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Judgment
Barin Ghosh, C.J.—Electricity Act, 2003, enacted on 26th May, 2003, while encouraged private sector participation in generation, transmission and distribution of electricity, obliged the Government of India to come up with a national electricity policy. On 12th May, 2005, Government of India came up with a policy and, thereby, amongst others, emphasized on addition to generation capacity. The policy emphasized on hydro-generation and mentioned that harnessing of hydro potential facilities would bring in economic development of States, including the State of Uttarakhand. It estimated an investment of Rs. 9 lac crores and felt a sizeable part thereof needs to be brought from private sector.
On 29th January, 2008, Government of Uttarakhand came up with a policy for addition to the generation capacity through renewable energy sources, including hydro-generation, through private participation. The policy indicated that developers may identify projects, prepare Detailed Project Report (hereinafter referred to as "DPR") and ask for allotment. Alternatively, the State or State sponsored agencies may identify projects of any size, prepare DPR and allot on the basis of open competitive bidding. On 25th July, 2008, State Government, through Uttarakhand Jal Vidyut Nigam Ltd. (hereinafter referred to as "UJVNL"), issued an advertisement inviting applications for allotment of self-identified projects. A brochure was also published. The last date of responding to the said advertisement was 27th December, 2008. 736 applications were received in relation to hydro projects in response to the said advertisement. Applicants deposited the amount of money they were required to deposit upfront in terms of the advertisement read with the brochure. 56 of those applications were approved. These applicants, with the exception of 7 applicants, deposited security money and other sums as were required to be deposited. Subsequent thereto, on 19th February, 2010, a list of 56 allottees and the projects allotted to them was published. On the same date, Government invited objections against acceptance of those 56 applications. 20th March, 2010 was the last date of receipt of such objections. Within that period, Government received 22 objections from unsuccessful applicants and 19 objections from political parties.
On 24th June, 2010, two Public Interest Litigations were filed, challenging the acceptance of those 56 applications. On 15th July, 2010, an office memorandum was issued, whereby and under, acceptance of the said 56 applications was made ineffective on the ground that the advertisement, published on 25th July, 2008, had certain discrepancies. On the same date, letters were issued by the Government to the applicants of those 56 projects stating, that letters of award issued to them, accepting their applications, have become ineffective. On 16th July, 2010, those two Public Interest Litigations were dismissed as infructuous by this Court upon recording the fact that the Government, by its order dated 15th July, 2010, has cancelled the allotments, i.e. acceptance of those 56 applications.
On 27th September, 2010, the present Public Interest Litigation (hereinafter referred to as the "PIL") was filed. In the PIL, it was principally highlighted:
(i) State identified projects have been delisted in order to enable private players to develop those projects;
(ii) while doing so, permitted them to pay a paltry sum of Rs. 5 lacs per megawatt, which, if recourse to auction had been taken, would have fetched much more, as is evident from past experience; and
(iii) cancellation of acceptance of those 56 applications has been made on untenable grounds with a tacit understanding that, should applicants of those applications challenge the cancellation order of the State Government in courts, the same will not be strongly contested. It was highlighted that 8 writ petitions have already been filed and many are to come and a learned Single Judge has already admitted all those 8 writ petitions.
In the PIL, while a prayer was made for staying all further proceedings in the matter of allotment of self-identified hydro projects, an inquiry, through Central Bureau of Investigation, has been sought in relation to allocation of 56 hydro projects.
While dealing with those writ petitions, a learned Single Judge felt that since the issues in them are also issues in the PIL, it would be appropriate if those writ petitions are decided along with the PIL. Subsequent thereto, other writ Petitioners also agreed that the writ petitions filed by them be also decided along with the PIL.
In the circumstances, the PIL and the writ petitions by those applicants, whose applications succeeded, or some of them, were heard by us. By agreement of the parties, those were heard together.
At this juncture, it should be pertinent to mention that out of those applicants, as aforesaid, 7 applicants did not deposit the requisite security amount and 9 applicants accepted the cancellation order and the remaining 40 applicants filed 17 writ petitions challenging the cancellation order.
It is the case of the public interest litigant, to which there appears to be no dispute, that the brochure, published by UJVNL, clearly mentioned that the projects already identified by the State owned agencies will not be considered as self-identified projects and the list of those projects may be obtained from the office of UJVNL or from the website of UJVNL. It was contended that UIPC, a joint venture of Uttarakhand Government and IL&FS, had identified 121 hydro projects in all, through detailed on the spot surveys in different river valleys of Uttarakhand and all of them were displayed in the official website of UJVNL. It was contended that from those 121 projects, 66 projects were surreptitiously removed from the list of State identified projects. It was contended that most of the allocated 56 projects were from those 66 projects. In the PIL, particulars of 9 projects, out of 56 projects, were highlighted to show that those were from amongst those 66 delisted projects.
In the 2nd supplementary counter affidavit filed by the State, it has been stated that identification of a project by the State or State sponsored agencies / any other agency involves (a) desk work, i.e. (i) preparation of contour map (height of places) based on topographic sheets obtained from Survey of India; (ii) assessment of water discharge from the observed discharges by Central Water Commission; (iii) assessment of potential generation of electricity; followed by (b) site visit; and lastly (c) preparation of geological maps on the basis of records of Geological Survey of India, where after, Pre Feasibility Report (hereinafter referred to as "PFR") is prepared, in which primary feasibility of the project (technical as well as economic) is examined. It was stated that preparation of PFR usually takes two to three months time. It was also stated that after preparation of PFR, detailed hydrological and geological investigations are carried out; techno economic feasibility as well as environmental compatibility of the project is examined in detail. It was also indicated that all these investigations and detailed studies of feasibility consume considerable time and involve large expanses as well as require measurement of minimum of two lean season discharge. It was stated that on the basis of the above investigations, studies, measurements and datas so collected, a DPR is prepared. It was also stated that after completion of the above two stages, i.e. preparation of PFR and DPR, in terms of the policy, State identified projects are required to be put up for open competitive bidding. It was stated that on 25th July, 2008, when the afore-mentioned advertisement was published, UJVNL uploaded a list of 240 projects identified in the State of Uttarakhand. Those included 141 projects undertaken by State agencies, 26 projects undertaken by Central agencies, 50 projects undertaken by private developers, 13 projects where agencies were not identified and 10 projects which were under bidding stage. It was stated that in respect of 58 projects in the said list, mentioned from serial No. 183 to 240, the names of river or tributary were not mentioned and, at the same time, neither the head levels (weir level), nor the tail levels (power house level) of the projects were specified. It was stated that the said list of 240 projects was not sent to the Government, nor was the same approved by the Hon''ble Chief Minister, who was the Minister in-charge for Power. It was stated that in September, 2008, UJVNL uploaded another list of 112 projects, which list was also not approved by the Hon''ble Chief Minister. It was contended that on 20th August, 2008, UJVNL wrote a letter to the State Government stating that a list of projects has been provided by UIPC to UJVNL for publishing on the website, where most of the locations have been identified in all the valleys and, accordingly, there shall be hardly any projects left for allocation to private participants. In this letter, it was stated that those projects, for which PFR / DPR has not been prepared, should be left to private participants for allocation. On 12th November, 2008, In-Charge, Urja Cell, had put up a note for consideration of the Hon''ble Chief Minister stating that those projects, on which the agencies of the State Government have done negligible work, should be delisted from the State identified projects so that local developers may get full opportunity for participation in the allotment of self-identified projects. The Hon''ble Chief Minister, in his capacity as Hon''ble Energy Minister, accepted the said proposal on 14th November, 2008. On the basis of such approval, UJVNL uploaded the final list, containing 288 State identified projects, in supersession of the earlier two lists. The said list contained 89 projects already commissioned, 25 projects being developed by central public sector undertakings, 42 projects being developed by private developers, and 132 projects being developed by State agencies. Thereby, 79 projects, which were earlier uploaded by UJVNL as State identified projects, were removed. The said list also included 16 new projects, which were not included in the earlier two lists of State identified projects. It was stated that in respect of those 79 projects, negligible work was done in the form of desk studies / work alone and neither PFR nor DPR was prepared. The said contention of the State was also accepted by UPIC in its counter affidavit filed to the PIL.
