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IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD
M.S. RAMACHANDRA RAO, T. VINOD KUMAR, JJ.
The Andhra Pradesh State Dairy Development Coop. Federation Ltd. – Petitioner
Versus
Telangana State Dairy Development Coop. Federation Ltd. – Respondent
Writ Petition No. 22680 of 2016
Decided On : 09-03-2021
A.P. Re-organization Act, 2014 - Andhra Pradesh State Dairy Development Co-operative - To declare the action of the State of Telangana in issuing G.O.Ms. No. 8 Animal Husbandry, Dairy Development and Fisheries (Dy-II) Department, as illegal, arbitrary, contrary to the Constitution of India and the provisions of the A.P. Re-organization Act, 2014 to set aside the same and to consequently direct Telangana State Dairy Development Co-operative Federation Ltd. not to operate Bank Accounts in respondent nos. 5 to 9 Banks unless and until division of Assets and Liabilities is completed in terms of Section 53 of the Act - Whether the Union of India, under the Act, has any jurisdiction in the apportionment of assets and liabilities of institutions and undertakings mentioned in Schedule IX to the Act and whether such a jurisdiction extends to adjudicating disputes in that regard between the successor States or their entities like the petitioner and the 1st respondent?
Finding of the Court:
Liabilities of the operational Units of the erstwhile A.P. Dairy Development Cooperative Federation Limited shall be apportioned between petitioner and 1st respondent on ‘location basis’ as per clause (a) of proviso to Section 53 of the Act and the liabilities of the ‘Head Quarters’ shall be apportioned between the petitioner and 1st respondent on the basis of population ratio i.e. 58.32:41.68 - limited power conferred on the Union of India under Section 71 is to issue directions with regard to: (a) division of the interests and shares of the existing State of Andhra Pradesh in a Company mentioned in the IX Schedule between the successor States and (b) reconstitution of the Board of Directors.
Result: Closed.
ORDER :
1. The Andhra Pradesh State Dairy Development Co-operative Federation Ltd. has filed this Writ Petition against the Telangana State Dairy Development Co-operative Federation Ltd. (1st respondent), the State of Telangana (2nd respondent), the Union of India, represented by its Secretary, Ministry of Home Affairs, New Delhi (3rd respondent) and six Banks (respondent Nos. 4 to 9) to declare the action of the State of Telangana in issuing G.O.Ms. No. 8 Animal Husbandry, Dairy Development and Fisheries (Dy-II) Department, dated 06.05.2016 as illegal, arbitrary, contrary to the Constitution of India and the provisions of the A.P. Re-organization Act, 2014 (for short ‘the Act’) to set aside the same; and to consequently direct Telangana State Dairy Development Co-operative Federation Ltd. not to operate Bank Accounts in respondent nos. 5 to 9 Banks prior to 02.06.2014 unless and until division of Assets and Liabilities is completed in terms of Section 53 of the Act.
The background facts
2. The composite State of Andhra Pradesh was bifurcated into the new State of Telangana and the residuary State of Andhra Pradesh w.e.f. 02.06.2014 under the Act made by the Parliament.
3. In the composite State of Andhra Pradesh, assistance of the UNICEF was taken in 1960 to commence Integrated Milk Project focusing on organizing milk production as a subsidiary activity to augment the income of farmers, to arrange for collection of rural surplus milk at the door steps of the farmers and to provide quality milk to the urban and semi-urban consumers.
4. Initially, dairy development activities were coordinated by the Dairy Development Department of the State Government and vast dairy infrastructure was built throughout the composite State of Andhra Pradesh.
5. Thereafter, in 1973, these activities were transferred to a Corporation by name, A.P. Dairy Development Corporation Ltd. a company registered under the Companies Act, 1956 vide G.O.Ms. No. 842 (F&A) (Dairy) Department dated 14.08.1973. All the shares in the said Corporation were owned by the Government of Andhra Pradesh.
6. In 1980, a policy-decision was taken by the Government of Andhra Pradesh vide G.O.Ms. No. 551, F&RD dated 10.12.1980 to implement Operation Flood Schemes funded through “Indian Dairy Corporation” under Three-Tier cooperative structure whereunder: (i) at village level, Primary Co-operative Societies collect milk, (ii) at District level, Dairy Units process, package and market as per the directives of the Federation at State level and (iii) at the State level, the petitioner would market milk and milk products under the popular ‘Vijaya’ brand.
7. For the above operations, the A.P. Dairy Development Cooperative Federation came into existence on 1.10.1981 on being registered under the A.P. Co-operative Societies Act, 1964, and the A.P. Dairy Development Corporation (the Company) gave all its assets to the petitioner on rent of Rs. 1,000/- per annum for operational management including the manpower.
8. Thus there were two entities: (i) A.P. Dairy Development Cooperative Federation Ltd. (a Society) and the (ii) A.P. Dairy Development Corporation Ltd. (a Company).
9. The A.P. Dairy Development Co-operative Federation, prior to bifurcation of the composite State of Andhra Pradesh on 02.06.2014, was operating in the Districts of Anantapur, Kadapa, Chittoor, West Godavari, East Godavari and in Krishna through its member Krishnaveni Milk Union, Warangal, Khammam, Mahbubnagar, Nalgonda, Ranga Reddy, Medak, Nizamabad, Karimnagar and Adilabad and also in Hyderabad.
10. After 02.06.2014, the Telangana State created its own Telangana State Dairy Development Cooperative Federation (1st respondent) vide R.C. No. 208/2016 Federation dated 04.03.2016.
11. Thereafter the A.P. Dairy Development Co-operative Federation’s activities became confined to the residuary State of Andhra Pradesh. The said entity is the petitioner in this Writ Petition.
12. In the Act which was enacted on 01.03.2014 and which came
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