Hingorani Vs. State of Bihar  Insc 35 (13 January 2005)
Hegde & S.B. Sinha
NOS. 7 & 9-10 IN WRIT PETITION (CIVIL) NO.488 OF 2002 O R D E R This Court
in this case disposed of on 9th May, 2003 since reported in (2003) 6 SCC 1 issued
certain directions. Those directions need not be reproduced herein. Pursuant to
or in furtherance of those directions, the State of Bihar has deposited a sum of Rs. 50 crores.
The High Court of Judicature at Patna has also constituted a committee headed by Hon'ble Mr. Justice Uday Sinha,
a former Judge of the Patna High Court.
report of the said committee has been placed before us, from a perusal whereof
it appears that a sum of Rs. 25,98,65,883.00 had been recommended for payment
to the employees of most of the undertakings.
to Bihar State Sugar Corporation was said to be in the pipeline which came to
be about Rs. 17 crores. It has been pointed out that BSIDC and units of other
corporations in Jharkhand had not been paid yet and the Committee is left with Rs.
6 crores and odd.
application for clarification has been filed by the Petitioner herein marked as
I.A. No. 7 of 2004 wherein it has been prayed that the Jharkhand Hill Area Lift
Irrigation Corporation Limited (JHALCO) be treated as successor of Bihar Hill
Area Lift Irrigation Corporation (BHALCO) from 15.11.2000 onwards. It has
further been contended that employees of Bihar Hill Area Lift Irrigation
Corporation Ltd. would be absorbed by Jharkhand Hill Area Lift Irrigation
Corporation Ltd., only if they forego their claim of salary for period prior to
the respective dates of absorption.
prayer therefore has been made to clarify the order dated 9th May, 2003 as to whether the State of Bihar or State of Jharkhand or both would be required to pay
the unpaid salary to the employees of BHALCO.
interlocutory application being I.A. No. 9 of 2004 has been filed by the
petitioner praying therein for a direction upon the Respondent State of Bihar
and/ or State of Jharkhand to deposit sufficient sum of money with the Hon'ble Patna
High Court so that at least the employees of the corporations listed in the
order dated 9th May, 2003 be paid their salaries.
affidavits affirmed by Shri Ashok Kumar Choudhary, Chairman, Bureau of Public
Enterprises, Government of Bihar, Patna have been filed on behalf of the State of Bihar both in I.A. No. 7 and I.A. No. 9
of 2004. In the counter affidavit filed in I.A. No. 7 of 2004, it has been
contended that the Government of Bihar will initiate liquidation proceedings in
respect of BHALCO and having regard to the offer made by the State of Jharkhand
no relief should be granted by this Court to the employees of the said
corporation as they may still close to exercise their option to get absorbed in
counter affidavit filed in I.A. No. 9 of 2004, the State of Bihar has been contended that the
direction issued by this Court in its order dated 9th May, 2003 being extraordinary in nature and by way of one time
arrangement only, no direction should be issued directing the State of Bihar to make any further payment.
State of Jharkhand has also been impleaded as a party
herein and it has filed a counter-affidavit affirmed by one Shri Binod Kumar Verma,
Managing Director, JHALCO, Ranchi wherein
a contention is raised that BHALCO is still under the control of the State of Bihar. It has further been affirmed that
in stead and place of BHALCO, a new corporation known as JHALCO has been
incorporated and registered to the Registrar of Companies, Jharkhand on or
about 22nd March, 2002. The said JHALCO is, thus, said to be new corporation
and nothing to do with BHALCO and in any event, it is not the successor of
not in dispute that pursuant to or in furtherance of the directions issued by
this Court, the Central Government has exercised its jurisdiction under Section
65 of the States Reorganization Act.