There appears to be no dispute that those 56 projects, or a number of them, were part of those 79 delisted projects. When the State contended that in respect of those 79 projects, except desk work, nothing further was done, since the negative cannot be asked to be proved, it was obligatory on the part of the public interest litigant to bring on record something, where from, it could be gathered that, apart from desk work, any further work was done by or on behalf of the State / State agencies in respect of those delisted projects. The public interest litigant has failed to do so.
The policy envisages identification of projects by the State or State sponsored agencies and preparation of DPR. There is no dispute, and as is evident, before DPR is prepared, a PFR is required to be prepared. There is no evidence before us that in respect of any of those 79 delisted projects, even a PFR was prepared. The State Government, itself, has accepted that, in respect of those 79 projects, desk work was done. In the event, desk work in respect of a project signifies identification thereof, as is evident from the facts and circumstances of the case, there would be no projects left for self-identification by private promoters. According to us, assessment of primary feasibility, which is done at the stage of preparation of PFR, a project is identified. However, the policy made it clear that identification of a project will be complete only when DPR is made. In the circumstances, we are unable to accept the contention of the public interest litigant that State identified projects were taken off from the list thereof for the purpose of making the same available to private promoters.
There is no dispute, as highlighted in the PIL, that in the year 2009, amongst others, three State identified projects were auctioned, when, in respect of projects having capacities of 23.25 megawatt, 5.5 megawatt and 12.5 megawatt, premium of Rs. 18.18 lacs, Rs. 72.114 lacs and Rs. 55.669 lacs per megawatt respectively was obtained. It was contended in the PIL, that, in that background, allotment of those 56 projects, at a premium of Rs. 5 lacs per megawatt, was unjust. In the counter affidavit filed by the State to the PIL, the stand of the State was quite ambiguous. It was stated that fixation of premium amount is the prerogative of the State Government, which prerogative has been exercised with due application of mind, but without elaboration. It was also contended that the public interest litigant has failed to demonstrate as to how fixation of premium is arbitrary. It was contended that the public interest litigant is confusing the issue and misleading the Hon''ble Court by illogically mixing the project cost at post DPR stage with the projects at the stage of identification only. In the supplementary affidavits filed by the State, nothing further was supplemented.
Since we found that, in course of bidding, premium of Rs. 18.18 lacs per megawatt for a project of 23.25 megawatt, premium of Rs. 72.114 lacs per megawatt for a project of 5.5 megawatt and premium of Rs. 55.669 lacs per megawatt for a project of 12.5 megawatt were received in the year 2009, it appeared to us that premium is dependent on cost effectiveness of a project, i.e. when the cost of the project is less, premium will go up, and when the cost of the project is high, premium will come down. In other words, premium obtainable is dependent on the size of projects. It appeared to us in course of hearing, as will be highlighted by us later on in this judgment, capacity of a project can only be ascertained with certainty, as far as possible, when DPR is made and not before. We, accordingly, thought that after a DPR is prepared, having regard to the specific project, it would have been appropriate to fix the premium therefor. We, accordingly, requested the learned senior counsel, appearing on behalf of the State, to explain to us as to how threshold premium of Rs. 5 lacs per megawatt was fixed. The learned senior counsel submitted that in the policy, itself, it has been provided, to which there appears to be no dispute, that in respect of State identified projects, minimum premium shall be Rs. 5 lacs per megawatt. The learned senior counsel submitted that, since it was decided to allot projects before the DPR is prepared, it was thought that premium at the rate of Rs. 5 lacs per megawatt would be fair and the same would bring in transparency. It was also submitted that, in the event, premium per megawatt was decided to be different for different projects, the same would have paved the way for nepotism, arbitrariness, etc. It was submitted that when it was announced that the upfront premium per megawatt would be Rs. 5 lacs, it was up to the private participants to go for those projects, which could be remunerative for them, paving the way for going ahead for all viable projects and expand competition amongst participants. Since the basis for fixing the premium of Rs. 5 lacs per megawatt was incorporated in the policy, itself, inasmuch as, the policy made it clear that no project should be allotted at a premium of less than Rs. 5 lacs per megawatt, there was nothing wrong in fixation of premium of Rs. 5 lacs per megawatt to be paid upfront before the DPR is made. We also see the rationale behind fixing uniform premium for all the projects in order to ward off nepotism and arbitrariness in the matter of fixation of premium on individual projects. We also feel that fixation of such premium has brought in transparency and, at the same time, has widened the scope of competition amongst private participants. Apart there from, when there is some basis for fixation of premium, the court is incompetent to hold that a better fixation was possible.
At this juncture, it would also be appropriate on our part to record that it was contended in the PIL that, if a private promoter pays a premium of Rs. 5 lacs per megawatt in respect of a project, he is likely to earn a large sum of money by undertaking the project, whereas there will be no corresponding return to the State. It was contended that the private developer will recover his investment within 10 years and, thereafter, would receive, for a long period of time, all that money through generation of electricity without any investment. These allegations have been made on the basis of hypothesis and assumptions of the price of the electricity to be produced and the cost of implementation of projects. Be that as it may, it is an undisputed fact that the State does not have enough resources to tap all the untapped hydro potentials by making its own investments. In the circumstances, the State has to, and as the national policy provides, permit participation of private players in tapping hydro potential of the State. A private player would invest only when he foresees that he would have adequate return. At the stage of preparation of the PFR, the private player would know what would be his primary realization against his investment. The same would crystallize only when the DPR is made. While a private player would be getting returns on his investment for which he would be taking a risk, the State would be richer by Rs. 5 lacs per megawatt in respect of untapped hydro potential at the stage when it is not known what would be the actual return for the investor.
In the circumstances, though it appears to us that if the State had prepared the DPR in respect of all those projects and then offered the same to be developed by private players through public bidding, the State may have had earned more than Rs. 5 lacs per megawatt, but it cannot be said that premium of Rs. 5 lacs per megawatt, as was fixed, was a paltry sum of money.
