Andhra Pradesh State Council of Higher Education Vs Union of India and Ors. Etc

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CA @SLP(C) Nos.14705-06 of 2015 1

REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS. 3019-3020 OF 2016

(Arising out of SLP (C.) Nos. 14705-14706 of 2015)

ANDHRA PRADESH STATE COUNCIL OF HIGHER EDUCATION ……APPELLANT

Vs.

UNION OF INDIA & ORS. ETC. ……RESPONDENTS WITH

CIVIL APPEAL NO. 3021 OF 2016 (Arising out of SLP (C.) No.14712 of 2015)

J U D G M E N T

V. GOPALA GOWDA, J.

Leave granted in the Special Leave Petitions.

2.The present appeals arise out of the common impugned

judgment and order dated 01.05.2015 passed by the

High Court of judicature at Hyderabad for the States

of Telangana and Andhra Pradesh in Writ Petition

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CA @SLP(C) Nos.14705-06 of 2015 2

Nos. 1873 and 2882 of 2015, wherein it was held that

the assets, properties and funds lying at the

present location of the Andhra Pradesh State

Education Council of Higher Education now belong

exclusively to the Telangana State Education Council

for Higher Education.

3.The relevant facts which are required for us to

appreciate the rival legal contentions are stated in

brief hereunder:

The Andhra Pradesh State Council of Higher

Education (hereinafter referred to as the “APSC”) was

constituted under Section 3 of the Andhra Pradesh

State Council of Higher Education Act, 1988, to advise

the State government in matters relating to Higher

Education in the State and to oversee its development

with Perspective Planning. The APSC continued carrying

out the various functions assigned to it under the Act

of 1988, including conducting common entrance

examinations for various courses in the State of

Andhra Pradesh.

4.On 02.06.2014, the Andhra Pradesh Reorganisation

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Act, 2014 (hereinafter referred to as the

“Reorganisation Act, 2014”) came into force, which

bifurcated the existing State of Andhra Pradesh into

two separate States, namely, the State of Andhra

Pradesh and the State of Telangana. The statement of

objects and reasons of the Act provides, inter alia,

as under:

“a) it provides for the territories of the two successor states of Andhra Pradesh and Telangana, and necessary provisions relating to representation in Parliament and State Legislatures, distribution of revenues, apportionment of assets and liabilities, mechanisms for the management and development of water resources, power and natural resources and other matters. …… c) it provides that Hyderabad in the existing State of Andhra Pradesh shall be the common capital of both the successor States from the appointed day for a period not exceeding ten years, and puts in place legal and administrative measures to ensure that both the State Governments can function efficiently from the common capital……”

Section 75 of the Reorganisation Act, 2014 provides as

under:

“75. Continuance of facilities in certain State institutions. (1) The Government of the State of Andhra Pradesh or the State of Telangana, as the case may be, shall, in respect of the institutions specified in the Tenth Schedule to this Act, located in that State, continue

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to provide facilities to the people of the other State which shall not, in any respect, be less favorable to such people than what were being provided to them before the appointed day, for such period and upon such terms and conditions as may be agreed upon between the two State Governments within a period of one year from the appointed day or, if no agreement is reached within the said period, as may be fixed by order of the Central Government. (2) The Central Government may, at any time within one year from the appointed day, by notification in the Official Gazette, specify in the Tenth Schedule referred to in subsection (1) any other institution existing on the appointed day in the States of Andhra Pradesh and Telangana and, on the issue of such notification, such Schedule shall be deemed to be amended by the inclusion of the said institution therein.”

APSC figures as item 27 in the Tenth Schedule to the

Reorganisation Act, 2014. Thus, in terms of Section

75, APSC was required to continue its functions in

respect of both the States, i.e. Andhra Pradesh and

Telangana until an agreement was reached between the

two successor States.

