In a much awaited decision which could have major implications on five States, the Supreme Court has given an advisory opinion that the Punjab Termination of Agreements Act, 2004 is unconstitutional..The opinion was rendered by a Bench of Justices Anil R Dave, PC Ghose, Shiva Kirti Singh, AK Goel and Amitava Roy in a Presidential reference of 2004..Senior Advocates Ram Jethmalani and RS Suri appeared for Punjab while Shyam Divan and Jagdip Dhankar appeared for Haryana. Senior Advocate JS Attri appeared for Himachal Pradesh, while CS Vaidyanathan appeared for Rajasthan. Former ASG and senior counsel Indira Jaising appeared for Delhi..Background.The case was a 2004 Presidential reference under Article 143 pertaining to the Punjab Termination of Agreements Act passed that year. Through this law, the Punjab government had terminated all water sharing agreements with neighbouring States, jeopardising the construction of the Satluj-Yamuna Link canal (SYL canal)..The case itself dates back to 1981 when the States of Punjab, Rajasthan and Haryana had entered into a water sharing agreement. This agreement also provided that the SYL canal would be completed within 2 years. However, violence surrounding the construction of the SYL canal led to Punjab halting the construction..Haryana government, then filed a suit in 1996 in the Supreme Court praying that the portions of the canal within the Punjab territory be completed. This suit was decreed in 2002, and the Court directed Punjab to complete the construction of the canal within a year. In 2003, Punjab filed a suit seeking a discharge of the obligation to construct the SYL Canal as directed. This suit was dismissed by the Supreme Court in 2004..Punjab had then proceeded to enact the Punjab Termination of Agreements Act, 2004 (herein after called Punjab Act, 2004) terminating and discharging the Government of Punjab from its obligations under the 1981 agreement..It was then that the President referred the matter to the Supreme Court for its opinion on four questions..Questions of reference.The following questions were referred to the Supreme Court for its opinion..i) Whether the Punjab Termination of Agreements Act, 2004 and the provisions thereof are in accordance with the provisions of the Constitution of India;.ii) Whether the Punjab Termination of Agreements Act, 2004 and the provisions thereof are in accordance with the provisions of Section 14 of the Inter-State Water Disputes Act, 1956, Section 78 of the Punjab Reorganisation Act, 1966 and the 8 Notification dated 24th March, 1976 issued there under;.iii) Whether the State of Punjab had validly terminated the agreement dated 31.12.1981 and all other agreements relating to the Ravi-Beas waters and is discharged from its obligation under the said agreement(s);.iv) Whether in view of the provisions of the Act; the State of Punjab is discharged from its obligations from the judgment and decree dated 15.01.2002 and the judgment and order dated 4.6.2004 of the Supreme Court of India.”.The case, however, lingered on as Supreme Court did not constitute a Bench to hear the case for a very long time..Interest in the matter was renewed after the Punjab government had introduced another Bill to return the land acquired for the construction of the canal to the farmers. Haryana had taken strong objection to this and the Court finally constituted a Bench to hear the matter..On March 17 this year, the court passed an interim order directing that status quo be maintained with respect to lands, works, property and portions of the SYL canal and all lands within the alignment of the SYL canal within the State of Punjab..Court’s Opinion.The Court in its opinion today placed reliance on its 2014 judgment of State of Tamil Nadu v. State of Kerala and Another [(2014) 12 SCC 696], and held that when there is a contract between two parties and a binding decree has been passed by a court of law based on that, one party cannot unilaterally act in a manner which would nullify the effect of the decree..“…it is not in dispute that there was a litigation between the State of Punjab and the State of Haryana and ultimately a decree was made whereby the arrangement with regard to sharing of water as per the agreement dated 31st December, 1981 had been made. There is thus a legal sanction to the said arrangement and once a binding decree has been passed by a Court of law, a party to the litigation cannot unilaterally act in a manner which would nullify the effect of the decree.”.The Court also noted that the dispute was referred to a Tribunal as per the provisions of Section 14 of the Inter State Water Disputes Act, 1956 but Punjab chose to unilaterally bring in an enactment instead of approaching the Tribunal..“It is pertinent to note that the water dispute, which the State of Punjab and State of Haryana had, had been referred to the Tribunal as per the provisions of Section 14 of the Inter State Water Disputes Act, 1956. After considering the relevant provisions, even with regard to Section 78 of the Punjab Reorganization Act, 1966, the Tribunal had taken a judicial decision and the said decision is also sought to be disturbed by virtue of enactment of the Punjab Act.”.The Court therefore, held that the unilateral action of Punjab is unconstitutional and hence answered all the questions referred to it in the negative..Impact.The matter was watched closely as it had major political implications with the Punjab elections round the corner. With this decision, the Punjab government will now have to restart construction of the SYL canal as per the directions of the court in its 2002 judgment..Read the judgment below.