of India has filed an affidavit wherein it has been contended that winding up
applications have already been filed by the State of Bihar in relation to the following
Bihar State Industries Development Corporation
Bihar State Leather Development Corporation
Bihar State Electronics Development Corporation
Bihar State Sugar Corporation Limited
5. Bihar State Medicine and Chemical Development Corporation
6. Bihar State Fruit and Vegetables Development Corporation
Bihar State Agro Industries Corporation
Bihar State Textiles Corporation Limited
Bihar State Small Industries Corporation Limited
10. Bihar State Handlooms and Handicrafts Corporation
Bihar State Forest Development Corporation Limited
Bihar State Export Development Corporation Limited
Bihar State Construction Corporation Limited
Bihar State Bridge Construction Corporation Limited
Bihar State Police Building Construction Corporation Limited
16. Bihar State Water and Sewage Disposal Board
Bihar State Panchayati Raj Finance Development Corporation Limited
Bihar State Film Development and Finance Corporation Limited" It is,
therefore, contended that in that view of the matter, no order was required to
be passed under Section 65 in relation thereto.
further contended that eight companies, names whereof are noticed hereinbelow,
operate within the territories of Bihar
and as such no order of bifurcation was required to be passed:
North Bihar Industrial Area Development
Industrial Area Development Authority
3. Patna Area Development Authority
Area Development Authority
Area Development Authority
6. Gaya Area Development Authority
Electricity Corporation Limited
Regional Development Authority, Bhagalpur" So far as other companies which
are operating both within the territories of States of Bihar and Jharkhand are
concerned, a direction in respect of the following four companies orders for
division of assets and liabilities has already been issued:
Bihar State Road Transport Corporation
2. Bihar State Housing Board
3. Bihar State Electricity Board
4. Bihar State Pollution Control Board"
stated that no decision as regard 18 companies have been taken by the States of
Bihar and Jharkhand. The case of one company known as Bihar State Cooperative
Milk Producer's Federation (COMFED) is said to be subjudice.
the purpose of division of assets of the companies which have been operating
within the territories of States of Bihar and Jharkhand, it is stated:
That as per the orders issued by the Ministry of Home Affairs, the assets,
liabilities and employees of the most of the companies have been divided
between the States of Bihar and Jharkhand.
in respect of the Corporations such as Bihar State Warehousing Corporation,
Bihar State Hydro Electric Power Corporation, Bihar State Text Book Publishing
Corporation Limited, Bihar State Finance Corporation and Bihar State Food and
Civil Supplies Corporation, it was decided that these Corporations will
continue to function as inter-State Corporations in the States of Bihar and Jharkhand.
Accordingly, it was decided to divide the shares of these Corporations as well
as the representation of the two States in their respective Board of
Directors." A Committee has also been constituted for monitoring the progress
of implementation of orders passed by the Central Government comprising of the
Chief Secretary, Bihar or his/ her nominee and Chief Secretary, Jharkhand or
his/her nominee. The said committee is required to meet at least once in a
month and submit a progress report to the Ministry of Home Affairs.
B.B. Singh, learned counsel appearing on behalf of the State of Bihar would submit that the State has no
liability to pay the salaries of the employees of the statutory corporations/
companies incorporated under the Indian Companies Act. Reliance in this behalf
has been placed on Steel Authority of India Ltd. and Others vs. National Union
Waterfront Workers and Others [(2001) 7 SCC 1] and Electronics Corporation of
India Ltd. and Others vs. Secretary, Revenue Department, Govt. of Andhra
Pradesh and Others [(1999) 4 SCC 458].
learned counsel would contend that the statutory corporations/ other public
undertakings being not completely under the control of the State, the remedy of
the employee, if any, is to file appropriate applications before the Company
Judge before whom winding-up applications in relation to 18 companies have been
filed or to approach the appropriate Industrial Court in that behalf.
order dated 9th May, 2003, this Court considered the matter from the human
rights aspects as also the fundamental rights of the employees of the public
sector undertakings operating in the State of Bihar holding :
however, hasten to add that we do not intend to lay down a law, as at present
advised, that the State is directly or vicariously liable to pay
salaries/remunerations of the employees of the public sector undertakings or
the Government companies in all situations . We, as explained hereinbefore,
only say that the State cannot escape its liability when a human rights problem
of such magnitude involving the starvation deaths and/or suicide by the
employees has taken place by reason of non-payment of salary to the employees
of Public Sector Undertaking for such a long time.
not issuing any direction as against the State of Jharkhand as no step had
admittedly been taken by the Central Government in terms of Section 65 of the
State Reorganisation Act and furthermore as only four public sector
undertakings have been transferred to the State of Jharkhand in respect whereof
the petitioner does not make any grievance." It has been contended before
us that after passing of the aforementioned order, five of employees have died
due to non-payment of their salaries.