5.Vide G.O.M. No. 5 dated 02.08.2014, the Government

of Telangana adapted the Act of 1988 in the

following terms:

“Whereas by Section 101 of the Andhra Pradesh Re-Organisation Act, 2014 (Central Act No. 6 of 2014), the appropriate Government i.e. the State of Telangana is empowered by order, to

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make such adaptations and modifications of any law (as defined in section 2(f) of the Act)made before 02.06.2014, whether by way of repeal or amendment as may be necessary or expedient, for the purpose of facilitating the application of such law in the State of Telangana before expiration of two years from 02.06.2014; and thereupon every such law shall have effect subject to the adaptations and modifications so made until altered, repealed or amended by a competent Legislature or other Competent Authority; And whereas, it has become necessary to adapt the Andhra Pradesh State Council of Higher Education Act, 1988 and the Rules and Regulations made thereunder for the purpose of facilitating their application in relation to the State of Telangana……”

Thus, the Telangana State Council of Higher Education

(hereinafter referred to as the “TSC”) came into

existence to discharge the same functions for the

State of Telangana as the APSC for the State of Andhra

Pradesh.

6.Pursuant to the creation of the TSC, the Secretary

to the Government, Higher Education (UE) Department,

Telangana, wrote Letter No.263/UE/2014-2 dated

05.09.2014, to the Principal Secretary to

Government, Higher Education (UE) Department, Andhra

Pradesh outlining a provisional allocation of assets

as well as posts between the two States, in terms

of the proposal already submitted by the APSC, to

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divide the assets in the ratio of population as

52:48, as provided for under Section 2(h) of the

Reorganisation Act, 2014. These were to include:

“ a) Distribution of posts in the ratio of 58:42 b) Allocation of fixed deposits c) Allocation of bank balances in various accounts d) Number of employees based on nativity e) Number of vehicles f) Number of equipments g) Number of movable assets etc.”

The details of the proposed allocation are provided as

under:

“ Fixed Deposits S.No. Category Total Amount

in Rs. 58% to APSCHE

42% to TSCHE

1. General Accounts

607796365 352521892 255274473

2. College Accounts

61502021 35671172 25830849

3. CETs Accounts

489531581 283928317 205603264

Total 115,88,29,96 7

67,21,21,38 1

48,67,08,586

Bank Balances in various accounts S.No. Category Total

Amount in Rs.

58% to APSCHE

42% to TSCHE

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1. General Accounts

18405959 10675456 7730503

2. College Accounts

164524435 95424172 69100263

3. CETs Accounts

1207229 700193 507036

Total 18,41,37,62 3

10,67,99,82 1

7,73,37,802

Cadre wise allocation of posts between APSCHE & TSCHE S.No. Post/Cadre Total

Sanctione d Posts

Allocation of posts after bifurcation 58% to APSCHE

42% to TSCHE

1. Finance Officer 1 1 0

2 Deputy Director 1 1 0

3 Asst. Directors 3 2 1

4 Lecturers 4 2 2

5 Asst. Secretary 1 0 1

6 Consultants 3 2 1

7 Superintendent 1 1 0

8 Private Secretary 1 0 1

9 Senior Accountant 3 2 1

10 Senior Steno 1 0 1

11 Jr. Stenographer 2 1 1

12 Jr. Assistant 1 0 1

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13 Clerk-cum-Typist 1 1 0

14 Typist-cum-Asst. 1 0 1

15 Computer Operator 1 1 0

16 Data Entry Operator

1 1 0

17 Drivers 3 2 1

18 Record Asst. 1 0 1

19 Roneo Operator 1 1 0

20 Office Subordinates

3 2 1

Total 34 20 14

Cadre wise posts to APSCHE & TSCHE S.No. Category Total

Number of posts

58% to APSCHE

42% to TSCHE

1 Gazetted Cadres

10 6 4

2 Other cadres

24 14 10

Total 34 20 14

Number of employees based on nativity ( only Council employees)

