State by another which would put an end to the State life of the former and extinguish its personality. What happened here was that several States voluntarily united together and integrated their territories so as to form a larger and composite State of which every one of the covenanting parties was a component part. There was to be one common executive, legislature and judiciary and the Council of Rulers would consist of the Rulers of all the Covenanting States.
It may not be said, therefore, that the Covenanting States lost their personality altogether and it is to be noted that for purposes of succession of Rulership and for counting votes on the strength of population and other purposes the Covenant of Merger recognises a quasi-separation between the territories of the different States. But although such separation exists for some purposes between one State territory and another, it is clear that the inhabitants of all the different States became, from the date of merger, the subjects of the United State of Rajasthan and they could not be described as subjects of any particular State. There is no such thing as subject of the Tonk State existing at the present day and the Ruler of Tonk cannot independently and in his own right exercise any form of sovereignty or control over the Tonk territory.
The Government, which exercises sovereign powers, is only one, even though the different Rulers may have a voice in it. It seems to us that in those altered circumstances the Extradition Treaty of 1869 has become entirely incapable of execution. It is not possible for the Tonk State, which is one of the contracting parties to act in accordance with the terms of the treaty, for it has no longer any independent authority or sovereign rights over the Tonk territory and can neither make nor demand extradition. When as a result of amalgamation or merger, a State loses its full and independent power of action over the subject-matter of a treaty previously concluded, the treaty must necessarily lapse. It cannot be said that the sovereignty of the Tonk State in this respect is now vested in the United State of Rajasthan.
The authority, so far as extradition was concerned, was already surrendered by the Tonk State in favour of the Dominion Government by the Instrument of Accession. But even assuming that these treaty rights could devolve upon the United State of Rajasthan by reason of Article 6 of the Covenant of Merger, the latter, it seems to me, could be totally incapable of giving effect to the terms of the treaty. As has been said already, there could be no such thing as a subject of the Tonk State at the present moment and Article 2 of the Treaty which provides for extradition of Tonk subjects accused of having committed heinous offences within Tonk territory and seeking asylum elsewhere would be wholly infructuous. The United State of Rajasthan could not possibly demand extradition on the basis of this article, and if reciprocity, which is the essence of an Extradition Agreement, is gone, the Treaty must be deemed to be void and inoperative.”
59.4. The view of Mukherjea, J. was concurred with by Mahajan, J. Das, J. substantially agreed with the reasoning of Mukherjea, J. Fazl Ali, J. agreed with the line of reasoning in both the judgments delivered by Patanjali Sastri, J. and Mukherjea, J. 59.5. A careful consideration of the judgment by Mukherjea, J. in Babu Ram Saksena4 would show that His Lordship’s opinion has no application to a non-political agreement such as 1886 Lease Agreement. The observation of Mukherjea, J., “When as a result of amalgamation or merger, a State loses its full independent power of action over the subject matter of a treaty previously concluded, the treaty must necessarily lapse…” is in the context of an extradition treaty which is purely political in nature. In our view, Babu Ram Saksena4 is clearly distinguishable and does not help Kerala in its argument that 1886 Lease Agreement lapsed on merger of the two States, Travancore and Cochin, into the United State of Travancore and Cochin.