Constitution Bench decision of this Court in Steel Authority of India Ltd.
(supra) and Electronics Corporation of India Ltd. (supra), which has been
relied upon by Mr. Singh had been considered by this Court in its order dated
9th May, 2003 holding :
the law as stated therein is not of universal application. The ratio of the
said decisions must be applied having regard to the fact situation obtaining
therein [See Bhavnagar University vs. Palitana Sugar Mill (P) Ltd.
and Others [(2003) 2 SCC 111 (Para 59)]. It
has its limitations in its applications, as exceptions exist in several
areas" This Court further relying upon the doctrine of 'lifting the
corporate veil' observed:
Government companies/public sector undertakings being 'States' would be
constitutionally liable to respect life and liberty of all persons in terms of
Article 21 of the Constitution of India. They, therefore, must do so in cases
of their own employees. The Government of the State of Bihar for all intent and purport is the
sole shareholder. Although in law, its liability towards the debtors of the
Company may be confined to the shares held by it but having regard to the deep
and pervasive control it exercises over the Government companies; in the matter
of enforcement of human rights and/or rights of the citizen of life and
liberty, the State has also an additional duty to see that the rights of
employees of such corporations are not infringed.
right to exercise deep and pervasive control would in its turn make the
Government of Bihar liable to see that the life and liberty clause in respect
of the employees is fully safeguarded. The Government of the State of Bihar, thus, had a constitutional
obligation to protect life and liberty of the employees of the Government owned
companies/corporations who are the citizens of India. It had an additional liability having regard to its right
of extensive supervision over the affairs of the company." As regards the
statutory corporation, it was further noticed:
relation to statutory authority, the State had also the requisite power to
issue necessary directions which were binding upon them, as for example,
Section 79(c) of Electricity (Supply) Act." This Court further observed
that the State has a constitutional obligation and acts in a fiduciary capacity
vis-`-vis performance of its constitutional duties and functions by the public
sector undertakings as it has constitutional obligations in relation thereto.
State of Bihar in response to the applications
filed by the petitioner herein cannot, in our opinion, be permitted to raise
questions which have expressly been rejected. It cannot seek a review of the
said judgment indirectly which could not do directly. Even for such matters, an
application for clarification would not be maintainable. [See Ram Chandra We,
therefore, do not appreciate the stand taken by the State of Bihar now that it does not have any
constitutional obligation towards a section of citizens, viz., the employees of
the public sector undertakings who have not been paid salaries for years.
also do not appreciate the submissions made on behalf of the State of Bihar that the directions issued were
only one-time direction. In clause 4 of the direction, it was clearly stated
that the State for the present shall deposit a sum of Rs. 50 crores before the
High Court for disbursement of salaries to the employees of the Corporations.
Furthermore, the matter had been directed to be placed again after six months.
supplied] It is really a matter of regret that despite statutory power as also
the power of control vested in the State of Bihar either under the statutes or
in terms of Articles and Memorandum of Association of the respective Government
Companies, it did not exercise the same and now raised a contention that the
State had no effective control over the functions of the said public sector
undertakings. The States of Bihar and Jharkhand, indisputably, can exercise
their statutory power and in discharge thereof can issue requisite directions
as is permissible in law.
have heretobefore noticed the operative part of the report of the Committee.
would appear therefrom that the directions of this Court could not be complied
with having regard to the fact that only six crores were left with the
Committee. Before us a chart has been submitted showing the approximate amount
involved for payment of arrears of salaries in relation to the following
of undertaking Approximate amount admittedly involved for payment of arrears
Bihar State Sugar Corporation Rs. 130 crores Bihar State Leather Industries
Development Corporation / Bihar Finished Leathers Rs. 62.45 crores Bihar State
Industrial Development Corporation Rs. 61.72 crores Bihar State Agro Industries
Development Corporation Rs. 60.73 crores Bihar State Construction Corporation Rs.
