41. Application of Part
(1) The provisions of this Part shall apply in relation to the apportionment of
the assets and liabilities of the existing State of Bihar immediately before the
appointed day.
(2) The successor States shall be entitled to receive benefits arising out of the
decisions taken by the predecessor State and the successor States shall be liable to
bear the financial liabilities arising out of the decisions taken by the existing State
of Bihar.
(3) The apportionment of assets and liabilities would be subject to such
financial adjustment as may be necessary to secure just, reasonable and equitable
apportionment of the assets and liabilities amongst the successor States.
(4) Any dispute regarding the amount of financial assets and liabilities shall
be settled through mutual agreement, failing which by order, by Central Government
on the advice of the Comptroller and Auditor-General of India.
42. land and goods
(1) Subject to other provisions of this Part, all land and all stores, articles and
other goods belonging to the existing State of Bihar shall,-
The Bihar Reorganisation Act, 2000
13(a) if within the transferred territory, pass to the State of Jharkhand; or
(b) in any other case, remain the property of the State of Bihar:
Provided that where the Central Government is of opinion that any goods or
class of goods should be distributed between the States of Bihar and Jharkhand,
otherwise that according to the situation of the goods, the Central Government
may issue such directions as it thinks fit for a just and equitable distribution of the
goods and the goods shall pass to the successor States accordingly;
(2) Stores held for specific purposes, such as use or utilisation in particular
institutions, workshops or undertakings or on particular works under construction,
shall pass to the successor States in whose territories such institutions, workshops,
undertakings or works are located.
(3) Stores relating to the Secretariat and offices of Heads of Departments
having jurisdiction over the whole of the existing State of Bihar shall be divided as
may be agreed upon between the successor States, or in default of such agreement,
as the Central Government may by order direct for a just and equitable distribution
of such stores.
(4) Any other unissued stores of any class in the existing State of Bihar shall
be divided between the successor States in proportion to the total stores of that
class purchased in the period of three years prior to the appointed day, for the
territories of the existing State of Bihar included respectively in each of the successor
States:
Provided that where such proportion cannot be ascertained in respect of any
class of stores or where the value of any class of such stores does not exceed rupees
ten thousand, that class of stores shall be divided between the successor States
according to the population ratio.
(5) In this section, the expression "land" includes immovable property of
every kind and any rights in or over such property, and the expression "goods"
does not include coins, bank notes and currency notes.
43.Treasury and bank balances
The total of the cash balances in all treasuries of the State of Bihar and the
credit balances of the State with Reserve Bank of India, the State Bank of India or
any other bank immediately before the appointed day shall be divided between
the States of Bihar and Jharkhand according to the population ratio:
Provided that for the purposes of such division, there shall be no transfer of
cash balances from any treasury to any other treasury and the apportionment shall
be effected by adjusting the credit balance of the two States in the books of the
Reserve Bank of India on the appointed day:
Provided further that if the State of Jharkhand has no account on the appointed
day with the Reserve Bank of India, the adjustment shall be made in such manner
as the Central Government may, by order, direct.
14 The Bihar Reorganisation Act, 2000
44.Arrears of taxes
The right to recover arrears of any tax or duty on property; including arrears
of land revenue, shall belong to the successor State in which the property is
situated, and the right to recover arrears of any other tax or duty shall belong to the
successor State in whose territories the place of assessment of that tax or duty is
included on the appointed day.
45. Right to recover loans and advances
(1) The right of the existing State of Bihar to recover any loans or advances
made before the appointed day to any local body, society, agriculturist or other
person in an area within that State shall belong to the successor State in which that
area is included on that day.
(2) The right of the existing State of Bihar to recover any loans or advances
made before the appointed day to any person or institution outside that State shall
belong to the State of Bihar:
Provided that any sum recovered in respect of any such loan or advance shall
be divided between ti)e States of Bihar and Jharkhand according to the population
ratio.
46. Investments and credits in certain funds
(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 Bihar as specified in the Seventh Schedule 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 Bihar 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 Bihar created wholly out of appropriations from the Consolidated Fund of, the
existing State of Bihar, 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.