State of Himachal Pradesh
60. Mr. Harish N. Salve also placed heavy reliance upon the decision of this Court in the case of State of Himachal Pradesh5. The dispute in that case was between the State of Himachal Pradesh on the one hand and the Union of India, State of Punjab, State of Haryana, State of Rajasthan and Union Territory of Chandigarh on the other relating to the power generated in the Bhakra-Nangal and Beas Projects. One of the issues under consideration was whether after the merger of the State of Bilaspur with the Dominion of India, the State of Himachal Pradesh could still have any cause of action to file the suit. While dealing with this issue, this Court referred to Bilaspur Merger Agreement dated 15.08.1948, particularly, Article 1 thereof. After having noticed that provision, this Court in paragraph 48 of the Report (Pgs. 359-360) held as under:
“48. It is thus clear that by the Bilaspur Merger Agreement dated 15-8- 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 the Dominion Government on 12-10-1948. Thereafter, the Government of India, Ministry of Law, issued a Notification dated 20-7- 1949 (Ext. D-4/2-A) in exercise of its powers under Section 290-A of the Government of India Act, 1935 making the States Merger (Chief Commissioners’ Provinces) Order, 1949, which came into force from 1-8- 1949. Under this States Merger (Chief Commissioners’ Provinces) Order, 1949, Bilaspur was to be administered in all respects as if it was a Chief Commissioner’s Province. Under the Constitution of India also initially Bilaspur continued to be administered as the Chief Commissioner’s Province and was included in the First Schedule to the Constitution as a Part C State.
Under Article 294(b) all rights, liabilities and obligations of the Government of the Dominion of India, whether arising out of any contract or otherwise, became the rights, liabilities and obligations of the Government of India. These provisions of the Bilaspur Merger Agreement dated 15-8-1948 (Ext. D-4/1-A), the States Merger (Chief Commissioners’ Provinces) Order, 1949, the First Schedule to the Constitution and Article 294(b) of the Constitution make it clear that Bilaspur became the part of the Dominion of India and thereafter was administered as a Chief Commissioner’s Province by the Government of India and all rights of the Raja of Bilaspur vested in the Government of India. We, therefore, hold 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.”
61. The above observations in State of Himachal Pradesh5 must be read in the context of Bilaspur Merger Agreement dated 15.08.1948 whereby 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 all rights of Raja of Bilaspur had vested in the Government of India. We find it difficult to appreciate how these observations have any application insofar as the continuance of the 1886 Lease Agreement after the merger of the Travancore State and the Cochin State into a new state, namely, United State of Travancore and Cochin are concerned. The judgment of this Court in State of Himachal Pradesh5, in our view, has no application to the submission advanced on behalf of Kerala.
Status of Indian States on accession
62. It is important to bear in mind that accession of Indian States to the Dominion of India did not extinguish those States as entities. They only became part of Dominion of India as constituent States along with the provinces of erstwhile British India. We are unable to hold that the entities of those States who acceded to the Dominion of India were totally wiped out. There is merit in the submission of Tamil Nadu that the fact that on 24.05.1949 the States of Travancore and Cochin merged together also establishes that Indian States which acceded to the Dominion continued as entities.
63. In light of the above, we are unable to accept the argument of Kerala that Madras ceased to be a lessee on 15.08.1947. It is pertinent to observe here that Kerala entered into the supplemental agreements with Tamil Nadu in 1970. In these supplemental agreements, the continuance of 1886 lease is stated in clear and unambiguous words. Had 1886 Lease Agreement ceased to be operational on and from 15.08.1947, there was no occasion for Kerala to enter into supplemental agreements with Tamil Nadu in 1970. By first supplemental agreement, Tamil Nadu surrendered the fishing rights in the leased lands and also agreed to the upward revision of the rent of the leased land. The second supplemental agreement conferred on Tamil Nadu the right to generate power and right to construct all facilities required for power generation. An additional extent of 42.7 acres was leased to Tamil Nadu for the said purposes.
Mr. Harish N. Salve, learned senior counsel for Kerala argued that 1970 supplemental agreements and the statement therein about continuance of 1886 Lease Agreement were based on a mistake of law (wrongful assumption) of continuance of lease of 1886. The submission of the learned senior counsel for Kerala can hardly be accepted firstly, in view of our finding that 1886 Lease Agreement continued on and from 15.08.1947 and secondly, in view of the decision of this Court in State of Andhra Pradesh3, wherein a three-Judge Bench of this Court speaking through one of us (R.M. Lodha, J., as he then was) observed, “when an ag