Telangana cannot claim exclusive rights over Hyderabad Institutions

Andhra Pradesh State Council of Higher Education v. Union of India & Ors. etc.


The appeal was filed against the judgment of the High Court wherein it was held that the assets, properties and funds lying at the present location of the Andhra Pradesh State Education Council (APSC) of Higher Education now belong exclusively to the Telangana State Education Council for Higher Education.

By Andhra Pradesh Reorganisation Act, 2014, State of Andhra Pradesh was bifurcated into two separate States – the State of Andhra Pradesh and the State of Telangana. Telangana State Council of Higher Education (TSC) came into existence to discharge the same functions for the State of Telangana as the APSC for the State of Andhra Pradesh. Pursuant to creation of TSC, at its behest, the State Bank of Hyderabad, Shantinagar, Hyderabad Branch, without giving prior notice to APSC, froze the accounts. Alleging the action to be arbitrary and contrary to the principles of natural justice, APSC filed a writ petition before the High Court. 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. 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 issue for consideration before the Supreme Court was whether the High Court was right in upholding the action of the Banks in freezing the accounts of APSC. The State of Telangana claimed ownership over the entire funds and assets of the (erstwhile) APSC. The main contention on behalf of State of Telangana was 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.

The Supreme Court observed that Article 3 of the Constitution of India confers the power of formation of new states on the Parliament. The bifurcation of states is a sensitive and tricky issue and hence adequate care has to be taken by the legislature while drafting such legislations 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. 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 Supreme Court further observed 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 never contemplated by the legislature while enacting the Reorganisation Act, 2014. Also section 47 of the Reorganisation Act provides for the apportionment of assets and liabilities among the successor States. The action of the Banks of freezing the bank accounts of APSC was held untenable in law and was set aside. The Supreme Court held that the action of freezing of the bank accounts of APSC is bad in law as 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 and hence 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, if the two successor States are agreeable to the same. Otherwise the Central Government may constitute a committee, which may be directed to arrive at an agreement as per the Act.