Rational apportionment under reorganisation law upheld where dissolution date and asset-liability split were based on hearing and relevant factors.

A reorganisation statute may validly authorise the Central Government to fix a dissolution date for an existing electricity board and to make provisional arrangements before final apportionment. The Court held that the cut-off date under Section 58 of the Madhya Pradesh Reorganisation Act, 2000 was not arbitrary under Article 14 because the successor boards had begun functioning on different dates and the parties were heard. It also upheld the apportionment of assets and liabilities, finding that power consumption ratio and revenue-generation capacity were rational bases for current assets and liabilities, while population ratio was not the governing criterion. The final challenge failed.

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Issues: (i) Whether the cut-off date fixed for dissolution of the existing electricity board under Section 58 of the Madhya Pradesh Reorganisation Act, 2000 was arbitrary or ultra vires Article 14 of the Constitution of India; (ii) Whether the apportionment of assets and liabilities between the successor boards under the impugned notification was irrational or unjust.

Issue (i): Whether the cut-off date fixed for dissolution of the existing electricity board under Section 58 of the Madhya Pradesh Reorganisation Act, 2000 was arbitrary or ultra vires Article 14 of the Constitution of India.

Analysis: Section 58 contemplates a scheme in which the existing board continues to function after the appointed day, the Central Government may fix a date for dissolution under sub-section (3), and the successor States may constitute their own boards under sub-section (4). The provision was read harmoniously to permit provisional arrangements before a final order. The materials before the Central Government showed that the successor boards had commenced functioning on different dates and that the parties had been heard. In that setting, the chosen date could not be treated as lacking rational basis or as per se arbitrary.

Conclusion: The cut-off date fixed by the Central Government was upheld and was not held to violate Article 14.

Issue (ii): Whether the apportionment of assets and liabilities between the successor boards under the impugned notification was irrational or unjust.

Analysis: The Court held that current assets and current liabilities could validly be apportioned on the basis of power consumption ratio, since that criterion had a rational nexus with the subject matter. Revenue generation capacity was also treated as a relevant factor for current liabilities, while population ratio was not the governing criterion for Section 58. The Court found no arbitrariness in the overall apportionment, particularly as the Central Government had considered multiple factors and had acted after hearing the parties.

Conclusion: The apportionment of assets and liabilities was upheld as rational and not arbitrary.

Final Conclusion: The challenge to the Central Government's final arrangement failed, and the writ petition was rejected while the transferred matters questioning the earlier provisional orders became infructuous.

Ratio Decidendi: Where a reorganisation statute confers power to fix a dissolution date and apportion assets and liabilities, the decision will stand if taken after hearing the parties and on a rational basis; provisional arrangements may be made before the final determination, and judicial interference is warranted only when the resulting classification or apportionment is shown to be arbitrary.

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