To the writ petitions filed by the private developers, the State Government has filed its counter affidavits, where it has demonstrated with full force that there were just and adequate reasons for cancellation of acceptance of those 56 applications and, accordingly, the contention of the public interest litigant that these writ petitions will not be strongly contested, cannot be accepted by us. The public interest litigant has failed to bring on record any tacit understanding that the writ petitions by the private players will not be strongly contested. On the other hand, as aforesaid, strong contest has been made by the State in the counter affidavits filed to the writ petitions. In the event, cancellation of acceptance of those 56 applications was on untenable grounds, as was contended by the public interest litigant, then, as it appears to us, in public interest, the same should have been challenged by the said litigant, inasmuch as, the cancellation has prevented the State to receive upfront premium and also prevented the people of the State to receive electricity at the uniform rate to be fixed by the Commission, since the developers would be entitled to uniform rate only so to be fixed.
The question is whether there were just and adequate reasons for cancellation of acceptance of those 56 applications. It is the contention of the writ Petitioners that there was and is no just reason for cancellation of the acceptance of the applications made by them. It was contended that, in any event, the reasons furnished for cancellation were identical and did not apply with equal force to all the applications made by the writ Petitioners. It was stated that everything was done in the most transparent manner by publishing the advertisement and the brochure and by holding consultation where clarifications were made and, accordingly, there was no just reason to ask for objections in the matter of acceptance of the applications made by the writ Petitioners. It was contended that unsuccessful applicants, having had participated in the selection process, could not turn around and say that the selection process was unjust. It was stated that, in any event, in the cancellation orders, it was not highlighted that any of the applications of the writ Petitioners was accepted, whereas application of any unsuccessful applicant should have been accepted. It was contended that the objections by the political parties in the instant case were uncalled for. Such objections were not invited and, accordingly, could not be considered. It was stated that even if those were considered, it was not highlighted in the cancellation order that any of the political parties could or did specify acceptance of any of the applications of the writ Petitioners was unjust or inappropriate. It was stated that, in fact, the decision to cancel the acceptance of the applications of the writ Petitioners was taken as a consequence of the public interest litigations, which were filed on 24th June, 2010. It is the contention of the State Government that just reasons for cancellation of the acceptance of the applications of the writ Petitioners were furnished in the orders cancelling the same. It was submitted that, in any event, there were just reasons to do so and a prudent person, informed of all the facts and circumstances of the case, would have cancelled the acceptance of the applications of the writ Petitioners.
In order to understand the respective contentions of the parties as regards justification of the cancellation of the acceptance of the applications of the writ Petitioners, one is required to look at the Government Order dated 15th July, 2010 and the identical letters dated 17th July, 2010, written by the Government to the writ Petitioners holding out that the letters of award, i.e. acceptance of the applications, issued to the writ Petitioners were made ineffective. Those, translated into English, are as follows:
Govt. of Uttarakhand Energy Development
No. 1790/1/2008-04 (8)-70/2008
Dehradun, dated 15.07.2010
OFFICE MEMORANDUM
To promote Electricity Generation from Renewable Energy Sources, the Govt. of Uttarakhand had notified a Renewable Energy Policy on 29.01.2008.
In order to implement Renewable Energy Policy, Uttarakhand Jal Vidyut Nigam Limited (UJVNL) was notified as the Nodal Agency vide Order No. 1873/1 (2)/2008 - 04 (8) - 70/2008 dated 24.07.2008.
Under the Renewable Energy Policy of 2008, UJVNL published an advertisement in different national dailies on 25.07.2008 for inviting applications and last date for submission of applications was fixed as 27.12.2008. By the last date 741 applications were received, out of which 736 applications pertained to Hydro Power Projects and the balance 5 to other renewable sources.
Under the terms and conditions of published advertisement, a further preliminary action was taken on 04.02.2010 and self identified developers were issued letters of award.
Subsequent to this and before signing Implementation Agreement, the Energy Department, Govt. of Uttarakhand invited objections. Thereafter, a four member Committee under the Chairmanship of Secretary (Power) was constituted vide Order No. 1403/1/2010/03 (8) 14/2010 dated 18.06.2010 to examine and process the objections received.
On the examination of the objections received against the allotment of self identified Hydro Power Projects, it was noticed that some points / conditions published in the advertisement on 25.07.2008 were not as per the provisions of the policy or have been modified.
Therefore, above examination revealed that the advertisement published on 25.07.2008 had certain discrepancies.
Therefore, UJVNL, Dehradun is hereby ordered to rectify the advertisement published on 25.07.2008 and to re-advertise it at the earliest and the process of allotment of Hydro Power Projects be carried out at the earliest.
In view of the above, the letter of award issued to various developers becomes automatically ineffective.
Sd.
Utpal Kumar Singh
Secretary
CC: Copy to following for information and necessary action.
Chief Secretary, Govt. of Uttarakhand, Dehradun.
Principal Secretary, Hon''ble Chief Minister, Uttarakhand
Managing Director, UJVNL, Dehradun.
Developers of Self Identified Schemes.
Government of Uttarakhand
Energy Department
No. 1821/1(2)/2010 - 04 - (8)/71/2008
Dehradun: Dated: 17th July, 2010
M/s Chandigarh Distillers & Bottlers Limited
H. No. 1377, Sector 34-C,
Chandigarh.
Kindly refer to office memo No. 1790/1/2008-04 - (8) /70/2008 dated 15th July, 2010 (copy attached) of the Govt. of Uttarakhand issued under Renewable Energy Policy-2008 vide which the letter of award has become ineffective.
Therefore in pursuance of above, the processing fee, Threshold Premium and Security Amount, amounting to Rs. 1,26,50,000/- deposited by you in reference to 25 MW Ralam Saba Udiyar Small Hydro Project is hereby returned to you vide bank Demand Draft No. 808822 dated 17.07.2010.
Kindly acknowledge the receipt.
Encl: As above.
(M.M. Saimwal)
Under Secretary
It is clear, therefore, that in the letters written to the writ Petitioners, State Government did not indicate any reason independent of the reasons furnished in the Government Order dated 15th July, 2010, a copy whereof was enclosed with those letters. In the Government Order dated 15th July, 2010, it was mentioned that a four member committee, under the chairmanship of Secretary, Power, was constituted to examine and process the objections as were received. It was, then added, that on examination of the objections, it was noticed that some points / conditions, published in the advertisement, were not as per the provisions of the policy or had been modified. It was not stated that the examination of the objections by the committee, so constituted, resulted in the finding that some points / conditions, published in the advertisement, were not as per the provisions of the policy or had been modified.
