STATE OF JHARKHAND Vs HARIHAR YADAV .
Bench: ANIL R. DAVE,DIPAK MISRA
Case number: C.A. No.-010515-010515 / 2013
Diary number: 29238 / 2011
Advocates: TAPESH KUMAR SINGH Vs
HINGORANI & ASSOCIATES
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Reportable
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 10515 OF 2013 (Arising out of S.L.P. (C) No. 30291 of 2011)
State of Jharkhand and Another … Appellants
Versus
Harihar Yadav and Others …Respondents
WITH CIVIL APPEAL NO. 10516 OF 2013
(Arising out of S.L.P. (C) NO. 31505 OF 2011) WITH
CIVIL APPEAL NOS. 10517-18 OF 2013 (Arising out of S.L.P. (C) NOS. 9166-9167 OF 2013)
WITH CIVIL APPEAL NOS. 10519-20 OF 2013
(Arising out of S.L.P. (C) NOS. 9169-9170 OF 2013)
J U D G M E N T
Dipak Misra, J.
Leave granted in all these Special Leave Petitions.
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THE IMPERATIVE PROLOGUE
2. How does a constitutional court respond to a situation
when a human problem of great magnitude frescoed on
constitutional canvas gets painfully projected with intense
sincerity, possibly realizing pain is one of the “sovereign
masters of mankind”? How is the Court required to react
in law when the workmen are forced to grapple with a
colossal predicament of sense of belonging due to a
situation created making them feel that they are neither
here nor there? We consider it as an unbearable tragedy
faced by the unfortunate employees warranting serious
attention of this Court, for some employees have breathed
their last due to starvation, constant stress being unable
to meet the keen demands of appetite, and the
impecuniosity that hampered them to avail timely
treatment, and some families have been unwillingly
driven to a state of unmeaningful survival – an animal
existence – sans proper food, sans clothes and sans real
shelter. It is not because of any natural calamity beyond
human control but because two States, namely, State of
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Jharkhand and State of Bihar deliberately have chosen to
create an Everstine catastrophe by their act of
abandonment of responsibility to pay despite availing
work for some years and thereafter disowning them and
nonchalantly shifting the burden to other’s shoulder and
ultimately arguing in chorus that Jharkhand Hill Area Lift
Irrigation Corporation (JHALCO) and Bihar Hill Area Lift
Irrigation Corporation (BHALCO) being companies
registered under the Companies Act, 1956, it is open to
the aggrieved employees or their legal representatives to
initiate necessary winding up proceedings to get their
dues. We can only say that the stand and stance so
adroitly put forth by both the States are shorn of their
constitutional accountability and statutory answerability.
In a way, it seems to be orchestrated by some kind of
abstruse and unfathomable idea fostered in fertile mind
that loves to keep helpless and hapless people in a state
of despair where hope dies an unceremonial death or it
lives in a state of “Trishanku”. It indubitably depicts a
startlingly unhappy situation commanding urgent surgical
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intervention so that the injury does not become
malignant.
3. Before we proceed to exposit the facts, regard being had
to the questions posed by us, we think it seemly to refer
to certain principles laid down by this Court.
4. In Jagdish Saran (Dr) v. Union of India1, it has been
stated as under:-
“Law, constitutional law, is not an omnipotent abstraction or distant idealization but a principled, yet pragmatic, value-laden and result-oriented, set of propositions applicable to and conditioned by a concrete stage of social development of the nation and aspirational imperatives of the people. India Today – that is the inarticulate major premise of our constitutional law and life.”
5. In Chameli Singh and Others v. State of U.P. and
Another2, after referring to Article 11(1) of the
International Covenant on Economic, Social and Cultural
Rights, 1966 which laid down that the State parties to the
Covenant recognize “the right of everyone to an adequate
standard of living for himself and for his family including 1 (1980) 2 SCC 768 2 (1996) 2 SCC 549
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food, clothing, housing and to the continuous
improvement of living conditions”, the Court opined that
the State parties are required to take appropriate action
to ensure that the said right is realized.
6. In P.G. Gupta v. State of Gujarat and Others3, it has
been opined that the Preamble to the Constitution says
that the people of India having resolved to secure to all its
citizens social and economic justice also made it subject
to equality of status and opportunity to promote the
dignity of the individual in the united and integrated
Bharat. Reference was made to Article 37 that declares
the rights in Part IV or fundamental law in the governance
of the country and also to Article 39(b) which enjoins that
the ownership and control of the material resources of the
community are to promote the welfare of the people by
securing social and economic justice to the weaker
sections.
