Disputes AndThe Lease Agreement

The dam is operated by the Government of Tamil Nadu based on a lease agreement entered into in 1886 by the British India Government and the Maharajah of Travancore. Control of the dam and the reservoir by Tamil Nadu, after Independence and after Reorganization of States, has been a matter of dispute between the States of Kerala and Tamil Nadu. The matter is still sub judice and is currently pending before a Division Bench of the Supreme Court.
A lease deed was signed between the Travancore Princely State and British Presidency of Madras in 1886 which gave the British the right to divert "all the waters" of the Mullaperiyar and its catchment to British territory (the Madras Presidency, now Tamil Nadu) for 999 years. After Independence, both the entities became non-existent. Further, according to Indian Independence Act 1947, all the treaties between British Government and Indian Princeley States have lapsed. Moreover, Article 131 of the Constitution of India denies Supreme Court of jurisdiction on pre-constitutional agreements. Kerala argued that the agreement is not an equal one, but imposed on the local King by the British Empire.
In 1970 the Kerala and Tamil Nadu governments signed a formal agreement to renew the 1886 treaty almost completely. The Idukki Hydroelectric project, located 30 km downstream was completed in 1976 by the Kerala government  After Independence the areas downstream of the Mullaperiyar become heavily inhabited, as Kerala has a very high population density.