2016 Supreme(SC) 254

SUPREME COURT OF INDIA
V. GOPALA GOWDA, ARUN MISHRA, JJ.
Andhra Pradesh State Council of Higher Education – Appellant
Vs.
Union of India & Ors. Etc. – Respondents
Civil Appeal Nos. 3019-3020 & 3021 of 2016 (Arising out of SLP (C.) Nos. 14705-14706 & 14712 of 2015)
Decided on : 18-03-2016

IMPORTANT POINTS
The statute should be read as a whole.
Freezing of Bank accounts of APSC was not justified.
Pre bifurcation assets of APSC should be apportioned in the population ratio of 58:42.

Headnote:(a) Constitution of India – Basic structure – Federal feature of the Union – Part of basic structure of the Constitution. (Para 20)

       (1994) 3 SCC 1 – Relied upon

       (b) Constitution of India – Articles 3 and 4 – Andhra Pradesh Reorganisation Act, 2014 – While interpreting Act, 2014 all parts of the statute must be given effect to. (Para 22)

       (2007) 3 SCC 184; (1971) 1 SCC 85;

       (2005) 2 SCC 40 – Relied upon

       (c) Andhra Pradesh Reorganisation Act, 2014 – Section 75 and 47 – State of Telangana invoking section 75 to claim territorial exclusivity on assets in Hyderabad which is in Telangana – This will render section 47 providing for apportionment of assets useless and nugatory – Not permissible – Bifurcation of assets and liabilities of the statutory bodies among the two successor States must be equitable – Held, freezing the bank accounts of APSC by Banks wholly untenable in law. (Para 24, 25, 26)

       (2000) 7 SCC 339 – Referred

       (d) Andhra Pradesh Reorganisation Act, 2014 – Section 75, 47 and 2(h) – Banks freezing accounts of APSC – Includes amounts collected from thirteen districts of Andhra Pradesh post bifurcation – Not proper – Assets on date of bifurcation directed to be apportioned in population ratio of 58:42. (Para 28)

       Facts of the case:

       The Andhra Pradesh State Council of Higher Education was constituted under Section 3 of the Andhra Pradesh State Council of Higher Education Act, 1988.

       On 02.06.2014, the Andhra Pradesh 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.

       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.

       Vide G.O.M. No. 5 dated 02.08.2014, the Government of Telangana adapted the Act of 1988 and the Telangana State Council of Higher Education came into existence to discharge the same functions for the State of Telangana as the APSC for the State of Andhra Pradesh.

       Pursuant to the creation of the TSC, the Secretary to the Government, Higher Education (UE) Department, Telangana, wrote Letter 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 divide the assets in the ratio of population as 52:48, as provided for under Section 2(h) of the Reorganisation Act, 2014.

       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.

       TSC sent a communication to the Manager, Andhra Bank, Saifabad, 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 to APSC, informing them about the letter from TSC. In its reply, 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 declined to freeze the accounts of APSC. The State Bank of Hyderabad, Shantinagar, Hyderabad Branch, without giving prior notice to APSC froze the accounts at the behest of TSC.

       APSC filed Writ Petition praying for the action of the State Bank of Hyderabad, Shantinagar, Hyderabad Branch in freezing the accounts of APSC to be declared as illegal, arbitrary and contrary to the principles of natural justice and setting it aside. The State of Telangana also filed Writ Petition 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 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 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.

       Finding of the Court:

       Impugned judgment is not sustainable.

       Result: Appeals filed by the State of Andhra Pradesh and APSC allowed.