It appears that on 18th June, 2010, Government constituted a committee, comprising of Secretary, Energy; Secretary, Finance; Additional Secretary, Law; and Additional Secretary, Energy, for disposal of objections received from unsuccessful applicants with respect to acceptance of those 56 applications. State Government has not been able to bring on record any document from where it would be evidenced that the committee, comprised of those officers of the Government, collectively considered those objections and gave their views. At the same time, it appears that a meeting of the said committee was held under the chairmanship of Secretary, Energy, when it was decided to submit well considered and clear remarks on the objections received after studying files of the Energy Department, which were available with the Government, for compliance of the policy and process. It appears that the Additional Secretary, thereafter on 5th July, 2010, submitted his comments in writing. In the comments, the following were highlighted:
(i) That the policy envisaged allocation after DPR is prepared, which was not done;
(ii) There is mention of Project Development Agreement and Project Execution Agreement under evaluation process mentioned at Clause 7 (A) (a) of the policy, which would become insignificant, if allocation is made after DPR is prepared and, therefore, the policy is not clear;
(iii) Eligible developers, according to the policy, are required to have experience of development / construction / running of energy projects, in all cases, such experience is absent;
(iv) Financial criteria, as prescribed in the policy, was altered and, though power to amend, relax and to give clarification vests with the Government, legal advice is necessary to ascertain whether alteration, as was done, is covered by such power;
(v) UJVNL was authorised on 24th July, 2008 to process power projects upto 05 megawatt, but it processed projects upto 25 megawatt before 1st January, 2009 when it was permitted to process the same;
(vi) The change effected to the brochure was uploaded on the official website of UJVNL, but probably not published in newspapers;
(vii) Applications were opened and scrutinised between 16th and 18th January, 2009, but criteria for allocation was fixed by the Evaluation Committee on 15th January, 2010 and was approved by the Empowered Committee on 16th January, 2010, but such criteria was not made public;
(viii) Before allocation, spot inspection of 10 projects was made by UJVNL, out of which, two projects were found unsuitable for allocation, but eight projects, which were found suitable, were not allocated and, at the same time, in respect of all of the 56 allocated projects, no spot inspection was carried out and it is apprehended, if such spot inspection had been carried out, some of those 56 allocated projects may have been found unsuitable for allocation;
(ix) Most of the 56 allocated projects are in cascade, resulting in the river water flowing in long tunnels, which will affect the environment adversely. It was also stated that developers have not been defined in the policy.
It appears that these comments of the Additional Secretary, Energy, dated 5th July, 2010 were considered by the Secretary, Energy, on 5th July, 2010, when he recorded his opinion in writing, in the form of a note, that many provisions of the advertisement are not according to the policy and, accordingly, it would be appropriate to cancel the advertisement and to start the process of allotment in accordance with the policy, by issuing a fresh advertisement. On 9th July, 2010, the Chief Secretary appended his signature at the foot of the observations of the Secretary, Energy, and on 10th July, 2010, the Hon''ble Chief Minister appended his signature below the signature of the Chief Secretary. From a reading of the comments given by the Additional Secretary, Energy; note of the Secretary, Energy; and the Government Order dated 15th July, 2010, which was also approved by the Hon''ble Chief Minister, it appears to us that the principal reason for cancellation of the acceptance of the said 56 applications is that the provisions of the advertisement are not in accordance with the policy. The comments of the Additional Secretary, Energy, disclosed only one deviation in the advertisement that allotment could be made even before the DPR was made. The comments of the Additional Secretary do not highlight any other deviation in between the advertisement and the policy. The Secretary, Energy, in his note, has although mentioned about many deviations, but his note has not highlighted any such deviation independently.
The question is, whether allotment before the DPR is made can be said to be such a deviation that the same would render the entire process of allotment bad?
A plain reading of Clause 7 (A) (11) (a) of the policy makes it absolutely clear that developers can ask for allotment only after preparation of DPR and not before. At the same time, Clause (10) of the policy empowered the Government to amend / relax / interpret provisions of the policy. It was contended on behalf of the State that the policy, in question, was framed by the Cabinet and, in accordance with Rule 7 of the Rules of Business framed under Clauses (2) & (3) of Article 166 of the Constitution of India, all cases, specified in the First Schedule to those Rules, are required to be brought before the Cabinet and that, in terms of the First Schedule, all proposals for making lump sum allotments regarding any scheme, unless the proposal has been considered by the Cabinet in connection with the budget or supplementary or additional demands, and also proposals for making assignments out of such lump sum allotments; proposals involving alienation, either temporary or permanent, or of sale, grant or lease of Government property exceeding Rs. 1 lac in value or abandonment or reduction of revenue or writing off losses exceeding that amount, except when such alienation, sale, grant or lease of Government property is in accordance with the Rules or with a general scheme already approved by the Cabinet; and proposals to vary or reverse a decision previously taken by the Cabinet, are required to be brought before the Cabinet. It was contended on behalf of the State that allotment before preparation of the DPR was not brought before the Cabinet and, accordingly, allotment before preparation of the DPR could not be made. As against such submission, it was submitted on behalf of the writ Petitioners that, in terms of Rule 11 of the said Rules, the Chief Minister may, in any case or class of cases, permit or condone a departure from those Rules to the extent he deems necessary and, accordingly, departure, if any, having been made by the Chief Minister, to permit allotment before preparation of the DPR, cannot be said to be not in accordance with law.
In relation to self-identified projects, requirements, in terms of the policy were, to identify a project, then prepare the DPR and, thereafter, ask for allotment. As has been indicated above, it is the perception of the State, as depicted in its counter affidavit, as also of UIPC, that a project is identified when the desk work is done and the PFR is prepared. In other words, desk work has led to more work for the purpose of ascertaining primary feasibility and, as a result, the PFR is prepared. Only when a project is, thus, identified and it appears from the PFR that there is a possible feasibility of undertaking the project, identification of the project is complete. That appears to be also the view of the Central Government, as contained in the guidelines for development of small (including micro and mini) hydro electric schemes. That appears to be also the view of the Central Board of Irrigation and Power, as depicted in the manual on Development of Small Hydro Electric Projects. Many a State Governments, including Arunachal Pradesh, Orissa, etc., have also proceeded on this basis. It is not disputed by the State, and on the contrary it has asserted positively, that, amongst others, while preparing the DPR, flow of water is required to be measured in the course of at least two lean seasons. Such a lean season is likely to occur once in a year. It may be that, in a given case, such a lean season may occur twice in a year, but, under all circumstances, with a gap of at least half of the year, i.e. 6 months. In those States, where rainfall usually occurs twice a year, it is possible that there may be two lean seasons in one year. But, where rainfall usually occurs twice a year, the same occurs at least with a gap of 6 months. In the State of Uttarakhand, usually there is one rainy season and, accordingly, a lean season occurs in the State of Uttarakhand usually once in a year. It has been accepted by the State, as mentioned above, and it is also the finding of the Central Electricity Authority and the Central Board of Irrigation and Power that flow of water, during at least two lean seasons, is required to be measured in order to make the DPR fruitful and correct to the extent possible.
