The court affirmed that allocation of resources post-reorganization requires only that decision-makers consider relevant factors, allowing flexibility in methodologies and reinforcing the validity of the power consumption ratio as a basis for allocation.

JUDGMENT :

Prateek Jalan, J.

I. Background:

1. These writ petitions concern the allocation of power between the States of Madhya Pradesh and Chhattisgarh, pursuant to reorganisation of the erstwhile State of Madhya Pradesh under the Madhya Pradesh Reorganisation Act, 2000 [“the Act”].

2. Under Section 75(2) of the Act, the Central Government was empowered to determine the share of the successor states, in the entitlement of the erstwhile State of Madhya Pradesh, to power produced by Central Government undertakings [“Central sector power”]. The Union of India [“UOI”] issued a provisional allocation order on 31.01.2001, which has been challenged by Madhya Pradesh State Electricity Board [“MPSEB”] in W.P.(C) 2200/2002. The final order was issued by the UOI on 03.11.2004. This is the subject matter of challenge by the Chhattisgarh State Electricity Board [“CSEB”] in W.P.(C) 5789/2005.[In the course of final hearing, a contention was raised by UOI that the disputes raised are amenable to the exclusive jurisdiction of the Supreme Court under Article 131 of the Constitution. By an order dated 10.04.2024, however, the petitions were held to be maintainable, having regard inter-alia to the judgments of the Supreme Court in State of Meghalaya v. Union of India [2023 SCC OnLine SC 613], Tashi Delek Gaming Solutions Ltd.& Anr. v. State of Karnataka & Ors. [ (2006) 1 SCC 442 ] and Union of India v. State of Rajasthan [ (1984) 4 SCC 238 ].]

II. Facts:

3. The erstwhile State of Madhya Pradesh was reorganised into two successor states - the States of Madhya Pradesh and Chhattisgarh, by virtue of the Act, with effect from 01.11.2000. The Act provided for the allocation of assets and liabilities between the two states. Section 58 of the Act provides for the constitution of State Electricity Boards [“SEB”] in each of the successor states. It contemplates the division of assets, rights and liabilities of the erstwhile Electricity Board between the successor states by mutual agreement, failing which by a manner in which the Central Government maydeem fit.

4. Section 75 provides for the management and development of power and water resources by the Central Government, keeping in mind the likely disadvantages that may have been caused by reason of formation of the successor states. The present case concerns exercise of power under Section 75(2), which reads as follows:-

“75(2) The Central Government shall within a period of three months from the appointed day, by order, also determine the share of the successor States in the entitlement of the existing State of Madhya Pradesh to power produced by the Central Government undertakings having due regard to the likely disadvantage which might have been occasioned to any successor State as a result of modified arrangements for generation and supply of electric power.”

5. This power was first exercised by the UOI on 31.01.2001. Out of the total allocation of 1614 MW of Central sector power [generated from five power stations], the State of Madhya Pradesh was allocated 1116 MW, whereas the State of Chhattisgarh was allocated 498 MW. The allocation from each of the power stations was provided in the following table:-

It was stated in the order