The Parliament while enacting a law to reorganise a State must ensure fair and equitable distribution of assets and funds between the two successor States, the Supreme Court has observed in a recent judgment.
The court was dealing with a “tricky” situation arising out of a decision by Telangana Government to freeze the bank accounts operated by the Andhra Pradesh State Council of Higher Education (APSC) post-bifurcation. The APSC, created in 1988, was headquartered at Hyderabad and this became the bone of contention.
What was at stake was a fixed deposit amount of
`115.88 crore lying in the name of APSC and a bank balance of 18.41 crore held in State Bank of Hyderabad. The Telangana Government ordered the bank to freeze all finances operated in the name of APSC and the bank complied with the same. The Andhra Pradesh High Court ruled in favour of Telangana accepting the position that Hyderabad fell in Telangana territory. In fact, the Telangana Government even passed a law creating a parallel APSC named Telangana State Council of Higher Education (TSC).
But in Supreme Court, Telangana lost. Ruling against Telangana, the bench of Justices V Gopala Gowda and Arun Mishra said, “By no stretch of imagination can it be assumed that the complete takeover of assets of the erstwhile APSC by TSC, on the ground that the State institution happens to be in Hyderabad, which is now a part of Telangana, was what the legislature had in contemplation while enacting the Reorganization Act 2014.”
Any bifurcation, the bench observed, is sensitive and tricky and thus the onus is on the legislature to make a smooth division of State’s erstwhile assets, finances and liabilities in the Reorganization Act. It said, “Adequate care has to be taken by the legislature (Parliament) while drafting legislations such as the Reorganisation Act, 2014 to ensure a smooth division of all assets, liabilities, and funds between the States to make sure that the interests of the citizens living in these States are protected adequately.”
The AP Government had read out from the Reorganization Act to show how APSC was meant to serve the interest of both states till such time they agreed to divide all assets, funds and liabilities accruing till the date of bifurcation in the ratio 52:48 based on population. According to this division, AP would benefit `77.89 crore from APSC while `56.4 crore will go to Telangana. But with the present decision of Telangana to unilaterally freeze the bank accounts, the money belonging to the 13 districts of AP post-bifurcation, over which Telangana had no claim, also got stuck. This fact also weighed with apex court in setting aside the freeze order.
The bench directed both states to amicably arrive at a settlement and asked Centre to constitute a Committee, to determine the share, if no agreement was forthcoming within two months.