Though on 12th May, 2005, the national policy was framed, State of Uttarakhand came up with a policy only on 29th January, 2008. If, in terms of the said policy, after identification of a project, the DPR is to be prepared, the same could only be prepared at the earliest in the year 2010. The State would, therefore, be required to wait till at least 2010 to have a DPR prepared by a private operator for consideration thereof whether, on the basis of such DPR, allotment of a self-identified project can be made or not. As it appears to us, the State did not want to wait till then. It wanted to know at the earliest whether there is a prospect of private operators identifying projects and, thereupon, undertaking the work of preparation of the DPR so as to ascertain how far hydro potential of the State can be exploited through private participation and, accordingly, on 25th July, 2008, State Government came up with the advertisement and the brochure. At that time, the State was aware that the policy, having been made on 29th January, 2008, it would neither be feasible nor possible for any private player to come up with a DPR either on 25th July, 2008, i.e. the date of the advertisement and publication of the brochure, or on or before 27th December, 2008, by which date the advertisement was to be responded to. The State, therefore, instead of insisting for preparation of the DPR as a condition precedent for allotment, wanted private participants to identify projects by carrying out desk work and preparing the PFR, for the purpose of ascertaining primarily how much electricity can be harnessed from the hydro potential of the projects that may be, thus, identified. In doing so, certainly, the State incorporated in the advertisement something, which was not contemplated in the policy. A policy is, though a legal document, but is not a law as such that an action, contrary thereto, though done in good faith, would render the action a malice in law. According to the Rules of Business, since the policy was framed by the Cabinet, it was obligatory to place the advertisement and the brochure before the Cabinet. Instead, the same were placed before the Hon''ble Chief Minister, who approved the same and, accordingly, it could be safely held that, in terms of the provisions of the Rules of Business, the Hon''ble Chief Minister permitted a departure from the rule of placing the said advertisement and the brochure before the Cabinet. Furthermore, for implementing or for working out the policy, things done otherwise in consonance with the policy by the policy maker or by such legal authority, here the Hon''ble Chief Minister, cannot be said to be impermissible, unless it is shown and established that the things, so done, made the policy otiose. The basic object of the policy was to harness hydro potential as expeditiously as possible through private operators. In order to achieve the said object, by the advertisement and the brochure, private players were enticed to show interest in fulfilling the object of the policy by asking them to take up the task of identification of projects and, thereupon, to go ahead with preparation of the DPR. Then again, entitlement to ask for allotment is one thing and making an allotment is another thing. No doubt, before preparation of the DPR, a private developer could not ask for allotment. But, by giving an allotment after identification of the project, in order to entice the private developer to prepare the DPR, no private developer was made entitled to allotment. The allotment, in the instant case, lifted the developer, who has identified a project, to the status of a prospector. It is possible that a developer, who has been allotted a project, on preparation of the DPR, would find that the project is not feasible. In other words, the object and purpose of the advertisement and the brochure was only to entice developers to prepare the DPR for the projects they have identified and, for that purpose, allotments were made in their favour paving the way for preparation of the DPR, after carrying out all those detailed studies, which neither the State nor UPIC could do, after incurring huge expenses for the purpose of fulfilling the object of the policy. In the circumstances, it appears to us that the view expressed by the Additional Secretary and Secretary, Energy, to the effect that the advertisement and the brochure, having proposed allotment before preparation of the DPR, was such an action that the same would make the policy redundant, is not acceptable.
It was urged on behalf of the writ Petitioners that no other ground, given in the comments of the Additional Secretary, Energy, can be taken into account, inasmuch as, since neither the Secretary, Energy, nor the Hon''ble Chief Minister accepted any of them. We think that there may be some substance in the contention, inasmuch as, in the Government Order dated 15th July, 2010, issued with the approval of the Hon''ble Chief Minister, none of the said grounds were mentioned, but at the same time, it appears to us that the submission of the learned senior counsel for the State to the effect that when the Hon''ble Chief Minister appended his signature at the foot of the signature of the Secretary, Energy, given under his notes, and when the Secretary, Energy, while appending his notes at the foot of the comments given by the Additional Secretary, Energy, did not say that they do not agree with the other points highlighted by the Additional Secretary, it is possible that the Hon''ble Chief Minister, by appending his signature, was accepting the suggestion given in the notes of the Secretary, Energy, as the reasons given also the grounds in support thereof highlighted in the comments of the Additional Secretary, Energy, cannot be brushed aside. It would, therefore, be necessary for us to ascertain whether the points / grounds, highlighted by the Additional Secretary, Energy, in his comments, are just reasons to support the said decision of the Government dated 15th July, 2010.
We have not been able to locate any Project Development Agreement and Project Execution Agreement at Clause (7) (A) (a) of the policy. Be that as it may, if the policy required the same, it must be deemed that the policy maker thought that the same is a requirement and, accordingly, it could not be opined that, if allocation is made after the DPR, those agreements would become insignificant and, accordingly, the policy is not clear. In relation to small projects, the policy directed evaluation of technical capability, which, according to the policy, included past experience in developing, constructing or operating energy projects. Therefore, past experience in developing or constructing or operating energy projects was not sine qua non for ascertaining technical capability. Furthermore, in the chart furnished to the court by the learned senior counsel for the State, it has been accepted that in most of the cases, developers had past experience in developing, constructing or operating energy projects. Thus, the said ground could not be a ground to cancel the acceptance of all the 56 applications. It would be seen from the policy that no hard and fast criteria had been prescribed for ascertaining financial capability in respect of small projects. The minimum financial capability, as was mentioned in the policy, was restricted to micro projects and mini projects. There is no dispute that when the brochure was published, it prescribed exactly those criteria, which were prescribed for ascertaining financial capability of developers, who would be developing micro projects and mini projects. It is true that, subsequent thereto, twice amendments were carried out to the brochure and, while doing so, minimum financial capability for micro projects and mini projects was brought down from the minimum, as was prescribed in the policy. We are of the view that the same, having not been approved by the Hon''ble Chief Minister, those dilutions were not permissible. As aforesaid, the policy did not prescribe any hard and fast criteria for ascertaining financial capability for small projects. In the brochure, published along with the advertisement, criteria in that regard were prescribed with the approval of the Hon''ble Chief Minister. Those were, later on, diluted without the approval of the Hon''ble Chief Minister. By that, however, the policy was not diluted. Prescription of such criteria was an administrative work. The same should be judged on the basis thereof. The subsequent dilutions were approved by the Chief Secretary of the State. It cannot be said that in relation to a pure administrative matter, the Chief Secretary could not do what he did. The very object thereof was to enlarge competition. Furthermore, in the chart, referred to above, it has been accepted by the State that many of the writ Petitioners fulfilled the yardstick of financial capability, as was originally prescribed with approval of the Hon''ble Chief Minister, and, accordingly, on the ground that the financial criteria, as prescribed in the policy, was altered, an omnibus order could not be passed canceling acceptance of all the applications of the writ Petitioners.
In law, post facto authorization is permissible. By such authorization, whatever has been done in the past without authority, becomes authorised. It is true that before 1st January, 2009, UJVNL was not authorised to process projects upto 25 megawatt. It got such authority only on 1st January, 2009. Applications were opened and scrutinised between 16th January, 2009 and 18th January, 2009, when UJVNL, for the first time, got an opportunity to process the projects applied for. At that time, UJVNL had due authority to process projects upto 25 megawatt. The applications, as were made, were either for 25 megawatt or for less than that. In the circumstances, the contention that UJVNL, without being authorised, processed the applications upto 25 megawatt has no substance at all. It may be possible that the changes effected to the brochure, subsequent to its original publication along with the advertisement, were not published in the newspapers, but, at the same time, admittedly, the same were published through the official website of UJVNL and, accordingly, it must be deemed in law that the people were made aware of the same. Furthermore, it is accepted in the said chart by the State, that a large number of writ Petitioners complied with all the criteria, as were originally prescribed in the brochure. Therefore, non-publication of the changes, effected to the brochure, in the newspapers could not be a good ground to cancel the acceptance of the applications of all the writ Petitioners by one stroke.
