The States Reorganisation Act,1956
Section 79. Right to recover loans and advances
(1) The right to recover any loans or advances made before the appointed day by an existing State 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.
(2) The right to recover any loans or advances made before the appointed day by an existing State to any person or institution outside that State shall belong to the successor State or, if there be two or more successor States, to the principal successor State:
Provided that where there are two or more successor States, any sum recovered in respect of any such loan or advance shall be divided between all the successor States according to the population ratio.
