CASE BRIEF
Citations: (2016) 6 SCC 635
Case Type: Civil Appeal
Case No: 3021 of 2016
Writ Petition No. 1873 and 2882 of 2015
Decided On: March 18, 2016
Appellant: Andhra Pradesh State Council of Higher Education
Respondent: Union of India & Ors. Etc.
Bench: V. Gopala Gowda, Arun Mishra.
Statutes Referred:
Andhra Pradesh State Council of Higher Education Act, 1988;
Andhra Pradesh Reorganization Act, 2014;
Article-1, 2-4,245-254,246(2) and (3) of Constitution of India.
Cases Referred: (2006) 1 SCC 442; (2014) 12 SCC 696; AIR 1963 SC 853; AIR 1970 SC 1446; (2006) 5 SCC 330
S.R. Bommai & Ors. v. Union of India
Electricity Employees Union v. Union of India
In Reserve Bank of India v. Peerless General Finance and Investment Co. Ltd.
Prakash Kumar@ Prakash Bhutto v. State of Gujarat
H.H. Maharajadhiraja Madhav Rao Jivaji Rao Scindia Bahadur of Gwalior & Ors. v. Union of India
Facts:
- The Andhra Pradesh State Council of Higher Education (APSC) was constituted under Section 3 of the Andhra Pradesh State Council of Higher Education Act, 1988, to instruct the State government in matters concerning to Higher Education in the State and to oversee its development with Perspective Planning.
- The APSC continued carrying out the several tasks assigned to it under the Act of 1988, including directing common entrance examinations for various courses in the State of Andhra Pradesh.
- Andhra Pradesh Reorganisation Act, 2014 came into force on 02.06.2014, which separated the existing State of Andhra Pradesh into two separate States, namely, the State of Andhra Pradesh and the State of Telangana.
- It is responsible for the territories of the two successor states of Andhra Pradesh and Telangana, and required provisions relating to representation in Parliament and State Legislatures, apportionment of assets and liabilities distribution of revenues, development of water resources mechanisms for the management and, power and natural resources and other matters.
- The Government of Telangana issued a Circular Memo On 30.10.2014 to the senior management of the banks in which the bank accounts of the government were said to be functional to ensure that they are operating as per the provisions of the Reorganization Act, 2014.
- TSC sent a communication to the Manager, Andhra Bank, Saidabad, Hyderabad Branch, on 05.01.2015 stating that TSC is the successor organization to APSC according to the Reorganisation Act, 2014 and asked the Bank to freeze the operation of all the accounts in the name of APSC along with Account No. 0533100110978.
- The Bank sent a letter on 07.01.2015 to APSC, notifying them about the letter from TSC. APSC in its reply dated 08.01.2015, denied that TSC was APSC successor and informed the Bank that if bank will freeze its account, it would go for a legal action.
- Accordingly, the Bank sent a letter on 14.01.2015 to TSC declining 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 directive of TSC on 28.01.2015,
- Aggrieved by the action of the Bank which freezed the accounts, Before the High Court of Andhra Pradesh APSC filed Writ Petition No. 1873 of 2015, praying for the action of the State Bank of Hyderabad, Shantinagar, Hyderabad Branch’s action of freezing the accounts of APSC to be declared as, arbitrary illegal and opposing to the principles of natural justice and setting it aside.
Issues Involved:
- To whom will this asset, property and funds which APSHE considers to be its own asset will now belong to either to APSHE will retain it or it will go to TSECHE is a question.
- Whether the High Court will uphold the action of bank account of APSHE.
Contentions advanced by the Appellant:
- The appellant states that all statutory and public sector businesses are under the provisions created by the existing Andhra Pradesh within the framework of current state restructuring. Therefore, their assets and liabilities should be distributed as per the population ratio which was agreed upon as per section 2(h) of the Reorganisation Act, 2014.
- APSC, an existing state asset created by the 1988 law, had to provide allocations for APSC branches and time deposits, bank balances, executive strength, vehicles, equipment, mobile assets, etc. .. Following a decision and order passed by the High Court, TSC manages
APSC’s bank account, which includes money collected from 13 districts in Andhra Pradesh.
Observations/Obiter Dicta:
- Referring to the case of S.R Bommai V. UOI ,the Bench said 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 Parliament.
- 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) Article 3 of the Constitution of India confers the power of formation of new states on the Parliament.
- In Reserve Bank of India v. Peerless General Finance and Investment Co. Ltd. This Court said:
- 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.” “
Rationale:
- If an existing state diverges to form two new states, there will be a fair divergence of statutory assets and liabilities between the two successors to ensure the welfare of the general public residing within.
- In this case, Telangana claimed ownership of the (former) APSC funds and entire assets. This should not have been the legislative intent of enacting the 2014 Reorganization Act. Due to the main purpose of the discussion of the scholarly senior adviser who appeared on behalf of Telangana and the fact that Hyderabad belongs to the successor Telangana, the successor Andhra Pradesh is an institution of the city of Hyderabad no right to it.
- Article 75 of the 2014 Restructuring Act also places great trust in the fact that assets belonging to a particular institution in Schedule 10 are not exclusively allocated to state institutions, and therefore belong only to state institutions.
- The bank’s behaviour of freezing APSC bank accounts is completely unacceptable by law and should be set aside. It cannot be imagined that the legislature was pondering the complete takeover of APSC’s assets by TSC, because the state agency happens to be in Hyderabad, which is now part of Telangana while enacting the 2014 Reorganization Act.
Judgment:
- The common impugned judgment and order passed by the High Court of judicature at Hyderabad for the States of 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.
- Having allowed the appeal filed by APSC, The court also held 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 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.
Conclusion:
This case highlighted the way of interpreting a statute in a just and reasonable manner. Any statute which is made must be seen as to why it was enacted, it will never go against justice, equity and good conscience, if the interpretation is made keeping the intention of the enactment of that legislation, there will be minimal chances of biased judgements.
The Supreme Court through its judgement said that upholding the freezing of the bank accounts of APSC being unsustainable in law is liable to be set aside. The assets of APSC of the undivided State of Andhra Pradesh may be divided between the successor states in the relevant ratio. If the states doesn’t arrive at an agreement, a committee will be setup which will resolve the issue according to the Reorganisation act within 2 months from the date of representation to the central government
Prepared by Anushka Choudhary