SC agrees to reopen Mullaperiyar case, re-examine 1886 lease deed between Kerala, TN

The Supreme Court has agreed to reopen the Mullaperiyar case to re-examine the validity of the lease deed of 1886 between Kerala and Tamil Nadu conceding to the issues raised by the state of Kerala in the original suit no.4 of 2014. The plea is likely to be listed on 30 September.

The suit was initially filed by the state of Tamil Nadu alleging that Kerala's construction of a major car project in the Mullaperiyar catchment area encroaches on land leased to Tamil Nadu. It is important to remember that though the dam is in Kerala, based on an 1886 lease agreement for 999 years by the British, it is operated by Tamil Nadu.

A bench of justices Abhay S. Oka and Augustine George Masih stated in the petition filed by Tamil Nadu that it will consider matters in detail, including whether the 1886 lease agreement related to the Mullaperiyar Dam is valid. The bench has asked both the states to submit documents within eight weeks.

The court will consider whether Tamil Nadu's petition remains viable, review the lease agreement, and determine if the central government has succession rights to it. The issues include how the State Reorganisation Act and the lease agreements are affected, whether Kerala's construction interferes with Tamil Nadu's lease rights, and if Kerala has encroached on Tamil Nadu's leased land in Kerala.

The bench will hear detailed arguments, including the correctness of the Survey of India's report, which states the construction is outside Tamil Nadu's leased land.

After hearing both Tamil Nadu and Kerala, the Supreme Court said the following issues would be considered for hearing with the plaintiff being Tamil Nadu and the defendant, Kerala:

1.       Whether Tamil Nadu’s suit is not maintainable under Article 131 of the Constitution?

2.       Whether the plea of the defendant on the validity of the Lease Deed of 1886 is not barred by the principles of res judicata?

3.       Whether the Government of India is the true successor to the Lease Deed of 1886 instead of Government of Tamil Nadu by virtue of Article 249(b) of the Constitution, conceding that the Standstill Agreement executed between Princely State of Travancore and Dominion of India as per the provisions of Section 7(1)(b) of the Indian Independence Act, 1947 survived after the commencement of the Constitution of India?

4.       Whether the Lease Deed of 1886 is valid and enforceable in the changed circumstances?

5.       Whether the defendant is interfering with the right to peaceful and exclusive possession under the Lease Deed of 1886 and the Supplementary Agreement of 1970?

6.       Whether Section 108 of the State Reorganisation Act will attract and give protection to the Lease Deed of 1886 as the Section only deals with the agreements entered into by the “existing States” defined by Section 2(g) of the State Reorganisation Act of 1956?

7.       Whether the various encroachments in the leased area 2 by the actions of the defendant is not an infringement on the rights of the plaintiff under the Lease Deed of 1886?

4.       Whether the proposed Mega Car Parking area by Kerala is not in the water spread area of the Mullai Periyar Dam?

5.       Whether the proposed construction of the Mega Car Parking Complex in the water spread area of the Mullai Periyar Dam is in breach and violation of the rights under the Lease Deed of 1886?

6.       Whether the Survey Report of March 2024 submitted by the Survey of India is correct and has any relevance to the present Suit?

7.       To what relief the plaintiff is entitled to?

According to Article 131 of the Constitution, though the Supreme Court has exclusive original jurisdiction over disputes involving the Government of India and one or more states, disputes between different states.

However, this jurisdiction does not extend to disputes arising from treaties or agreements made before the Constitution came into effect, or those explicitly excluding such jurisdiction. The Court's authority is limited to matters where legal rights are in question.

This means that though it is an inter-State dispute in this case, the Supreme Court will check if the case that Tamil Nadu makes is maintainable under Article 131.

Kerala has submitted that the Supreme Court had erred in 2014 in holding that “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 Supreme Court had further erred in holding that “deletion of Section 177 is prospective and did not undo what had already taken place”.

The state said that Tamil Nadu, in response to the Court’s query on succession, introduced a new argument, wrongly asserting that it became a successor in 1935 under Section 177 of the Government of India Act of 1935 to the 1886 lease deed executed by the Secretary of State for India.

Kerala has argued that Section 177 of the 1935 Act did not come into effect because the “Federation of India, envisioned in Sections 5 and 6 of the Act”, was never established.

