54Public debt

(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—

(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

(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—

(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

(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).