Telangana govt suffers setback, HC quashes Milk Factory transfer order

Located at Lalapet, Milk Products Factory was a part of erstwhile A.P. Dairy Development Cooperative Federation (APDDCF) Limited. The factory produces the 'Vijaya' brand milk products.

Hearing a petition of APDDCF, a division bench of Justice MS Ramachandra Rao and Justice Tadakamalla Vinod Kumar said the action of Telangana government was illegal, arbitrary, and contrary to the AP Reorganization Act ­2014.

The bench said that unless and until the division of assets and liabilities is completed in terms of Section 53 of the AP Reorganization Act, the ownership of the properties and machinery of the milk factory cannot be claimed unilaterally by Telangana state. Hence the decision of the state government was arbitrary, the court said.

Telangana government contended that erstwhile AP Dairy Development Co-operative Federation had units in districts that fall in the new state of Telangana and in the residuary state of Andhra Pradesh and therefore the operations of the entity were inter-state.

Telangana government also stated that the milk products factory and the buildings at Somajiguda are exclusively located in Hyderabad and its operations are confined to the local area. It was purely to cater to the needs of the twin cities of Hyderabad and Secunderabad and to the attached dairy units in the surrounding areas of Hyderabad. So, the milk factory at Lalapet cannot be treated as the headquarters to be divided between the two states.

The bench rejected the contentions of the Telangana government and directed that the administrative office of the erstwhile AP Dairy Development Cooperative Federation and the assets and liabilities thereof shall be divided as per clause (b) of the proviso to Section 53(1) of the AP Reorganization Act in the ratio of 58.32: 41.68 within four weeks.

The administrative office of the APDDCF and its assets and liabilities should be divided between APDDCF and TSDDCF in the ratio of 58.32: 41.68. While the first and second floors of the building go to TSDDCF, the third and fourth floors go to APDDCF. The ground floor should be used by both of them, the order said.

Both federations were given the liberty to approach the Comptroller and Auditor­ General of India (CAGI) to assess the market value of the property. The Comptroller and Auditor­ General should, within eight weeks of receiving such a request from either party, complete the valuation, and pass on details to the two federations, the court said.

Within three months of receiving information from CAGI, the TSDDCF should transfer 58.32 percent of the share to APDDCF.

The GO No. 17, issued by Telangana was declared to be only an interim arrangement. The APDDCF was not bound by that GO, the court said.

The other entities were some dairy buildings and the Somajiguda guest house. All these belonged to the erstwhile APDDCF. The court ordered that the market value of the guest house at Somajiguda should be determined by the Comptroller and Auditor General and it should be apportioned between APDDCF and TSDDCF in the ratio of 58.32 and 41.68.