S.No. Category Total Employees Working

Andhra Telangana

1 Gazetted cadres

4 4 0

2 Other cadres

19 5 14

Total 23 9 14

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Number of vehicles (working and condemned) S.No. Category Total

Vehicles 58% to APSCHE

42% to TSCHE

1 Serviceabl e

4 2 2

2 Condemned 5 3 2 Total 9 5 4

Number of Equipments S.No. Category Total

Equipments 58% to APSCHE

42% to TSCHE

1 Computers 37 21 16 2 Printers 18 10 8 3 Others 27 16 11

Total 82 47 35

Number of Movable Assets S.No. Total Assets 58% to APSCHE 42% to TSCHE

1 676 392 284

” 7.On 30.10.2014, the Government of Telangana issued a

Circular Memo to the senior management of the banks

in which the bank accounts of the government were

operating to ensure that the provisions of the

Reorganization Act, 2014, especially with respect to

the institutions listed in Schedules VII, IX and X

were not violated. On 05.01.2015, TSC sent a

communication to the Manager, Andhra Bank, Saifabad,

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Hyderabad Branch, stating that TSC is the successor

organization to APSC as per the Reorganisation Act,

2014 and requested the Bank to freeze the operation

of Account No. 0533100110978 and all other accounts

operating in the name of APSC. The Bank sent a

letter dated 07.01.2015 to APSC, informing them

about the letter from TSC. In its reply dated

08.01.2015, APSC denied that TSC was its successor

and informed the Bank that if it were to freeze its

accounts, it would be constrained to take the

appropriate legal action. Accordingly, the Bank sent

a letter dated 14.01.2015 to the TSC declining to

freeze the accounts of APSC. On 28.01.2015, the

State Bank of Hyderabad, Shantinagar, Hyderabad

Branch, without giving prior notice to APSC froze

the accounts at the behest of TSC.

8.Aggrieved of the said action of the Bank in freezing

the accounts, APSC filed Writ Petition No. 1873 of

2015 before the High Court of Andhra Pradesh,

praying for the action of the State Bank of

Hyderabad, Shantinagar, Hyderabad Branch in freezing

the accounts of APSC to be declared as illegal,

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arbitrary and contrary to the principles of natural

justice and setting it aside. The State of Telangana

also filed Writ Petition No. 2882 of 2015 praying

for a declaration that APSC and the State of Andhra

Pradesh be not allowed to withdraw money from the

bank accounts of APSC. By way of the impugned common

judgment and order dated 01.05.2015, the High Court

held that TSC would be allowed to operate the

concerned bank accounts, and that the claim made by

APSC was not sustainable since it was now located in

the State of Telangana. The High Court held as

under:

“6. It is the settled position of law that institutions located in the successor States are governed by the law of successor State- laws of the land namely, principle of land, known as lex situs. 7. Under Article 246 (2) & (3) of the Constituion of India, the State Legislatures are competent to make laws in respect of their territory covered by the entries in List-II & III of the 7th schedule of the Constitution. Therefore, in terms of Section 75 of the Act, 2014, the specified institutions under the tenth schedule are governed by the laws of the respective States where they are located. Having regard to the aforesaid legal position, the institutions specified in the tenth schedule located in Telangana are governed by the law of the State of Telangana. 8…… The office of institution of petitioner

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No.2 formerly known as APSC, is now situated in the State of Telangana at Hyderabad. Therefore, the law enacted by the State of Telangana alone, necessarily, has application for administration of the institution. Consequently, any action taken or order now passed by the erstwhile body of the institution specified at Item No. 27 of tenth schedule is without jurisdiction and would be ultra vires. 9. The APSC, at the instance of the State of Andhra Pradesh, is now asserting its power and authority and physically occupying the premises without any authority of law. The APSC is not entitled to operate the bank accounts or withdraw any amount. Notwithstanding the aforesaid legal status, even after 2nd June 2014, the APSC has withdrawn considerable amounts from the State Bank of Hyderabad, Shantinagar Branch, in respect of the above two saving bank accounts. As such, the petitioner No.2 wrote a letter to the State Bank of Hyderabad and Andhra Bank for freezing of the said accounts. Accordingly, a decision was taken by the Bank and rightly so.”