(2) The investments of the existing State of Bihar 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 Bihar 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 Bihar or any part thereof has, by virtue of the
provisions of Part II, becomes an inter-State body corporate, the investments in, or
The Bihar Reorganisation Act, 2000 15
loans or advances to, any such body corporate by the existing State of Bihar made
before the appointed day shall, save as otherwise expressly provided by or under
this Act, be divided between the States of Bihar and Jharkhand in the same
proportion in which the assets of the body corporate are divided under the
provisions of this Part.
47.Assets and liabilities of State undertakings
(1) The assets and liabilities relating to any commercial or industrial
undertaking of the existing State of Bihar shall pass to the State in which the
undertaking is located.
(2) Where a depreciation reserve fund is maintained by the existing State of
Bihar for any such commercial or industrial undertaking, the securities held in
respect of investments made from that fund shall pass to the State in which the
undertaking is located.48.
Public Debt
(1) All liabilities on account of Public Debt and Public Account of the existing
State of Bihar outstanding immediately before the. appointed day shall be
apportioned in the ratio of population of the successor States unless a different
mode of apportionment is provided under the provisions of this Act.
(2) The individual items of liabilities to be allocated to the successor States
and the amount of contribution required to be made by one successor State to
another sh?ll be such as may be ordered by the Central Government in consultation
with the Comptroller and Auditor-General of India:
Provided that till such orders are issued, the liabilities on account of Public
Debt and Public Account of the existing State of Bihar shall continue to be the
liabilities of the successor State of Bihar.
(3) The liability on account of loans raised from any source and re-lent by the
existing State of Bihar to such entities as may be specified by the Central Government
and whose area of operation is confined to either of the successor States shall
devolve on the respective States as specified in sub-section (4).
(4) The public debt of the existing State of Bihar attributable to loan taken
from any source for the express purpose of re-lending the same to a specific
institution and outstanding immediately before the appomted day shall-
(a) if re-lent to any local body, body corporate or other institution in any
local area, be the debt of the State in which the local area is included
on the appointed day; or
(b) if re-lent to the Bihar State Electricity Board, the Bihar State Road
Transport Corporation, or the Bihar Housing Board or any other
institution which becomes an inter-State institution on the appointed
day, be divided between the States of Bihar and Jharkhand in the same
proportion in which the assets of such body corporate or institution
are divided under the provisions of Part VII of this Act.~
16 The Bihar Reorganisation Act, 2000
(5) Where a sinking fund or a depreciation fund is maintained by the existing
State of Bihar for repayment of any loan raised by it, the securities held in respect
of investments made from that fund shall be divided between the successor States
of Bihar and Jharkhand in the same proportion in which the total public debt is
divided between the two States under this section.
(6) 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).
49. Floating Debt
The liability of the existing State of Bihar in respect of any floating loan to
provide short-term finance to any commercial undertaking shall be the liability of
the State in whose territories the undertaking is located.
50. Refund of taxes collected in excess
The liability of the existing State of Bihar to refund any tax or duty on
property, including land revenue, collected in excess shall be the liability of the
successor State in whose territories the property is situated, and the liability of the
existing State of Bihar to refund any other tax or duty collected in excess shall be
the liability of the successor State in whose territories the place of assessment of
that tax or duty is included.
51. Deposits, etc.
(1) The liability of the existing State of Bihar in respect of any civil deposit or
loan fund deposit shall, as from the appointed day, be the liability of the State in
whose area the deposit has been made.
(2) The liability of the existing State of Bihar in respect of any charitable or
other endowment shall, as from the appointed day, be the liability of the State in
whose area the institution entitled to the benefit of the endowment is located or of
the State to which the objects of the endowment under the terms thereof, are
confined.
52. Provident fund
The liability of the existing State of Bihar in respect of the provident fund
account of a Government servant in service on the appointed day shall, as from
that day; be the liability of the State to which that Government servant is permanently
allotted.
53. Pensions
The liability of the existing State of Bihar in respect of pensions and other
retirement benefits shall pass to, or be apportioned between, the successor States of
Bihar and Jharkhand in accordance with the provisions contained in the Eighth
Schedule to this Act.
