Division of assets and liabilities of statutory bodies in newly formed two states must be based, entirely, on Reorganisation Act, 2014
Civil Appeal No(s). 3019 – 3020 of 2016
Bench: Justice V. Gopala Gowda; Justice Arun Mishra
Case Brief: In present case, several appeals were brought challenging the common impugned judgment and order of the High Court of Hyderabad wherein the High court in its decision in the Writ Petition, (1873 and 2882 of 2015) held that the assets, properties and funds lying at the present location of the Andhra Pradesh State Education Council of Higher Education (APSCHE), now belonging exusively to the Telengana State Education Council of Higher Education (TSECHE). In the facts of the case, when the Andhra Pradesh Reorganisation Act of 2014 was brought into operation, the State of Andhra Pradesh was bifurcated into State of Andhra Pradesh and State of Telengana. Moreover, it was observed that the APSCHE in the terms of the Section 75 of the Act along with Tenth Schedule (item 27), is required to continue its functions in respect of both the new States, until an agreement was reached between the two. Later, the Telengana adapted this Act of 1988 and TSCHE was brought into existence, in respect of new State of Telengana operation. And on this basis, it has sent a letter to Manger of the Banks, through which it has requested the Banks to freeze the operation of APSCHE’s accounts. However, the bank, without given any intimation to APSCHE froze the accounts at the behest of TSCHE. The APSCHE which felt itself aggrieved of such action, filed Writ Petition before High Court, and claimed it as illegal, arbitrary and contrary to the principles of natural justice. In another writ petition, the State of Telengana prayed that APSCHE and Andhra Pradesh state should not be allowed to withdraw money from the bank accounts of APSCHE. However, the High Court decided that the TSCHE would be allowed to operate the bank accounts. Thus, the present bench took a short point for consideration that whether the High Court was right in upholding the action of Banks in freezing the accounts of APSCHE. The while considering the issue of bifurcation of the state to form new states, observed that this issue is both sensitive and tricky, thus adequate care has to be taken by the legislature, while drafting legislations like Reorganisation Act of 2014. Such care shall also have been taken for ensuring that no discrimination is done against either of the successor state. Also, the Courts are required to interpret the statutes of such nature, to ensure that all parts of the Statute are given effect to. Moreover, it is also observed that when a state is divided into two then naturally, there should equitable bifurcation of assets and liabilities of statutory bodies among the two new states. Thus, the bench decided that the claim of Telangana State as to ownership over the entire funds and assets of the old- APSCHE, cannot be considered as was intended by the Legislature while enacting the Reorganisation Act, 2014. Moreover, the Act itself appeared not providing any apportionment to them, the Court is entirely unable to do so. Thus, the court held that the action of the Banks to freeze the accounts of the APSCHE was wholly untenable in law and as such it is set aside. Thus, the decision of the High Court which had upheld such action of the bank is also set aside. Moreover, the bench further directed for the division of the assents which were existing up to bifurcation’s date.
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