Punjab and Haryana Must Repay Himachal in Power, Supreme Court Rules
New Delhi: The Supreme Court on 6 November 2026 closed a hydel power dispute that Himachal Pradesh took to the Court 30 years ago, in 1996. It directed Punjab and Haryana to supply the State of Himachal Pradesh with energy arrears of 13,066 million units over 20 winter seasons, with no cash changing hands. A Bench of Chief Justice of India Surya Kant, Justice Joymalya Bagchi and Justice V. Mohana disposed of Original Suit No. 2 of 1996, reported as 2026 INSC 1200, and rejected Punjab's objections as vague, superficial and an attempt to relitigate the 2011 decree.
The Court also gave the two States more time than the Union of India had proposed, stretching the payback from 15 years to 20 years, and warned that the decree cannot be rendered fruitless by the recalcitrance of a judgment debtor. The judgment is marked reportable.
Case at a Glance
Case: State of Himachal Pradesh v. Union of India and Others
Citation: 2026 INSC 1200 (Reportable)
Case Number: Original Suit No. 2 of 1996 (Article 131 of the Constitution)
Bench: Chief Justice of India Surya Kant (author), Justice Joymalya Bagchi and Justice V. Mohana
Date of Judgment: 6 November 2026
What Was Decided: How to give effect to the decree of 27 September 2011 that gave Himachal Pradesh 7.19 percent of the power from the Bhakra-Nangal and Beas Projects
Outcome: Energy arrears fixed at 13,066 million units, to be supplied by Punjab and Haryana over 20 lean seasons on a cashless basis, with a capital-cost adjustment of Rs. 420.77 crores
The Question Behind the Headline
A State had already won a share of the power from two giant dams built largely on its land. The unanswered question, for 15 more years, was how to turn that share into actual electricity and money: how much is owed, at what price, and how it is paid. Punjab and Haryana disagreed on the numbers, and the Supreme Court has now decided all of them.
Background of the Dispute
The Projects and the Land They Took
The Bhakra-Nangal Project and the Beas Project were built substantially on the territory of the former princely State of Bilaspur and in Kangra district, both now part of Himachal Pradesh. The Bhakra-Nangal Project submerged about 27,869 acres of Bilaspur land and the Beas Project submerged over 65,050 acres in Kangra district. Yet the power came to be enjoyed principally by composite Punjab and, after 1966, by Punjab, Haryana, Rajasthan and Chandigarh.
The Punjab Reorganisation Act and Ad Hoc Sharing
Section 78 of the Punjab Reorganisation Act, 1966 provided that the rights and liabilities of the old State of Punjab in the two Projects would pass to the successor States in a proportion fixed by agreement, or by the Central Government if no agreement was reached within two years. No final apportionment was made. Power was shared on an ad hoc basis: of the 84.78 percent Bhakra-Nangal share of composite Punjab, Punjab received 54.50 percent, Haryana 39.50 percent, Himachal Pradesh 2.50 percent and Chandigarh 3.50 percent, with Himachal Pradesh also receiving 1.2 lakh units per day at a concessional rate.
The Suit and the 2011 Decree
Himachal Pradesh claimed 7.19 percent of the total benefits from 1969 and filed the suit in 1996 under Article 131, seeking among other reliefs 12 percent free power, 7.19 percent of the power and Rs. 2,199.77 crores in compensation. By judgment dated 27 September 2011, the Supreme Court held the suit was not barred by limitation, that the record of 17 April 1967 was tentative and not a binding agreement, and that Himachal Pradesh had an enforceable right under Section 78. It rejected the 12 percent free power claim.
The Entitlement Declared in 2011
7.19 percent of the power attributable to composite Punjab, being 6.095 percent of the total power from the Bhakra-Nangal Project, from 1 November 1966.
5.752 percent of the total power from Beas Unit I, and 2.984 percent from Beas Unit II, from the dates production began.
Shares of Punjab and Haryana fixed at 51.8 percent and 37.51 percent, with Chandigarh's 3.5 percent to be met by them.
The Union of India to compute the amount payable to Himachal Pradesh and place it before the Court.
Fifteen Years of Computation and Failed Settlements
The Union of India's affidavit of 5 July 2013 computed the arrears at 13,066 million units. It proposed valuing the shortfall at the rate charged to National Fertilizers, and put the amount at Rs. 1,497.39 crores with simple interest, or compensation in kind over 30 years. Himachal Pradesh's own liability for capital cost and operating expenditure was computed separately. Punjab and Haryana disputed the figures. Three successive references to the Attorney General for India failed to produce a settlement, and the present reference began on 11 September 2024.
Arguments Before the Supreme Court
Himachal Pradesh's Case
Himachal Pradesh accepted the figure of 13,066 million units and did not dispute its capital-cost liability as computed in 2013. It argued that the rate used by the Union was a historically concessional rate for a fertilizer factory, and pressed for the rate applied by the Bhakra Beas Management Board in inter-State exchanges, claiming Rs. 4,249.45 crores. It also sought losses for submergence and displacement and Rs. 1,745 crores spent on open market power purchases between 1989 and 2011.
Union of India's Proposal
The Attorney General for India reiterated the 2013 computation and proposed a cashless settlement: arrears of 13,066 million units supplied over 15 lean seasons at 871 million units a year, split between Punjab and Haryana in the ratio of 58:42 for Bhakra-Nangal and 60:40 for Beas. Himachal Pradesh would pay the annual charges set by the Board, and its capital liability, reconstructed at about Rs. 420.77 crores, would be set off against energy at Rs. 3.85 per unit. Himachal Pradesh and Haryana agreed in principle.
