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Business News/ Politics / Policy/  Telangana can’t claim right on Hyderabad-based institutions: Supreme Court
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Telangana can’t claim right on Hyderabad-based institutions: Supreme Court

The verdict has set aside a high court verdict upholding freezing of bank accounts of Andhra Pradesh State Council of Higher Education

Photo: MintPremium
Photo: Mint

New Delhi: Newly carved out state Telangana cannot claim “absolute" right over institutions merely because they are located in its capital Hyderabad which is being shared by Andhra Pradesh also, the Supreme Court has held.

The verdict, having far-reaching consequences in matters relating to division of assets and liabilities between Andhra Pradesh and Telangana post 2014 bifurcation, has set aside a high court verdict upholding freezing of bank accounts of Andhra Pradesh State Council (APSC) of Higher Education on the ground that now APSC assets belong to Telangana State Council (TSC) of Higher Education as it is located in Hyderabad.

“In the instant case, the State of Telangana has claimed ownership over the entire funds and assets of the (erstwhile) APSC. This could surely not have been the intention of the legislature while enacting the Reorganisation Act, 2014.

“The main thrust of the argument of both senior counsel appearing on behalf of State of Telangana, as well as the impugned judgment and order passed by the High Court is that the successor State of Andhra Pradesh has absolutely no right over the institutions in the city of Hyderabad, by virtue of the fact that Hyderabad falls in the successor State of Telangana.

“We are wholly unable to agree with this contention advanced on behalf of the State of Telangana. If this contention is accepted, it would render Section 47 of the Act, which provides for apportionment of assets and liabilities among the successor States, useless and nugatory," a bench of justices V. Gopala Gowda and Arun Mishra said.

Referring to the 2014 Reorganisation Act that had paved the way for creation of Telangana, it said that the issue of bifurcation of states is “both sensitive as well as tricky". “Adequate care has to be taken by the legislature 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.

“Therefore, care must be taken to ensure that no discrimination is done against either of the successor state. Thus while interpreting statutes of such nature, the courts must ensure that all parts of the statute are given effect to," the bench said.

The apex court, in its verdict, said, “the action of the Banks of freezing bank accounts of APSC is wholly untenable in law, which must be set aside. 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 Reorganisation Act, 2014."

The APSC had moved the apex court against the high court judgment, passed on 1 May 2015, holding that the assets, properties and funds lying at the present location of the APSC now belong “exclusively to TSC. The Telangana government, on August 02, 2014, had created TSC to discharge the same functions for the state as was done by the APSC for Andhra Pradesh and got the bank accounts of APSC freezed on the ground that it is the successor body. The High Court held that TSC would be allowed to operate the bank accounts and the claim of APSC on those accounts was not “sustainable" since it was now located in Telangana. Taking note of the principle of territoriality, the High Court dismissed the plea of APSC.

Setting aside the verdict, the apex court said, “It is natural that when an existing State if bifurcated to form two new States, there must be an equitable bifurcation of the assets and liabilities of the statutory bodies among the two successor States as well, to ensure welfare of the public at large residing within these territories," it further said.

The court held that the action of freezing of the bank accounts of APSC was “bad in law’ on account of the fact that what has been frozen is not just the pre bifurcation amount, but also the amounts collected by APSC for the period after the bifurcation in relation to the thirteen districts of the successor state of Andhra Pradesh. It said that APSC “must be allowed to operate their bank accounts in respect of thirteen districts which fall within State of Andhra Pradesh now, in which the amounts collected post the date of bifurcation have been deposited."

If two successor states are unable to arrive at an agreement, the central government may constitute a committee, to arrive at the settlement in accordance with the Reorganisation Act within a period of two months from the day when representations are made before the Centre.

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Published: 19 Mar 2016, 10:25 PM IST
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