2006 (9) TMI 603 - SC - Indian Laws

Summary

Issues Involved:
1. Interpretation and application of Section 58 of the Madhya Pradesh Reorganisation Act, 2000.
2. Fixation of the date of dissolution of the Madhya Pradesh State Electricity Board (MPSEB).
3. Division of assets and liabilities between Madhya Pradesh and Chhattisgarh.
4. Alleged arbitrariness and violation of Article 14 of the Constitution of India.

Issue-wise Detailed Analysis:

1. Interpretation and Application of Section 58 of the Madhya Pradesh Reorganisation Act, 2000:
The primary issue was the interpretation and application of Section 58 of the Madhya Pradesh Reorganisation Act, 2000. The Act provided for the reorganization of the existing State of Madhya Pradesh and the creation of the State of Chhattisgarh. Section 58 specifically dealt with the continuation and dissolution of the Madhya Pradesh State Electricity Board (MPSEB) and the formation of successor boards. The Court noted that the MPSEB was to continue functioning until a mutually agreed arrangement or directions from the Central Government were issued. The Central Government had the authority to fix a date for the dissolution of the MPSEB and to apportion its assets, rights, and liabilities between the successor states.

2. Fixation of the Date of Dissolution of the MPSEB:
The Court examined whether the fixation of the dissolution date as 15.11.2000 was arbitrary and violative of Article 14 of the Constitution. The Central Government had fixed this date based on the formation of the Chhattisgarh State Electricity Board (CSEB) on 15.11.2000. The Court held that the Central Government had the authority to fix the date and that the provisional order passed under Section 58(4) was implicit. The Central Government's decision to fix the date was not found to be arbitrary or without jurisdiction.

3. Division of Assets and Liabilities:
The division of assets and liabilities between Madhya Pradesh and Chhattisgarh was a contentious issue. The MPSEB argued that the division was made without considering the revenue generation potential and was therefore prejudicial. The Court noted that the Central Government had adopted a rational method of apportioning current assets and liabilities based on the power consumption ratio of the states, which was roughly 77:23. The long-term assets and liabilities were divided in the ratio of 90:10. The Court found that the Central Government's approach was not arbitrary and had a rational nexus with the subject matter of apportionment.

4. Alleged Arbitrariness and Violation of Article 14:
The MPSEB contended that the fixation of the dissolution date and the apportionment of assets and liabilities were arbitrary and violated Article 14 of the Constitution. The Court examined the procedural fairness and the principles of natural justice followed by the Central Government. It was observed that the Central Government had given an opportunity of hearing to both parties and had considered various factors before making its decision. The Court held that the Central Government's actions were not arbitrary and did not violate Article 14.

Conclusion:
The Supreme Court dismissed the writ petition filed by the MPSEB and upheld the Central Government's decision regarding the fixation of the dissolution date and the division of assets and liabilities. The Court found that the Central Government had acted within its jurisdiction and had followed a rational and fair approach in apportioning the assets and liabilities between the successor states. The Court also emphasized that it would exercise judicial restraint in such matters and would not interfere unless there was a clear violation of fundamental rights.