It is true that on 15th January, 2010, Evaluation Committee formulated the criteria for allocation, which was approved by the Empowered Committee on 16th January, 2010. Evaluation Committee, constituted by the Government on 24th July, 2008 by an office memorandum in terms of the sanction accorded by the Governor of the State, and the Empowered Committee, constituted by the policy itself, were to play the role of selectors. They were to select, for the purpose of acceptance, amongst those applications, which were received in response to the advertisement. Selectors, unless directed, by the orders of their appointment or a legal document or by any law, to adopt a particular criteria for selection, are entitled to adopt any criteria for selection and to record the same in writing in order to protect them from the allegation that the selection has been made arbitrarily and without following a standard. Since the criteria for selection was neither prescribed in the office memorandum, constituting Evaluation Committee, or in the policy, constituting the Empowered Committee, and there being no law prescribing criteria for selection, it should be deemed that the Evaluation Committee and the Empowered Committee were authorised by law to fix criteria for selection. They have recorded such criteria in writing. It was not highlighted in the comments of the Additional Secretary, Energy, that such criteria was not in public interest or arbitrary or unreasonable. There was and is no legal requirement for selectors to make such criteria public. Therefore, on the ground that the said criteria was not made public, acceptance of the applications could not be cancelled.
However, such criteria should be reasonable and purpose specific and, in addition to that, it must be shown that the same is devoid of any arbitrariness and not fixed for giving any undue advantage to any particular applicant or a class of applicants. The criteria, thus fixed, are as follows:
(i) Applicants who have indicated more capacity (MW) in a given head will be given preference over other applicants for ensuring optimization of power generation in the stream in a given head.
(ii) Committee found that there are a number of applicants who have applied for projects in a cascading manner in the same stream without giving any gap in between two projects. Also there are projects of same capacity which are overlapping with cascading projects. Committee is of the considered view that in such cases preference will be given to the applicant who has applied projects in cascading manner.
(iii) In case there will be more than one applicant who have applied for same capacity (MW) under same head in the stream, preference will be given to the applicants, who have acquired more marks in the financial and technical evaluation.
(iv) Committee is of the view that since this policy was formulated to promote local people, such situation in which local people who have applied for projects under 5 MW and whose projects are overlapping with big projects and due to that they may not be preferred for allotment, may be given an option to change their levels.
(v) Committee did not considered those projects whose levels are overlapping with existing or proposed state identified projects.
(vi) Applicants who have indicated similar capacity in less head will be given preference over other applicants for ensuring optimization of power generation in the stream in a given head.
Except the second criterion, mentioned above, which shall be dealt with hereafter, it was neither highlighted in the comments, nor was it urged on behalf of the State at the time of argument in these matters that any other criterion was unreasonable, arbitrary or against public interest or against interest of the State. At the same time, it was not urged that except criterion No. 2, any other criterion was aimed at giving undue favour to any applicant.
It is true that spot inspection of 10 projects was carried out and none of the applications relating to those 10 projects were accepted and, accordingly, it is possible that if spot inspection of the 56 allocated projects had been carried out, none of them would have been allotted. But then, that is a hypothesis. It is possible that if spot inspection of all the 56 projects had been carried out, the same would have resulted in non-rejection of any of the applications made therefor. On the basis of such hypothesis, it was not open to cancel acceptance of all those 56 applications by one stroke. As it appears to us, spot inspection by UJVNL of 10 projects resulted in rejection of two projects and acceptance of the remaining by the Evaluation Committee. The Empowered Committee directed a re-visit of the project sites of the accepted projects for the purpose of carrying out further spot inspection. Those were not carried out in fact. The applicants of those projects also did not insist for the re-visit. None of them has expressed any grievance in relation thereto or in relation to non-acceptance of their applications. Furthermore, the evaluation criteria nowhere prescribed such a visit. In the circumstances, as it appears to us, for spot visits of the accepted projects were not carried out, the same was not a tenable ground to cancel the acceptance of the applications of all the writ Petitioners.
Projects in a cascading manner, as has been pointed out in criterion No. 2 of the criteria fixed by the committees engaged for selection of the applications, means projects without giving any gap in between them. In other words, at the level of power house, where the water in the tunnel meets the stream / river of a project proposed at the highest altitude of the river / stream, the level of weir side of the next project, from where water is drawn through the tunnel for the said project, is constructed and so on and so forth. In other words, no sooner water is drawn in the tunnel of the first project, the same remains almost in the tunnel up to the power house level of the last project. It was submitted that the stream / river is, accordingly, lost from the intake point of the first project to the exit point of the last project. It was submitted that the same is likely to cause environmental hazards. In order to highlight the said contention, a report, prepared by One Man Committee at the instance of the Hon''ble Himachal Pradesh High Court, was brought to our notice. In that report, it was reported that, by reason of cascading effect, 67 kms. of a river has been lost out of the stretch of the said river of 70 kms. It was reported by the One Man Committee that there should be a gap of about 5 kms. in between the exit point of the tunnel of one project and the intake point of the tunnel of the next project. When attention of the Ministry of Environment was drawn to the said One Man Committee report, on its behalf, it responded that the matter, pertaining to projects in a cascading manner, will be looked into, but, for the time being, it would be appropriate to have a gap of about a kilometer. The One Man Committee noted that the Government of Himachal Pradesh has taken a policy decision that it shall be obligatory on the part of the project developers to ensure that 15% of the water in the stream / river flows despite construction of weir and that the projects, in question, have randomly violated the same. This report was given in the month of July, 2009. Upto this date, the State of Uttarakhand has not taken a policy in regard thereto. On the other hand, in relation to many State identified projects, which have been auctioned in 2009, as has been brought on record, have been permitted to be constructed in a cascading manner. In the absence of a specific policy by the State of Uttarakhand in relation to minimum water to be permitted to flow in a river / stream, according to the Central Electricity Authority, at least 100 liters of water should be permitted to flow in the river / stream by the project developers. The said 100 liters of water must be permitted to flow in the lean season. Upto now, no effort has been made to gather, if at least 100 liters of water is permitted to flow in the rivers / streams of Uttarakhand during the lean season, by reason of carrying the remaining water through the tunnel, whether the river will die or the same will cause any environmental hazard. It has not come on record that since July, 2009, until today, any effort was made by the State Government to look into that aspect of the matter either by itself or through any other agency. The projects, with which we are concerned, are runof the river / stream projects. There is no concept of construction of a dam. The water collected from the river / stream, after leaving at least 100 liters of water to flow, will return to the river / stream. The very concept of projects in cascading manner entails maximized utilization of water for hydro electricity generation. If the object of the policy is to maximize generation of electricity through hydro potential, then no doubt, projects in a cascading manner would achieve the same. If, however, projects in a cascading manner are likely to cause environmental hazards, on a finding to that effect, it could be said that the same will affect environment adversely. As aforesaid, no attempt has been made by the State to bring to the notice of this Court that any attempt to ascertain the same was either made by any agency for or on behalf of the State. It has also not come on record that any of the projects did not have a gap of 1 km. in between two successive projects. One year has since passed, but, apart from cancelling the acceptance of the applications of many of the writ Petitioners for they have proposed projects in a cascading manner, no attempt has been made to establish that any of these projects is likely to cause any environmental hazard. In the backdrop of the fact that projects in a cascading manner would maximize hydro potential of a river / stream, a decision that such projects will be preferred, as was taken by the selectors, cannot be said to be against public policy or arbitrary or unreasonable and not case specific. When such a decision was taken and the same was in the interest of the State and the people of the State, for projects in a cascading manner are likely to generate maximum electricity, it cannot be said that the said criteria was fixed to help any applicant or a class of applicants.