This was because “Section 5 required proclamations to create the Federation of India, consisting of provinces and princely states, but no such proclamation was issued; the princely state of Travancore did not sign an instrument of accession, thus failing to join the Federation; and as a result, as the Federation was never established, Section 177 did not come into force”.

As the Federation of India was not set up in 1935, and Section 177 did not apply.

Kerala has contended that the question now arises whether the state can challenge the validity of the 1886 Agreement based on res judicata, considering that the Supreme Court's judgment in State of Tamil Nadu vs. State of Kerala of 2014 relied on Section 177, which was not applicable.

In 2014, Tamil Nadu had challenged the National Green Tribunal's decision permitting Kerala to proceed with a "mega car parking" project in the Mullaperiyar dam's water spread area.

Tamil Nadu argued that the project, which included various constructions, would harm the dam’s catchment area and impact the reservoir used for drinking and irrigation in five Tamil Nadu districts.

Tamil Nadu claimed Kerala had already encroached on 2.5 acres and sought to occupy an additional 20 acres for parking and other facilities. Kerala disputed this, asserting that the car park was not in the water spread area. Kerala government contends that the 1886 lease agreement does not grant any rights to the land at Periyar.

In November 2023, the Supreme Court directed the Survey of India to investigate Tamil Nadu's claims. The Survey of India report, which was submitted in April 2024, found that the car park was outside the leased area, but Tamil Nadu disputed this finding.

The Supreme Court then asked Kerala to respond before finalising and framing the issues for the suit. After Kerala responded, the bench framed the issues to be considered.

What is the Mullaperiyar Dam case?

On 29 October 1886, a 999-year lease was signed between Maharaja Moolam Thirunal Rama Varma of Travancore and the British Secretary of State for India for the Periyar Irrigation Works.

The agreement, finalised after 24 years of negotiation, granted the British full rights to construct and use irrigation works on 8,100 acres of land, including 8000 acres for the reservoir and 100 acres for the dam, at an annual rent of Rs 40,000 with a tax of Rs 5 per acre.

Following India’s Independence, when the state of Kerala came into being in 1956, the state government declared the original agreement invalid and sought renewal.

The agreement was renewed in 1970 after multiple unsuccessful attempts by the C Acthutha Menon government. The new contract raised the per-acre tax on the dam's land and increased electricity generation costs for Tamil Nadu. As a result, Tamil Nadu uses the water and land, paying Kerala a tax.

But Kerala’s case is that an agreement that was signed by the British and then Tranvancore Maharaja ceased to exist when India gained freedom and so, this agreement could not be held as valid after Independence.

Additionally, Kerala has stated that the existing dam is old (128 years old) and for the safety of people residing downstream, a new dam should be constructed and the stability of the old dam is also under question.  

In May 2014, a five judge Constitution bench comprising then Chief Justice R.M. Lodha and Justices H.L. Dattu, Chandramauli K.R. Prasad, Madan B. Lokur and M.Y. Iqbal allowed Tamil Nadu to raise the level of water in the dam to 142 ft from 136 ft. It was considered a major victory for Tamil Nadu.

In 2006, Kerala passed a law declaring the Mullaperiyar dam as ‘endangered’ and established a Dam Safety Authority to prevent Tamil Nadu from raising the water level from 136 to 142 feet.

The dispute began in 1998 when Tamil Nadu sought to raise the water level, opposed by Kerala. After the issue went through the Madras and Kerala high courts, it reached the Supreme Court, which had previously appointed a technical team that found no risk to the dam.

In February 2006, the Supreme Court ruled Tamil Nadu could raise the water level to 142 feet, ending an eight-year legal battle. Kerala responded by amending the Irrigation and Water Conservation Act to limit the level to 136 feet, classifying the dam as a scheduled dam. Tamil Nadu then filed a suit in the Supreme Court in March 2006 under Article 131 of the Constitution.

The Supreme Court appointed an Empowered Committee, led by Justice A. S. Anand, to review the issue. The committee submitted its report in April 2013. The verdict in this case was given by R.M. Lodha in 2014.

The Kerala government filed a plea to review this decision and also for an open court hearing in the case, but it was rejected by another five- judge bench comprising Chief Justice H.L. Dattu and Justices J. Chelameswar, M.B. Lokur, M.Y. Eqbal and C. Nagappan in December 2014.