37. Application of Part.—(1) The provisions of this Part shall apply in relation to the apportionment
of the assets and liabilities of the State of Madhya Pradesh immediately before the appointed day.
(2) The successor State 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
decision taken by the existing State of Madhya Pradesh.
(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.
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(4) Any dispute regarding the amount of financial assets and liabilities shall be settled through mutual
agreement, failing which by order by the Central Government on the advice of the Comptroller and
Auditor-General of India.
38. Land and goods.—(1) Subject to the other provisions of this Part, all land and all stores, articles
and other goods belonging to the existing State of Madhya Pradesh shall,—
(a) if within the transferred territory, pass to the State of Chhattisgarh; or
(b) in any other case, remain the property of the State of Madhya Pradesh:
Provided that any land, stores, articles or other goods may be distributed otherwise than in accordance
with the situation of such land, stores, articles or goods by mutual agreement between the successor
States, failing which the Central Government may, on the request of any of the Governments of the
successor States and after consulting both the Governments of the successor States, issue directions for
the just and equitable distribution of such land, stores, articles or goods between the successor States and
the land, articles or goods shall accordingly pass to the successor States:
Provided further that in case of the distribution, of any land, stores, articles and goods or class of
goods under this sub-section located outside the existing State of Madhya Pradesh, such distribution shall
be made through mutual agreement arrived at between the Governments of the successor States for that
purpose, failing which the Central Government may, on request by any of the Governments of the
successor States, after consulting both the Governments of the successor States, issue such direction as it
may deem fit for the distribution of such land, stores, articles and goods or class of goods, as the case may
be, under this sub-section.
(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 Madhya Pradesh shall be divided between the successor States in
accordance with the mutual agreement arrived at between the Government of the successor States for that
purpose, failing which the Central Government may, on request by any of the Governments of the
successor States, after consulting both the Governments of the successor States, issue such direction as it
may deem fit for the distribution of such stores or any part of such stores, as the case may be.
(4) Any other unissued stores of any class in the existing State of Madhya Pradesh 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 Madhya Pradesh 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.
39. Treasury and bank balances.—The total of the cash balances in all treasuries of the State of
Madhya Pradesh 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 Madhya
Pradesh and Chhattisgarh 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 apportionments shall be effected by adjusting the credit balances of
the two States in the books of the Reserve Bank of India on the appointed day:
Provided further that if the State of Chhattisgarh 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.
40. 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
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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.
41. Right to recover loans and advances.—(1) The right of the existing State of Madhya Pradesh 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 Madhya Pradesh 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 Madhya
Pradesh:
Provided that any sum recovered in respect of any such loan or advance shall be divided between the
States of Madhya Pradesh and Chhattisgarh according to the population ratio.
42. 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 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.
43. Assets and liabilities of State undertaking.—(1) The assets and liabilities relating to any
undertaking of the existing State of Madhya Pradesh whether directly owned or through a body corporate
constituted or incorporated or registered under any Central, State or Provincial Act, shall,—
(a) if exclusively located in a successor State, pass to the successor State, and where a
depreciation reserve is maintained by the existing State of Madhya Pradesh for such undertaking, the
securities held in respect of investment made from that fund shall also pass to such successor State;
(b) where any such undertaking or part thereof is located, in more than one successor State, the
assets, liabilities and securities shall be divided in such manner as may be agreed upon between the
successor States within a period of two years from the appointed day or in failure of such agreement
as the Central Government may by order direct.
(2) An agreement entered into between the successor States, or order made by the Central
Government under sub-section (1) may provide for the dissolution of the undertaking or transfer or
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re-employment of any employee of the undertaking to or by the successor States, subject to the provisions
of section 62.
(3) An agreement entered into between the successor States, or order made by the Central
Government under sub-section (1) may also provide for the transfer of the assets and liabilities which
would otherwise have passed to a successor State to any other undertaking of that successor State; and
any employee of the undertaking referred to in sub-section (1), who would otherwise have been
transferred to or re-employed by a successor State, may be transferred to or be re-employed by such
undertaking instead of that successor State.