3 1995 Supp. (2) SCC 182
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7. In D.S. Nakara v. Union of India4, the court stated that
the basic framework of socialism is to provide a proper
standard of life to the people, especially, security from
cradle to grave. Emphasis has been laid on a vibrant,
throbbing socialist welfare society and what is the duty of
the State to achieve the said goal.
8. In J.K. Cotton Spinning and Weaving Mills Co. v.
Labour Appellate Tribunal of India5, this Court clearly
stated that the concept of social justice is not narrow, one-
sided or pedantic, and is not confined to industrial
adjudication alone. It is comprehensive. It is founded on
the basic ideal of socio-economic equality and its aim is to
eliminate disparities and inequalities.
9. In State of Mysore v. Workers of Gold Mines6 the
Court observed thus: -
“10. ... The concept of social and economic justice is a living concept of revolutionary import; it gives sustenance to the rule of law and meaning and significance to the ideal of welfare State.”
4 (1983) 1 SCC 305 5 AIR 1964 SC 737 6 AIR 1958 SC 923
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10. In Y.A. Mamarde v. Authority under the Minimum
Wages Act7, the Court observed that under our present
Constitution the State is now expressly directed to
endeavour to secure to all workers (whether agricultural,
industrial or otherwise) not only bare physical subsistence
but a living wage and conditions of work ensuring a
decent standard of life and full enjoyment of leisure. This
directive principle of State policy being conducive to the
general interest of the nation as a whole, merely lays
down the foundation for appropriate social structure in
which the labour will find its place of dignity, legitimately
due to it in lieu of its contribution to the progress of
national economic prosperity.
11. In S.P. Gupta v. Union of India8, this Court held as
under:-
“27.... The judiciary has, therefore, a socio- economic destination and a creative function. It has to use the words of Glanville Austin, to become an arm of the socio-economic revolution and perform an active role calculated to bring social justice within the reach of the common man. It cannot remain
7 (1972) 2 SCC 108 8 (1981) Supp SCC 87
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content to act merely as an umpire but it must be functionally involved in the goal of socio-economic justice.”
[Emphasis added]
12. In Ramon Services (P) Ltd. v. Subhash Kapoor9,
R.P. Sethi, J. observed thus: -
“21. After independence the concept of social justice has become a part of our legal system. This concept gives meaning and significance to the democratic ways of life and of making the life dynamic. The concept of welfare State would remain in oblivion unless social justice is dispensed. Dispensation of social justice and achieving the goals set forth in the Constitution are not possible without the active, concerted and dynamic efforts made by the person concerned with the justice dispensation system.”
13. In Harjinder Singh v. Punjab State Warehousing
Corporation10 Singhvi, J. opined thus: -
“It need no emphasis that if a man is deprived of his livelihood, he is deprived of all his fundamental and constitutional rights and for him the goal of social and economic justice, equality of status and of opportunity, the freedoms enshrined in the Constitution remain illusory. Therefore, the approach of the courts must be compatible with the constitutional philosophy of which the directive
9 (2001) 1 SCC 118 10 (2010) 3 SCC 192
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principles of State policy constitute an integral part and justice due to the workman should not be denied by entertaining the specious and untenable grounds put forward by the employer—public or private.”
14. We have referred to the aforesaid authorities to
highlight the concept of social justice, dignity of living and
the role of the judiciary. The court is bound to respond
within the constitutional framework. In this context, the
Preamble of the Constitution becomes extremely
significant. The Preamble uses the words “social justice”
while speaking of “Justice – social, economic and political”.
Thus, social facet and the economic aspect are the ideal
goal of the welfare State. The Constitution casts a
responsibility on the State to sustain social and economic
security, for the Preamble is the floodlight illuminating the
path to be persuaded by the State to set up a sovereign,
socialist, secular, democratic republic. [See: D.S. Nakara
(supra)].
15. It is the duty of the Court to see that the philosophy
which is ingrained in our Constitution is not atrophied by
the State paving a path of deviency. The employer, within
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the meaning of Article 12 of the Constitution has a
sacrosanct duty to act in terms of the sacred objectives of
social and economic justice. In this content, we may
fruitfully reproduce a passage from Balbir Kaur and
Another v. Steel Authority of India Ltd. and
Others11:-
“The concept of social justice is the yardstick to the justice administration system or the legal justice and as Roscoe Pound pointed out the greatest virtue of law is in its adaptability and flexibility and thus it would be otherwise an obligation for the law courts also to apply the law depending upon the situation since the law is made for the society and whatever is beneficial for the society, the endeavour of the law court would be to administer justice having due regard in that direction.”
