Section 54 of The Punjab Reorganisation Act, 1966 in hindi — Public debt

Bare section text

Official Legislative Text

(1)The public debt of the existing State of Punjab attributable to loans raised by the issue of Government securities and outstanding with the public immediately before the appointed day shall, on and from that day, be the debt of the State of Punjab, and—
1. (a)the other successor States shall be liable to pay to the State of Punjab their shares of the sums due from time to time for the servicing and repayment of the debt, and
2. (b)for the purpose of determining the said shares, the debt shall be deemed to be divided between the successor States as if it were a debt referred to in sub-section (4).
(2)The public debt of the existing State of Punjab attributable to loans taken from the Central Government, the National Co-operative Development Corporation or the Khadi and Village Industries Commission or from any other source for the purpose of re-lending the same to a specific institution or class of institutions and outstanding immediately before the appointed day shall—
1. (a)if re-lent to any local body, body corporate or other institution in any local area, be the debt of the successor State in whose territories the local area is included on the appointed day; or
2. (b)if re-lent to the Punjab State Electricity Board or any other institution which becomes an interState institution on the appointed day, be divided between the successor States in the same proportion in which the assets of such body corporate or institution are divided under the provisions of Part VII.
(3)The public debt of the existing State of Punjab attributable to loans taken from the Central Government for the Beas Project and the Bhakra-Nangal Project as defined in sub-section (4) of section 78 shall be divided between the successor States in such proportion as may be agreed upon between them, or if no agreement is entered into within two years from the appointed day, as may be fixed by order of the Central Government.
(4)The remaining public debt of the existing State of Punjab attributable to loans taken from the Central Government, the Reserve Bank of India or any other body or bank before the appointed day shall be divided between the successor States in proportion to the total expenditure on all capital works and other capital outlays incurred or deemed to have been incurred up to the appointed day in the territories of the existing State of Punjab included respectively in each of those successor States: Provided that in computing such expenditure, the expenditure on the Beas Project and the Bhakra-Nangal Project as defined in sub- section (4) of section 78 shall be excluded and the expenditure on other assets for which capital accounts have been kept shall be taken into account. Explanation.—Where any expenditure on capital works or other capital outlays cannot be allocated between the territories included in the successor States, such expenditure shall, for the purposes of this sub-section, be deemed to have been incurred in those territories according to the population ratio.
(5)Where a sinking fund or depreciation fund is maintained by the existing State of Punjab for repayment of any loan referred to in sub-section (3), the securities held in respect of the investments made from that fund shall be divided between the successor States in the same proportion and in the same manner as the public debt referred to in sub-section (3).
(6)Where a sinking fund or depreciation fund is maintained by the existing State of Punjab for the repayment of any loan raised by it other than a loan referred to in sub-section (3), the securities held in respect of the investments made from that fund shall be divided between the successor States in the same proportion as the public debt referred to in sub-section (4).
(7)In this section, the expression "Government security" means a security created and issued by a State Government for the purpose of raising a public loan and having any of the forms specified in, or prescribed under clause (2) of section 2 of the Public Debt Act, 1944 (18 of 1944).

Educational Study Layer

Summary

This section outlines how the public debt of the existing State of Punjab is divided among the new successor States.
Debt from government securities outstanding before the appointed day becomes the initial debt of Punjab, with other States reimbursing Punjab for their shares.
Loans taken to re-lend to local bodies belong to the State where that local body is located.
Debt related to the Beas and Bhakra-Nangal Projects is divided by mutual agreement or by the Central Government after two years.
General public debt is divided based on the proportion of capital expenditure previously spent in each new State's territory.

Practical examples

1In 1960, Punjab issued a public bond. Under this rule, the new State of Punjab must manage the repayment of this bond, but Haryana will send money to Punjab to cover its specific share of the bond payments.

2The old Punjab government borrowed money from the Central Government to build a local hospital in Simla. Because Simla goes to Himachal Pradesh, Himachal Pradesh completely takes over this specific hospital loan.

3A massive loan was taken for general infrastructure across the whole region. The total capital spent in Haryana's new borders was 30 percent, so Haryana assumes 30 percent of this general public debt.

FAQ

1. How is the public debt from government securities handled under Section 54 of the Punjab Reorganisation Act, 1966?

Section 54 of the Punjab Reorganisation Act, 1966 states that this debt becomes the responsibility of the new State of Punjab, but the other successor States must pay Punjab their respective shares over time.

2. What happens to loans taken for the Beas Project under Section 54 of the 1966 Punjab Reorganisation Act?

Under Section 54 of the 1966 Punjab Reorganisation Act, loans for the Beas and Bhakra-Nangal Projects are divided in a proportion agreed upon by the successor States, or fixed by the Central Government if no agreement is reached within two years.

3. According to Section 54 of the Punjab Reorganisation Act, how is general unallocated capital expenditure divided?

Section 54 of the Punjab Reorganisation Act provides that if capital expenditure cannot be allocated to specific territories, it is deemed to have been incurred according to the population ratio.

Practice Quiz

Q1.Under Section 54 of the Punjab Reorganisation Act, 1966, which entity is initially responsible for the public debt raised by the issue of Government securities?

Q2.If the old State of Punjab took a loan from the Khadi and Village Industries Commission to re-lend to a local society, who takes the debt under Section 54 of The Punjab Reorganisation Act, 1966?

Q3.What happens to loans taken for the Beas Project if States cannot agree within two years under Section 54 of the Punjab Reorganisation Act?

Q4.How are remaining general loans divided among successor States under Section 54 of the 1966 Punjab Reorganisation Act?

Q5.Cross-referencing Section 54 and Section 53 of the Punjab Reorganisation Act, 1966, how are securities in a depreciation fund for a general public loan treated compared to securities for a state undertaking?

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