37.50 crores Bihar State Handloom & Handicraft Corporation Rs. 18 crores
Bihar State Small Scale Industrial Development Corporation Rs. 18 crores Bihar
State Medicine & Chemical Development Corporation Rs. 9.46 crores Bihar
State Panchyati Raj Financial Corporation Rs. 3.75 crores Bihar State
Electronic Dev. Corporation Rs. 2.51 crores Bihar State Fruit & Vegetable
Development Corporation Rs. 1.8056 crores Bihar State Vastraya (Textile)
Corporation Rs. 0.70 crores Bihar State Film Development & Financial
Corporation Rs. 55,000/- per month since August 2002" It has further been
placed before us that as regards Bihar State Road Transport Corporation, Bihar
State Khadi Gramdhoyog Board, Bihar State & Food Civil Supplies Corporation
and Bihar State Seed Corporation, approximate amount involved for payment of
arrears of salaries and assets and liabilities divided have been shown in the
of Undertaking Approximate amount involved for payment of arrears of salaries
Status Bihar State Road Transport Corporation Rs. 160.35 crores Assets and
Liabilities divided at the ratio of 65:35 vide order dated 14.1.2004 Bihar
State Khadi Gramdhoyog Board Rs. 37.50 crores Assets and liabilities divided
vide Order dated 13.9.2004 Bihar State & Food Civil Supplies Corporation Rs.
16.56 crores Assets and liabilities divided at the ratio of 3:1 vide order
dated 13.9.2004 Bihar State Seed Corporation Rs. 4.53 crores Assets and
liabilities divided at the ratio of 78:22 vide order dated 13.9.2004" As
regards BHALCO, it was contended that the approximate amount involved for
payment of arrears and salaries is not available as the said corporation
continues to be under the control of the State of Bihar.
true, as has been contended on behalf of the State of Jharkhand, that a new
corporation named as JHALCO has come into being, but keeping in view of the
fact that the State of Jharkhand itself has given option to the employees of
BHALCO, the order of absorption of those employees who opt for employment may
be passed at an early date and not later than six weeks from date. The
concerned employees need not file any undertaking at this stage as the question
as to whether the State of Jharkhand is liable to pay any salary and other
emoluments to the employees of BHALCO is a question which would fall for
decision in an appropriate proceedings.
in view of the fact that despite this Court's our order dated 9th May, 2003,
five persons have lost their lives owing to non-payment of salaries and keeping
in view of the order of the Central Government dividing the assets and
liabilities between the States of Bihar and Jharkhand in relation to Bihar
State Road Transport Corporation, Bihar State Khadi Gramdhoyog Board, Bihar
State & Food Civil Supplies Corporation and Bihar State Seed Corporation,
etc., we direct the State of Bihar to deposit a sum of Rs. 50 crores and the
State of Jharkhand a sum of Rs. 25 crores within eight weeks from date.
Committee headed by Justice Uday Sinha would continue to function. The High
Court of Judicature at Patna and the Jharkhand High Court are
hereby requested to pass appropriate orders in the liquidation proceedings
filed by the States of Bihar or Jharkhand, as the case may be, as expeditiously
as possible and preferably within a period of six months from the date of
communication of this order.
amount paid to the employees concerned shall be subject to the order(s) passed
by the appropriate court of law in this behalf and it goes without saying that
the amount so paid to them shall be duly credited.
make it clear that we have not issued aforementioned directions to the States
of Bihar and Jhakhand on the premise that they are bound to pay the salaries of
the employees of the public sector undertakings but on the ground that the
employees have a human right as also a fundamental right under Article 21 which
the States are bound to protect. The directions, which have been issued by this
Court on 9th May, 2003 as also which are being issued
herein, are in furtherance of the human and fundamental rights of the employees
concerned and not by way of an enforcement of their legal right to arrears of
salaries. The amount of salary payable to the concerned employees or workmen
would undoubtedly be adjudicated upon in the proper proceedings. However, these
directions are issued which are necessary for their survival. Undoubtedly, any
amount paid by Justice Uday Sinha Committee pursuant to these directions shall
be duly credited for.
applications are disposed of with the aforementioned directions.
the matter after six months.