(emphasis laid by this Court)

On the question of ownership and control of the

erstwhile APSC, the High Court held as under:

“38.On a fair reading of Section 5 of the Act, 2014, as correctly contended by the learned A.G. for the state of Telangana, the State of Andhra Pradesh is a mere user of the city of Hyderabad for a maximum period of ten years. It has no proprietary right, title and interest in this city and none of the assets which belong to the erstwhile State of Andhra Pradesh, located at Hyderabad, can be claimed by the State of Andhra Pradesh except in accordance with the Act, 2014…… XXX XXX XXX 40……Because of the adaptation with amendments

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in the eye of law, APSC has no existence, at least in Hyderabad, or in any part of Telangana State… 41. Under such circumstances, the assets and properties and funds whatever lying at the present location of the APSC belong to TSC.”

The High Court held that the claim made by APSC is not

sustainable in law and that present TSC be allowed to

operate the bank accounts of the erstwhile APSC.

Hence, the present appeals filed by the State of

Andhra Pradesh and APSC.

9.Mr. P.P. Rao, learned senior counsel appearing on

behalf of the APSC, contends that it is essential to

first understand the correct purport of Section 75

of the Reorganisation Act, 2014. Section 75

(extracted above) deals only with the continuance of

facilities in respect of the Institutions specified

in the Tenth Schedule. It can, by no means, be

stretched to deal with either ‘apportionment of

assets and liabilities’ of the Institutions

specified in Tenth Schedule of the Reorganisation

Act, 2014 or allocation of the Institutions to one

State or the other.

10. The learned senior counsel contends that the

assets and liabilities of the existing State are

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dealt with in Part-VI, consisting Sections 47-67 of

the Reorganisation Act, 2014, under heading

‘apportionment of assets and liabilities’.

Section 47 of the Reorganisation Act, 2014 reads

as under:

“47. (1) The provisions of this Part shall apply in relation to the apportionment of the assets and liabilities of the existing State of Andhra Pradesh immediately before the appointed day. XXX XXX XXX (3) The apportionment of assets and liabilities shall be subject to such financial adjustment as may be necessary to secure just, reasonable and equitable apportionment of the assets and liabilities amongst the successor States. (4) Any dispute regarding the amount of financial assets and liabilities shall be settled through mutual agreement, failing which by order by the Central Government on the advice of the Comptroller and Auditor-General of India.”

(emphasis laid by this Court)

Further, Section 49, which deals with Treasury and

Bank Balances, reads as under:

“49. The total of the cash balances in all treasuries of the existing State of Andhra Pradesh and the credit balances of the existing State of Andhra Pradesh with the Reserve Bank of India, the State Bank of India or any other bank immediately before the appointed day shall be divided between the States of Andhra Pradesh and Telangana on the basis of population ratio……”

Population ratio has been defined in Section 2(h) as

under:

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“2. (h) “population ratio”, in relation to the States of Andhra Pradesh and Telangana, means the ratio of 58.32 : 41.68 as per 2011 Census”

The learned senior counsel contends that the assets of

APSC need to be divided in the population ratio

between the successor States of Andhra Pradesh and

Telangana in a fair and equitable manner.

11. Mr. Basava Prabhu S. Patil, the learned senior

counsel appearing on behalf of the State of Andhra

Pradesh contends that the impugned judgment and

order passed by the High Court is erroneous in law.