Punjab's Objections
Punjab raised three objections. First, the supply of 1.2 lakh units per day had not been deducted, which would cut the arrears to 11,094 million units. Second, the capital liability should be converted to energy at the operation and maintenance rate of 79 paise, not Rs. 3.85, which would leave 5,768 million units due. Third, the payback should run for 30 years, as an earlier written submission of the Union had suggested. Haryana separately disputed the 58:42 ratio, claiming it should be 42:58 and 40:60, and disputed the capital cost data.
The Supreme Court's Analysis
A Matter of Execution, Not a Fresh Trial
The Bench said the Union of India had been given the onerous task of untying a knot that only tightened with the passage of decades, and that its repeated efforts at settlement had failed. The responsibility therefore fell on the Court to settle the matter finally. It clarified that the exercise is not meant to reopen the 2011 decree but is in the nature of execution proceedings.
Why Punjab's Objections Failed
The Court found that Punjab's contentions were vague and superficial and amounted to an attempt to relitigate issues already settled by the 2011 decree.
The Daily Supply and the Conversion Rate
On the first objection, the Court held that the supply of 1.2 lakh units per day had already been considered and accounted for in the capital-cost liability worked out in the Union's framework. On the second, it held that converting the liability at today's operation and maintenance rate was inaccurate and misleading, because the arrears relate to an earlier period and cannot be computed at a rate that prevails today.
The Thirty-Year Plea
On the third objection, the Court noted that the only reason offered for 30 years was an earlier submission of the Union, and that Haryana had agreed to 15 years. Still, to ease the burden on the Defendant-States and close a long-standing dispute, it extended the period from 15 years to 20 years. It also noted that Punjab had accepted, in principle, the method used to compute Himachal Pradesh's capital-cost liability.
A Warning on Compliance
The Court called it unfortunate that a dispute pending for decades continues to need judicial time, and it recorded its appreciation of the Attorney General's good offices. It then added a firm warning:
The expectation of decree, having remained pending for several decades, cannot be rendered fruitless by reason of the unwillingness or recalcitrance of a Judgment Debtor.
Operative Directions
Energy arrears due to Himachal Pradesh are fixed at 13,066 million units, to be supplied by Punjab and Haryana at 653 million units a year over 20 lean seasons (October to March), in the ratio of 58:42 for the Bhakra-Nangal Project and 60:40 for the Beas Projects.
Himachal Pradesh shall pay the charges determined by the Bhakra Beas Management Board for the year in which each tranche is received.
Himachal Pradesh's liability for its 7.19 percent share of capital cost is assessed at Rs. 420.77 crores, being Rs. 249.23 crores for Punjab and Rs. 171.55 crores for Haryana.
That liability is adjusted against energy valued at Rs. 3.85 per unit, an adjustment of about 1,093 million units.
The balance of about 11,973 million units is to be supplied by Punjab and Haryana at about 598 million units a year over 20 lean seasons, in the same ratios.
The settlement is to be implemented on a cashless basis, with all directions binding and to be acted upon without reservation.
The suit stands disposed of, along with pending applications.
Why This Judgment Matters
The judgment shows how the Supreme Court handles the execution of a decree in an inter-State dispute under Article 131. When the executive's computation is accepted by most parties and the objections amount to relitigation, the Court will adopt the framework, fix the numbers and close the case, rather than send the States back to negotiate.
For Himachal Pradesh, it converts a long-delayed declaration into a binding schedule of energy. For Punjab and Haryana, it fixes their liability and the ratio in which they share it. For lawyers, it is a reminder that a decree is only as useful as its execution, and that an earlier failure to raise or prove a point can close the door at the final stage.
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Frequently Asked Questions
What Did the Supreme Court Decide in State of Himachal Pradesh v. Union of India?
The Court fixed Himachal Pradesh's energy arrears at 13,066 million units and directed Punjab and Haryana to supply them over 20 lean seasons, adjusting Himachal Pradesh's capital-cost liability of Rs. 420.77 crores against them.
Will Punjab and Haryana Pay Himachal Pradesh in Cash?
No. The Court directed a cashless settlement, with the arrears supplied as energy and the capital-cost liability adjusted against it at Rs. 3.85 per unit.
How Long Will the Energy Be Supplied?
Over 20 lean seasons, from October to March. The Court extended the period from the 15 years proposed by the Union of India to 20 years as a concession to the Defendant-States.
Why Did the Court Reject Punjab's Objections?
The Court held they were vague and superficial and amounted to relitigating the 2011 decree. It also held that the daily supply of 1.2 lakh units was already accounted for and that today's rate cannot be applied to old arrears.
Is the Judgment Reportable?
Yes. The judgment in State of Himachal Pradesh v. Union of India, 2026 INSC 1200, is marked reportable.
Keywords
State of Himachal Pradesh v. Union of India, 2026 INSC 1200, Bhakra-Nangal Beas power share, Original Suit No. 2 of 1996, Article 131 original jurisdiction, Section 78 Punjab Reorganisation Act, Punjab Haryana Himachal energy arrears, Chief Justice of India Surya Kant, Supreme Court judgment 6 November 2026
Case Title: State of Himachal Pradesh v. Union of India and Others
Case No.: Original Suit No. 2 of 1996
Citation: 2026 INSC 1200
Bench: Chief Justice of India Surya Kant, Justice Joymalya Bagchi and Justice V. Mohana
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