The policy envisaged that not more than three projects will be allocated to a developer. The Additional Secretary, Energy, felt that ''developer'' has not been defined in the policy. The policy envisaged harnessing of, amongst others, hydro power through developers, who may develop not more than three projects by self-identifying the same or by being the highest bidder of a State identified project. In the context, the policy meant ''developer'' as an individual, either a natural person or a juristic. The policy, thus, defined ''developer''.
The conclusion, therefore, would be that there was no just reason to cancel the acceptance of the applications of the writ Petitioners by a stroke of the pen. Certainly not, when they are asked by representations made to incur expenses to complete identification of projects by carrying out desk work and preparing PFR. In such circumstances, we are constrained to hold that the Government Order dated 15th July, 2010, for the reasons mentioned in the comments of the Additional Secretary, Energy, dated 5th July, 2010 as also the note of the Secretary, Energy, dated 5th July, 2010, is not sustainable.
Despite that, we would not interfere with the Government Order dated 15th July, 2010, for the reason, that while permitting allotment before preparation of the DPR, but after identification of a project, the basic structure of the policy, unconsciously, was given a go-by. The policy addressed developing of micro (upto 100 KW), mini (100 KW - 5 MW) and small (5 MW - 25 MW) hydro power projects, in addition to generation of electricity through biomass / agro residue, wind power, solar energy, cogeneration, etc. In these matters, we are concerned with hydro power projects upto 25 megawatt. The policy envisaged potential of such hydro power projects is about 600 megawatt. The 56 applications, in question, proposed generation of 963.6 megawatt. The policy permitted identification of projects by developers and also by the State or State sponsored agencies. The policy envisaged that the developers may identify projects, prepare the DPR and ask for allotment. The policy also envisaged that the State or State sponsored agencies may identify projects of any size, prepare the DPR and allot the same on the basis of open competitive bidding to any interested player. In terms of the policy, private developers, self-identifying projects, could identify the same, if the projects were to generate electricity upto 25 megawatt. Since the State or State sponsored agencies may identify projects of any size, they were entitled to identify projects of capacity even beyond 25 megawatt. Therefore, the policy envisaged that projects, having the capacity to generate more than 25 megawatt, should be auctioned. At the same time, the policy envisaged that, in case of augmentation of capacity of self-identified projects due to any reason, the developer would be required to pay additional premium of Rs. 1 lac per megawatt or a fraction thereof for enhancement upto 5 megawatt and Rs. 5 lacs per megawatt or a fraction thereof in case of enhancement beyond 5 megawatt, along with the requisite amount to take into effect the inflation from the date the premium was paid, and that, for State identified projects allotted on the basis of open competitive bidding, extra premium to be paid would be calculated on the basis of a formulation to be specified separately. It has been accepted by all the parties concerned that the capacity of a project will stand crystallized, to the extent possible, when the DPR is prepared. In this background, augmentation of the capacity of self-identified projects, due to any reason mentioned in the policy, must be understood. Such augmentation, as conceptualized in the policy, may take place when, upon preparation of the DPR, the project is installed, whereupon it is found that, for some reason, which was not taken into account in the DPR, the capacity of the project has increased. The policy envisaged that after the DPR is prepared, in respect of self-identified projects, the same would be cleared by the Empowered Committee, which was constituted by the policy. While clearing the project, it goes without saying, the Empowered Committee would look into the DPR, thus, prepared by the developer of a self-identified project and, accordingly, would be entitled to probe into all aspects of the DPR, including the capacity of generation proposed thereby. If, despite such probe, for any reason, the capacity is augmented, the policy envisaged payment of additional premium. While fixing the additional premium, the policy proposed Rs. 1 lac per megawatt or a fraction thereof for enhancement upto 5 megawatt and Rs. 5 lacs per megawatt or a fraction thereof in case of enhancement beyond 5 megawatt, along with the requisite amount to take into effect the inflation from the date the premium was paid. That indicates that question of payment of additional premium will arise only after implementation of the project. Thus, if a self-identified project, which can only be of the capacity of upto 25 megawatt, for any unforeseen reason not taken into account while preparing the DPR and not noticed in course of verification thereof, augments its capacity, then the developer of the self-identified project is required to pay additional premium. Thus, the concept of payment of additional premium was incorporated in the policy in relation to self-identified projects, which can only be upto 25 megawatt and permitted to be installed after the DPR is made and, later on, it appears that due to any reason the capacity of the said projects has augmented. At that stage, the project cannot be done away with. In that contingency only, therefore, the policy envisaged payment of additional premium. While permitting allotment of a project before the DPR had been made, no safeguard had been made to ensure that the projects, to be installed on self-identification by the private players, would remain confined to 25 megawatt only and the same would not be beyond the capacity of 25 megawatt. Almost all the writ Petitioners, except a few, obtained allotment to install small projects of 25 megawatt. When they would come up with DP Rs and when others, who have projected lesser capacity for small projects, would come up with the same, those may show that the capacity of the projects, allotted to them, would be more than 25 megawatt. In terms of the policy, such projects are to be auctioned. The same principle applies to micro and mini projects as they are reserved for a class of developers.
We, accordingly, cannot interfere with the Government Order dated 15th July, 2010, but for the reasons as above. Accordingly, the Public Interest Litigation as well as the writ petitions of the applicants, whose acceptance of applications have been cancelled by the Government Order dated 15th July, 2010, are hereby dismissed, without any order as to costs. This will not prevent the writ Petitioners to take such steps as they may be advised for recovery of damages / interest.
I concur with the conclusions reached by My Lord the Chief Justice with respect to the ultimate fate of these petitions before us. But in view of the importance of the case, I feel in my considered view that some directions need to be given as well to the State.
What I have been able to gather from the arguments made by the Petitioners in PIL, the private developers and by the State Government is that there is no Environmental Impact Assessment made by the State Government before venturing into the exercise of making allotments of these projects to private developers. In fact it is a candid admission made by Sri Vijay Hansaria, Senior Advocate, representing the State of Uttarakhand that there is no Environment Impact study done by the State.
It is also true that the adverse effect on environment is not an aspect highlighted by the Petitioners in PIL, nevertheless this aspect became relevant and only increased in significance with each argument made in defence by the State Government while it spelled out its reasons one by one for cancelling these allotments. Two of the main reasons assigned are (1) adverse effect of cascading of these projects and (2) no inspection being made before such projects were allotted. Amongst others, these were the two reasons, which admittedly compelled the State Government for cancelling these projects. According to the State, out of 56 projects which have been allotted, 44 projects have a cascading effect. Now according to the State Government "cascade" has an adverse effect on environment as it is stated in a "short report" of the Additional Secretary (Energy), Government of Uttarakhand, which is a part of the record before this Court. This report which was submitted to an Evaluation Committee of the Government states as under:
In first stage, out of 56 allocated hydro electric power projects maximum projects are allocated in Cascade. Projects being constructed in cascades, river water will flow in long tunnel which possibly will effect the environment adversely. This possible effect on environment has not been kept in view at the time of allocation.