The learned senior counsel contends that the funds

collected by APSC post the creation of Telangana,

i.e., post 02.06.2014 cannot be appropriated by the

State of Telangana simply by way of the order of the

High Court, on the basis of faulty interpretation of

the provisions of the Reorganisation Act, 2014. It

is submitted that this has effectively resulted in

the State of Telangana stopping the State of Andhra

Pradesh from utilising the funds it had collected

even post the bifurcation, in respect of the

thirteen districts which formed part of its

territory. The learned senior counsel further draws

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our attention to Section 64 of the Reorganisation

Act, 2014, which reads as under:

“64. Residuary Provision: The benefit or burden of any asset or liability of the existing State of Andhra Pradesh not dealt with in the foregoing provisions of this Part shall pass to the State of Andhra Pradesh in the first instance, subject to such financial adjustment as may be agreed upon between the States of Andhra Pradesh and Telangana or, in default of such agreement, as the Central Government may, by order, direct.”

(emphasis laid by this Court)

12. The learned senior counsel further contends that

the impugned judgment and order has been passed on a

faulty consideration of the provisions of Sections

5, 75 and 101 of the Reorganisation Act, 2014, and

in ignorance and non consideration of the provisions

of Part VI of the Act, which deal with apportionment

of assets and liabilities. The learned senior

counsel contends that the overarching principle of

the Reorganisation Act, 2014 is a twofold basis of

bifurcation, namely reasonableness and equity, and

population ratio, and the same must be implemented

in its true spirit.

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13. On the other hand, Mr. T.R. Andhyarujina, the

learned senior counsel appearing on behalf of the

State of Telangana contends that the term

‘facilities’ used in Section 75 of the

Reorganisation Act, 2014 should also be understood

to include assets and liabilities of those

respective institutions. If an institution falls

within the territory of Telangana, then it cannot be

disturbed, and the new State of Andhra Pradesh

cannot stake any claim in it whatsoever.

14. Mr. K. Ramakrishna Reddi, learned Advocate

General for the State of Telangana contends that the

specified institutions in the tenth Schedule of the

Reorganisation Act, 2014 are partly corporate

personalities, in the nature of state owned

institutions, without any commercial element and are

non-profit in nature. The learned Advocate General

places reliance on the decision of this Court in the

case of Electricity Employees Union v. Union of

India1, wherein this Court, while interpreting the

provisions of the Punjab Reorganisation Act held as 1

(2000) 7 SCC 339

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under:

“11. Part VI of the Act as stated above deals with apportionment of assets and liabilities of the erstwhile State of Punjab. This Part is not applicable for apportionment of assets and liabilities of the existing Punjab State Electricity Board, as there is specific provision for this purpose viz., Section 67 and moreover the Board has a separate legal entity.”

15. Further, the learned Advocate General contends

that the apportionment of assets and liabilities as

per the Reorganisation Act, 2014 has been made on

the basis of territory and location. The Tenth

Schedule state institutions have to be maintained as

per the location of the respective States. Thus,

purely on the basis of the principle of

territoriality also, the funds and assets of the

erstwhile APSC now belong to the TSC.

16. Mr. Ranjit Kumar, the learned Solicitor General

appearing on behalf of Union of India, submits that

APSC is a statutory body constituted under the

Andhra Pradesh State Council for Higher Education

Act, 1988. Since the Council has to discharge

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statutory responsibilities under the relevant Act,

both the States should adopt the Act of 1988 under

Section 101 of the Reorganisation Act, 2014, in the

interest of students, till such time as they enact

their own laws. While the government of Telangana

has already adopted this, the Government of Andhra

Pradesh is still to do so. The learned Solicitor

General further submits that the ownership and

division of the assets of the erstwhile APSC would

be governed by Section 47 of the Reorganisation Act,

2014.

17. The learned Solicitor General draws our attention

to a crucial provision which governs the assets and

liabilities of the institutions incorporated under

Central or State Act, i.e. Section 52(4), which

reads as under:

“52(4) Where anybody corporate constituted under a Central Act, State Act or Provincial Act for the existing State of Andhra Pradesh or any part thereof has, by virtue of the provisions of Part II, become an inter-State body corporate, the investments in, or loans or advances to, any such body corporate by the existing State of Andhra Pradesh made before the appointed day shall, save

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as otherwise expressly provided by or under this Act, be divided between the States of Andhra Pradesh and Telangana in the same proportion in which the assets of the body corporate are divided under the provisions of this Part.”

