APPORTIONMENT OF ASSETS AND LIABILITIESState · Madhya Pradesh

Section 42 of The Madhya Pradesh Reorganisation Act, 2000

(1)The securities held in respect of the investments made from Cash Balances Investment Account or from any Fund in the Public Account of the existing State of Madhya Pradesh as specified in the Fifth Schedule to this Act shall be apportioned in the ratio of population of the successor States: Provided that the securities held in investments made from the Calamity Relief Fund of the existing State of Madhya Pradesh shall be divided in the ratio of the area of the territories occupied by the successor States: Provided further that the balance in the Reserve Funds in the Public Account of Madhya Pradesh created wholly out of appropriations from the Consolidated Fund of the existing State of Madhya Pradesh, to the extent the balances have not been invested outside Government account, shall not be carried forward to similar Reserve Funds in the Public Account of, successor States: Provided also that the balances in any other Reserve Funds, excluding those specified in sub-section (2), shall be allocated between the States of Madhya Pradesh and Chhattisgarh in the ratio of population of those States.
(2)The investments of the existing State of Madhya Pradesh immediately before the appointed day in any special fund the objects of which are confined to a local area shall belong to the State in which that area is included on the appointed day.
(3)The investments of the existing State of Madhya Pradesh immediately before the appointed day in any private, commercial or industrial undertaking, in so far as such investments have not been made or are deemed not to have been made from the cash balance investment account, shall pass to the State in which the principal seat of business of the undertaking is located.
(4)Where any body corporate constituted under a Central Act, State Act or Provincial Act for the existing State of Madhya Pradesh or any part thereof has, by virtue of the provisions of Part II of this Act, become an inter-State body corporate, the investments in, or loans or advances to, any such body corporate by the existing State of Madhya Pradesh made before the appointed day shall, save as otherwise expressly provided by or under this Act, be divided between the States of Madhya Pradesh and Chhattisgarh in the same proportion in which the assets of the body corporate are divided under the provisions of this Part.

Summary

This provision divides the investments and credits held in various government funds between the two new states.
Securities from the Public Account or Cash Balances Investment Account are split based on the population ratio of the states.
Money held in the Calamity Relief Fund is divided based on the land area each state occupies.
Investments in private or commercial businesses go to the state where the main office of that business is located.
If a fund was created only for a specific local area, that investment stays with the state containing that area.

Practical examples

1The old state had ten crore rupees invested in a general Road Safety Fund. Since this fund is listed in the Fifth Schedule, Madhya Pradesh and Chhattisgarh split the money based on their population numbers according to the 2000 Reorganisation Act.

2A large investment was made in a textile mill that has its main office in Indore. Because Indore remained in Madhya Pradesh, the entire investment in that mill belongs to Madhya Pradesh under Section 42.

3The state held specific disaster relief funds. Since Chhattisgarh covers a certain percentage of the total land area of the original state, it receives a matching percentage of the Calamity Relief Fund.

FAQ

1. How does the Madhya Pradesh Reorganisation Act, 2000, handle general reserve funds under Section 42?

According to Section 42 of the Madhya Pradesh Reorganisation Act, 2000, general reserve funds in the Public Account are allocated between the states based on their population ratio.

2. What happens to a fund meant for a specific city under the Madhya Pradesh Reorganisation Act, 2000?

Under Section 42 of the Madhya Pradesh Reorganisation Act, 2000, any investment in a special fund meant for a local area belongs to the state where that area is now located.

3. Which ratio is used for the Calamity Relief Fund in the Madhya Pradesh Reorganisation Act, 2000?

Section 42 of the Madhya Pradesh Reorganisation Act, 2000, specifies that the Calamity Relief Fund must be divided based on the ratio of the land area of the successor states.

Test yourself

Q1.Under Section 42 of the Madhya Pradesh Reorganisation Act, 2000, what is the primary basis for dividing securities held in the Cash Balances Investment Account?

Q2.According to Section 42 of the Madhya Pradesh Reorganisation Act, 2000, where does an investment in an industrial undertaking go?

Q3.How are investments from the Calamity Relief Fund handled under Section 42 of the Madhya Pradesh Reorganisation Act, 2000?

Q4.What happens to investments in an inter-state body corporate under Section 42 of the Madhya Pradesh Reorganisation Act, 2000?

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