The Bihar Reorganisation Act, 2000 17
54. Contracts
(1) Where, before the appointed day, the existing State of Bihar has made any
contract in the exercise of its executive power for any purposes of the State, that
contract shall be deemed to have been made in the exercise of the executive
power-
(a) if the purposes of the contract are, on and from the appointed day,
exclusive purposes of either of the successor States of Bihar and
Jharkhand; and
(b) any other case, of the State of Bihar;
and all rights and liabilities which have accrued, or may accrue under any such
contract shall, to the extent to which they would have been rights or liabilities of
the existing State of Bihar, be rights or liabilities of the State of Jharkhand or the
State of Bihar, as the case may be:
Provided that in any such case as is referred to in clause (b), the initial
allocation of rights and liabilities made by this sub-section shall be subject to such
financial adjustment as may be agreed upon between the successor States of Bihar
and Jharkhand or in default of such agreement, as the Central Government may, by
order, direct.
(2) For the purposes of this section, there shall be deemed to be included in
the liabilities which have accrued or may accrue under any contract-
(a) any liability to satisfy an order or award made by any court or other
tribunal in proceedings relating to the contract; and
(b) any liability in respect of expenses incurred in or in connection with any such proceedings. .
(3) This section shall have effect subject to the other provisions of this Part
relating to the apportionment of liabilities in respect of loans, guarantees and other
financial obligations; and bank balances and securities shall, notwithstanding that
they partake of the nature of contractual rights, be dealt with under those provisions.
55. Liability in respect of actionable wrong
Wl\ere, immediately before the appointed day, the existing State of Bihar is
subject to any liability in respect of any actionable wrong other than breach of
contract, that liabilityshall,-
(a) if the cause of action arose wholly within the territories which, as from
that day; are the territories of either of the successor States of Bihar or
Jharkhand, b~ a liability of that successor State; and
(b) in any other case, be initially a liability of the State of Bihar, but subject
to such financial adjustment as may be agreed upon between the
States of Bihar and Jharkhand or, in default of such agreement, as the
Central Government may; by order, direct.
18 The Bihar Reorganisation Act, 2000
56. Liability as guarantor
Where, immediately before the appointed day, the existing State of Bihar is
liable as guarantor in respect of any liability of a registered co-operative society or
other person, that liability of the existing State of Bihar shall-
(a) if the area of operations of such society or persons is limited to the
territories which, as from that day, are the territories of either of the
States of Bihar or Jharkhand, be a liability of that successor State; and
(b) in any other case, be initially a liability of the State of Bihar, subject to
such financial adjustment as may be agreed upon between the States
of Bihar and Jharkhand or, in default of such agreements, as the
Central Government may; by order, direct.
57. Items in suspense
If any item in SUSpt;: se is ultimately found to affect an asset or liability of the
nature referred to in any of the foregoing provisions of this Part, it shall be dealt
with in accordance with that provision.
58. Residuary provision
The benefit or burden of any asset or liability of the existing State of Bihar not
dealt with in the foregoing provisions of this Part shall pass to the State of Bihar in
the first instance, subject to such financial adjustment as may be agreed upon
between the States of Bihar and Jharkhand or, in default of such agreement, as the
Central Government may, by order, direct.
59. Apportionment of assets or liabilities by agreement
Where the successor States of Bihar and Jharkhand agree that the benefit or
burden of any particular asset or liability should be apportioned between them in
a manner oth~r than that provided for in the foregoing provisions of this Part,
notwithstanding anything contained therein, the benefit or burden of that asset or
liability shall be apportioned in the manner agreed upon.
60. Power of Central Government to order allocation or adjustment in certain
cases
Where, by virtue of any of the provisions of this Part, any of the successor
States of Bihar and Jharkhand becomes entitled to any property or obtains any
benefits or becomes subject to any liability, and the Central Government is of
opinion, on a reference made within a period of three years from the appointed
day by either of the States, that it is just and equitable that property or those
benefits should be transferred to, or shared with, the other successor State, or that
a contribution towards that liability should be made by the other successor State,
the said property or benefits shall be allocated in such manner between the two
States, or the other State shall make to the State subject to the liability such
contribution in respect thereof, as the Central Government may, after consultation
with the two State Governments, by order, determine.
The Bihar Reorganisation Act, 2000 19
61. Certain expenditure to be charged on Consolidated Fund
All sums payable either by the State of Bihar or by the State of Jharkhand to
the other States or by the Central Government to either of those States, by virtue of
the provisions of this Act, shall be charged on the Consolidated Fund of the State
by which such sums are payable or, as the case may be, the Consolidated Fund of
India.