44. Public Debt.—(1) All liabilities on account of Public Debt and Public Account of the existing
State of Madhya Pradesh 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 shall 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 Madhya Pradesh shall continue to be the liabilities of the successor State of
Madhya Pradesh.
(3) The liability on account of loans raised from any source and re-lent by the existing State of
Madhya Pradesh 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 Madhya Pradesh 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 appointed 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 Madhya Pradesh State Electricity Board, the Madhya Pradesh State Road
Transport Corporation, or the Madhya Pradesh Housing Board or any other institution which becomes
an inter-State institution on the appointed day, be divided between the States of Madhya Pradesh and
Chhattisgarh 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.
(5) Where a sinking fund or a depreciation fund is maintained by the existing State of Madhya
Pradesh 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 Madhya Pradesh and Chhattisgarh 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).
45. Floating loans.—All liabilities of the existing State of Madhya Pradesh of any floating loan to
provide short term finance to any local body, body corporate or other institution shall be determined by
mutual agreement between the successor States, failing which the Central Government shall determine
such liability between the successor States in consultation with such States.
46. Refund of taxes collected in excess.—The liability of the existing State of Madhya Pradesh 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
Madhya Pradesh 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.
47. Deposits, etc.—(1) The liability of the existing State of Madhya Pradesh in respect of any civil
deposit or local fund deposit shall, as from the appointed day, be the liability of the State in whose area
the deposit has been made.
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(2) The liability of the existing State of Madhya Pradesh 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.
48. Provident fund.—The liability of the existing State of Madhya Pradesh 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.
49. Pensions.—The liability of the existing State of Madhya Pradesh in respect of pensions shall pass
to, or be apportioned between the successor States of Madhya Pradesh and Chhattisgarh in accordance
with the provisions contained in the Sixth Schedule to this Act.
50. Contracts.—(1) Where, before the appointed day, the existing State of Madhya Pradesh 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 Madhya Pradesh and Chhattisgarh, then, of that State; or
(b) in any other case, of the State of Madhya Pradesh,
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 Madhya Pradesh, be rights or
liabilities of the State of Chhattisgarh or the State of Madhya Pradesh, 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 Madhya Pradesh and Chhattisgarh 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
accured 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.
51. Liability in respect of actionable wrong.—Where, immediately before the appointed day, the
existing State of Madhya Pradesh is subject to any liability in respect of any actionable wrong other than
breach of contract, that liability shall,—
(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 Madhya Pradesh or Chhattisgarh, be a liability of that
successor State; and
(b) in any other case, be initially a liability of the State of Madhya Pradesh, but subject to such
financial adjustment as may be agreed upon between the States of Madhya Pradesh and Chhattisgarh
or, in default of such agreement, as the Central Government may, by order, direct.
52. Liability as guarantor.—Where, immediately before the appointed day, the existing State of
Madhya Pradesh 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 Madhya Pradesh 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 Madhya Pradesh or Chhattisgarh, be a liability of
that successor State; and
(b) in any other case, be initially a liability of the State of Madhya Pradesh, subject to such
financial adjustment as may be agreed upon between the States of Madhya Pradesh and Chhattisgarh
or, in default of such agreements, as the Central Government may, by order, direct.
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53. Items in suspense.—If any item in suspense 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.
54. Residuary provision.—The benefit or burden of any asset or liability of the existing State of
Madhya Pradesh not dealt with in the foregoing provisions of this Part shall pass to the State of Madhya
Pradesh in the first instance, subject to such financial adjustment as may be agreed upon between the
States of Madhya Pradesh and Chhattisgarh or, in default of such agreement, as the Central Government
may, by order, direct.
55. Apportionment of assets or liabilities by agreement.—Where the successor States of Madhya
Pradesh and Chhattisgarh agree that the asset, liability or benefit or burden of any particular asset or
liability should be apportioned between them in a manner other than that provided for in the foregoing
provisions of this Part then, notwithstanding anything contained therein, the assets, liability or benefit or
burden of that asset or liability shall be apportioned in the manner agreed upon.
56. 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 Madhya Pradesh and
Chhattisgarh 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.
57. Certain expenditure to be charged on Consolidated Fund.—All sums payable either by the
State of Madhya Pradesh or by the State of Chhattisgarh 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.