(emphasis laid by this Court)

The learned Solicitor General further submits

that since all statutory corporations and Public

Sector Undertakings are the instrumentalities created

by the existing State of Andhra Pradesh in the context

of reorganization of the existing State, their assets

and liabilities are liable to be apportioned between

the two States as per the population ratio stipulated

under the provisions of Section 2(h) of the

Reorganisation Act, 2014. The APSC, being an asset of

the existing State, created by the Act of 1988, it

became necessary to provide for bifurcation of APSC

and allocation of fixed deposits, Bank balances, cadre

strength, vehicles, equipment, movable assets etc. The

learned senior counsel submits that subsequent to the

impugned judgment and order passed by the High Court,

TSC has been operating the bank accounts of APSC,

which includes the money collected from the thirteen

districts of the successor State of Andhra Pradesh.

18. We have heard the learned senior counsel

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appearing on behalf of the parties. The short point

which arises for our consideration is whether the

High Court was right in upholding the action of the

Banks in freezing the accounts of APSC.

19. We are unable to agree with the contentions

advanced by the learned senior counsel appearing for

the State of Telangana.

20. The Constitution of India envisages a federal

feature, which has been held to be a part of the

basic structure of the Constitution of India, as has

been held by the seven Judge Bench of this Court in

the case of S.R. Bommai & Ors. v. Union of India2,

wherein Justice K. Ramaswamy in his concurring

opinion elaborated as under:

“247. Federalism envisaged in the Constitution of India is a basic feature in which the Union of India is permanent within the territorial limits set in Article 1 of the Constitution and is indestructible. The State is the creature of the Constitution and the law made by Articles 2 to 4 with no territorial integrity, but a permanent entity with its boundaries alterable by a law made by

2 (1994) 3 SCC 1

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Parliament. Neither the relative importance of the legislative entries in Schedule VII, Lists I and II of the Constitution, nor the fiscal control by the Union per se are decisive to conclude that the Constitution is unitary. The respective legislative powers are traceable to Articles 245 to 254 of the Constitution. The State qua the Constitution is federal in structure and independent in its exercise of legislative and executive power. However, being the creature of the Constitution the State has no right to secede or claim sovereignty. Qua the Union, State is quasi-federal. Both are coordinating institutions and ought to exercise their respective powers with adjustment, understanding and accommodation to render socio-economic and political justice to the people, to preserve and elongate the constitutional goals including secularism.

248. The preamble of the Constitution is an integral part of the Constitution. Democratic form of Government, federal structure, unity and integrity of the nation, secularism, socialism, social justice and judicial review are basic features of the Constitution.”

(emphasis laid by this Court)

21. Article 3 of the Constitution of India confers

the power of formation of new states on the

Parliament. The scope of Article 3 was elaborated

upon by a five judge bench of this Court in the case

of Raja Ram Pal v. Hon’ble Speaker, Lok Sabha3 as

3 (2007) 3 SCC 184

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under:

“India is an indestructible Union of destructible units. Article 3 and Article 4 of the Constitution together empower Parliament to make laws to form a new State by separation of the territory from any State or by uniting two or more States or parts of States or by uniting any territory to a part of any State, and in so doing to increase or diminish the area of any State and to alter its boundaries……”

22. 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. An eleven Judge

Bench of this Court in the case of H.H.

Maharajadhiraja Madhav Rao Jivaji Rao Scindia

Bahadur of Gwalior & Ors. v. Union of India4 has 4

(1971) 1 SCC 85

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held as under:

“The Court will interpret a statute as far as possible, agreeably to justice and reason and that in case of two or more interpretations, one which is more reasonable and just will be adopted, for there is always a presumption against the law maker intending injustice and unreason. The Court will avoid imputing to the Legislature an intention to enact a provision which flouts notions of justice and norms of fairplay, unless a contrary intention is manifest from words plain and unambiguous. A provision in a statute will not be construed to defeat its manifest purpose and general values which animate its structure. In an avowedly democratic polity, statutory provisions ensuring the security of fundamental human rights including the right to property will, unless the contrary mandate be precise and unqualified, be construed liberally so as to uphold the right. These rules apply to the interpretation of Constitutional and statutory provisions alike.”