Apart form this report, the counsel appearing for the Government of Uttarakhand has placed heavy reliance on another report known as "Report of the one man committee to monitor environmental compliance of hydel projects".
The aforesaid report is a study of about eleven "run of the river projects" which was submitted before the High Court of Himachal Pradesh which again was seized with a PIL relating to such hydel projects in Himachal Pradesh. This report is an eye opener and an alarm bell for the State of Uttarakhand, as Uttarakhand is topographically similar to Himachal Pradesh, as both these hill states are a part of the same Central Himalayan region. The report cautions:
All policy makers must understand, and accept that hydel projects in mountainous terrains, constrained by the requirements of design, technology, geography and finances, shall inevitably cause damage to the environment during the construction phase. There cannot be a totally environmental friendly hydel project in the Himalayas. The results of blasting, excavating, cutting, dumping, tree-felling, diverting of rivers-all these are bound to have a severe and damaging effect on the environment and ecology of the area affecting water sources, green cover, wild-life. Conditions imposed on the project developers can only attempt to minimize these effects but cannot do away with them altogether. It is therefore for the concerned governments, both at the centre and the states, to weight the pros and cons and decide whether this is a cost worth paying, and if the answer is in the affirmative then they must accept that there will always be collateral environmental damage in the process. The responsibility for such damage has to be shared between the government and the project. It would be extremely na�ve to believe that the mere imposition of a few conditions while according clearance would prevent any environmental impact.
According to this report there are three prime areas of concern in practically all the projects it examined (by orders of the Hon''ble High Court of Himachal Pradesh). These are: delay in implementation of Catchment Area Treatment (CAT) plans including compensatory afforestation, road construction and dumping sites. It further notes that where hydel projects have been done, road construction and the dumping sites are responsible for 90 per cent of the damage. The committee had noticed that the river valley (in that case the river valley of Vyas, Sutlej and Ravi) which it had examined has saturated with hydel projects every few kilometers and now the projects are being allotted in ever increasing numbers in the side valley of the tributaries as well. What is alarming the committee has noticed with some alarm is as follows:
The effects of such large scale felling of trees, dumping of muck and diversion of waters over the entire river basins (not just a few isolated spots) has never been studied by the govt. before allotting these projects. Individual EI As and EM Ps for individual projects do not address the larger concerns for, where environmental impacts are concerned, the whole is larger than the sum of the parts.
I have noted this aspect with a rather grave concern because presently we have before us a candid admission by the Government of Uttarakhand that the Environmental Impact Assessment of these projects has not been done at all!
Reverting back to the Himachal Pradesh Committee report, the committee notes the overall environmental impact of these hydel projects. Though it is a common knowledge that one of the main reasons assigned for developing of hydel project is that there is only the initial capital investment on these hydel projects and thereafter the only cost is that of maintenance and as such in pure economic terms the cost of production is always a declining figure. However, the same is not with environment! The committee notes as follows:
Unlike the pure manufacturing process where the incremental cost of production is always a declining figure, in matters of environment costs (such as in generation of hydel power) the incremental environmental cost is always an increasing figure as environmental impacts accumulate: in other words, the environmental cost of producing the second megawatt of power is more than that of producing the first megawatt. The Committee therefore recommends that the state govt. should carry out basin-wide EI As for all the river basins of the state, and till these are finalized no more hydel projects should be allotted or, where allotted, their clearances should be withheld.
Regarding the cascading effect of these projects and which is one of the reasons taken by the State Government for cancelling the allotment, the committee has stated as under:
A typical ROR project consists of a Dam or Weir which impounds the waters which are then diverted away from the river into a HRT for a few kilometers, then dropped into a Powerhouse via a pressure shaft or penstock to turn the turbines, and then released back into the river through a tail race tunnel. Where this process appears to be becoming an environmental hazard in HP is that practically no linear distance is being left between the tail race of one project and the intake of the next. This would eventually result in entire rivers drying up, their waters diverted into tunnels and serving no purpose other than the generation of power- certainly not what Nature had intended. This emerging environmental disaster-in-the-making is established by the survey of the Ravi valley carried out by us. The approximate length of the Ravi river between Chamba and Bajoli (upstream, in Bharmour) is 70 kms. There are 4 HE Ps sanctioned along this stretch- starting from the top these are: Bajoli-Holi (at clearances stage), Kuther (at clearances stage), Chamera III (under execution) and Chamera II (commissioned). When all these projects are commissioned there shall be only 500 m open river left between Bajoli- Holi and Kuther, 500 m. between Kuther and ChameraIII, and 2 Kms. between ChameraIII and Chamera II. In other words, in this entire 70 km. stretch, only 3kms. of the river shall flow in its original bed and 67 kms. shall disappear underground. This cannot be anything but an unmitigated disaster, for a river is not just a flowing mass of water- it is an entire eco-system, sustaining human, animal and rich aquatic life within it and along its banks, creating green belts of vegetation on both sides re-charging underground acquifers, feeding surface streams, creating micro-climates along its path. And yet, the state or central governments have not carried out any EI As of such a cascading pattern from independent experts before allowing this cascade of projects.
This report was pooh-poohed by the private developers. According to them this report is not at all relevant for the present purpose as this was a study on medium and large hydel projects, whereas we are only concerned with the small hydel projects, they also submitted that a cascading effect in a given situation or in a given topography may have harmful effect but in another it may not.
As regarding the second objection of the private developers that cascading manner per se is not bad, we can be in agreement, as it is possible that in a given situation cascading manner may yield better returns without causing any environmental hazard or atleast without causing any additional environmental hazard. All the same, this can only be determined after a detail study has been done which has sadly not been done in the present case. What is clearly relevant is what has been shown in the report that cascading effect can finish the entire stream or a river bed altogether. The environmental hazard and the impact on environment have not been placed before this Court as there is no study as yet, but there is something which is obvious from such over exploitation where according to the study in Himachal Pradesh in one case sixty seven out of seventy kilometers stretch of river will now become dry! What is therefore quite understandable, even in the absence of an environment impact study, is the loss of at least the riparian rights of those hamlets and villages in the hills and down streams who are settled on the banks of these rivers and tributaries, and for whom the water of these rivers is the very sustenance of their life and livelihood. We therefore cannot be too cautious here. If water itself will dry up from these rivers, nothing shall remain of these rivers. As it is said in the Bible: "ye are the salt of the earth: but if the salt have lost his savour, wherewith shall it be salted?"
For the reasons stated above, it is directed that before allotting any hydel project, be it small, medium or large, there should first be a detail Environmental Impact assessment and scientific study of all the major and minor river basins in the State of Uttarakhand, where these projects are to be allotted and only after a detail study has been made and the riparian rights of the settlements which are on the banks of these rivers taken care of, that any steps be made for giving these hydel projects to either State or private developers.
Before parting, I also feel that it would be expedient on the part of the State, having gained in experience in relation to the present lis, as against its experience of auctioning of these projects, that the Government should make an all out effort in future to auction even the small hydel projects.