(emphasis laid by this Court)

23. In the case of Prakash Kumar@ Prakash Bhutto v.

State of Gujarat5, a constitution bench of this

Court held as under:

“By now it is well settled Principle of Law that no part of a statute and no word of a statute can be construed in isolation. Statutes have to be construed so that every

5 (2005) 2 SCC 409

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word has a place and everything is in its place. It is also trite that the statute or rules made thereunder should be read as a whole and one provision should be construed with reference to the other provision to make the provision consistent with the object sought to be achieved. In Reserve Bank of India v. Peerless General Finance and Investment Co. Ltd. this Court said:

"33. Interpretation must depend on the text and the context. They are the basis of interpretation. One may well say if the text is the texture, context is what gives the colour. Neither can be ignored. Both are important. That interpretation is best which makes the textual interpretation match the contextual. A statute is best interpreted when we know why it was enacted. With this knowledge, the statute must be read, first as a whole and then section by section, clause by clause, phrase by phrase and word by word. If a statute is looked at, in the context of its enactment, with the glasses of the statute- maker, provided by such context, its scheme, the sections, clauses, phrases and words may take colour and appear different than when the statute is looked at without the glasses provided by the context. With these glasses we must look at the Act as a whole and discover what each section, each clause, each phrase and each word is meant and designed to say as to fit into the scheme of the entire Act. No part of a statute and no word of a statute can be construed in isolation. Statutes have to be construed so that every word has a place and everything is in its place." "

(emphasis laid by this Court)

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24. 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.

25. 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 the learned 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. Heavy reliance has also been placed on

Section 75 of the Reorganisation Act, 2014, on the

ground that the assets belonging to the specified

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institutions of the Tenth Schedule exclusively

belong to the State institutions, since the Act does

not provide any apportionment to them. 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 the apportionment of assets and

liabilities among the successor States, useless and

nugatory.

26. The action of the Banks of freezing the 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.

27. For the reasons stated supra, the common

impugned judgment and order passed by the High Court

of judicature at Hyderabad for the States of

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CA @SLP(C) Nos.14705-06 of 2015 28

Telangana and Andhra Pradesh in Writ Petition Nos.

1873 and 2882 of 2015, upholding the freezing of the

bank accounts of APSC being unsustainable in law is

liable to be set aside and set aside. Accordingly,

the appeals filed by the State of Andhra Pradesh and

APSC are allowed.

28. Having allowed the appeal filed by APSC, we also

hold that the action of freezing of the bank

accounts of APSC is 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. Accordingly, APSC must be

allowed to operate their bank accounts in respect of

the thirteen districts which fall within State of

Andhra Pradesh now, in which the amounts collected

post the date of bifurcation have been deposited.

The assets of APSC of the undivided State of Andhra

Pradesh, that is, assets existing up to the date of

bifurcation may be divided between the two successor

States in the population ratio of 58:42, as provided

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CA @SLP(C) Nos.14705-06 of 2015 29

under Section 2(h) of the Reorganisation Act, 2014,

if the two successor States are agreeable to the

same. If the two successor States are unable to

arrive at an agreement, the Central Government may

constitute a committee, which may be directed to

arrive at an agreement, in accordance with the

provisions of the Reorganisation Act, 2014 within a

period of two months from the date such

representation is made to the Central Government.

29. All pending applications are disposed of. No

costs.

………………………………………J. [V. GOPALA GOWDA]

………………………………………J. [ARUN MISHRA]

New Delhi, Dated: March 18, 2016