THE CHEQUERED HISTORY OF THE LITIGATION
16. Instead of mentioning only history, we have
deliberately stated chequered history as we are at pains
to say that this Court has dealt with this lis on earlier
occasion in many a context and thereafter left it to the
High Court to adjudicate. Before we chronologically refer
to the earlier judgments it can be stated without any 11 (2000) 6 SCC 493
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hesitation that the facts which have been unfurled are not
only disturbing but also reflective of the scenario how a
pyramid of suffering, strain and starvation can be
ingenuously built by both the States, as if they are
determined to compete with each other about gaining
success in effectively creating a sanctuary of errors.
17. A Government company was floated by the State of
Bihar in the name of Bihar Hill Area Lift Irrigation
Corporation Limited and got it registered under the
Companies Act, 1956. The object of that company was to
explore, execute, install, develop, promote, improve,
establish, finance, manage, administer and maintain
water resources for the purposes of ensuring regular
irrigation facilities to the cultivators in the hilly areas of
Chotanagpur and Santhal Pargana and also for other
areas like the districts of Rohtas, Aurangabad, Nawadah,
Gaya, Bhagalpur (South of Ganga) and Monghyr (south of
Ganga) through the means of bigger diameter wells
intake, wells lift irrigation schemes as well as other
suitable devices appropriate for such irrigation facilities
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and to manufacture spare parts, machinery, tools,
implements, materials, substances, goods or things of any
description which in the opinion of the company are likely
to promote or advance the development of irrigation
facilities to the cultivators in the aforesaid area. As the
object of the company would project, it was floated in
public interest and to take challenges in the field of
irrigation and that too in difficult hilly areas in the State of
Bihar.
18. As the events have been unfolded, in the State of Bihar
many a Government corporation and companies were not
paying the salaries to the employees and the whole thing
was in utter chaos. An employee of a statutory
corporation had attempted immolation as a consequence
of which he sustained serious injuries and, eventually,
succumbed to the same. At that stage a public spirited
person, Kapila Hingorani, preferred a writ petition under
Article 32 of the Constitution before this Court asserting,
inter alia, that various Government companies/public
undertakings situate in the State of Bihar have not paid
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salaries to their workmen and other employees for a long
time resulting in deaths and insurmountable miseries
befell on large number of families dependant on such
employees. The two-Judge Bench, dealing with the case
of Kapila Hingorani v. State of Bihar12 encapsulated
the pivotal controversy thus: -
“If at all and to what extent the Government of the State of Bihar is vicariously liable for payment of arrears of salaries to the employees of the State- owned corporations, public sector undertakings or the statutory bodies is the core question involved in this writ petition.”
19. Be it noted, a list was provided to this Court on
12.3.2003 and the name of BHALCO featured at Sl. No. 19.
The Court addressed the lis at length and took note of the
dismal atmosphere in the State, as the deaths had
occurred owing to starvation or malnutrition and the fact
that employees had not been paid their salaries for a long
time and in some cases for a decade or more as admitted.
A stand was taken by the State of Bihar that having
regard to the fact that most of the undertakings are
companies registered or incorporated under the 12 (2003)6 SCC 1
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Companies Act, 1956, the rights and liabilities of the
shareholders would be governed by the provisions of the
said Act and the liabilities of the said companies cannot
be passed on to the State by taking recourse to the
doctrine of “lifting of veil” or otherwise. A further
contention was advanced that having regard to the
magnitude of the problem it would be just and proper if
liabilities directed is met with to the extent of 80% by the
Union of India and 10% by the State Government and the
remaining from the sale of properties belonging to the
respective companies. The public spirited person, Kapila
Hingorani, appearing in person, contended that the State
cannot escape its liability in the matter of payment of
salary to its own employees though ostensibly they are
working in companies incorporated under the Companies
Act, 1956. The Court referred to number of authorities
and came to hold that the 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
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and, therefore, they must do so in cases of their own
employees. It was further opined that the Government of
the State of Bihar for all intent and purport is the
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 to life and liberty, the State has also an
additional duty to see that the rights of employees of such
corporations are not infringed. The learned Judges further
observed that the 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 had a constitutional obligation to
protect the 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
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company. It was further held that the State having regard
to its right of supervision and/or deep and pervasive
control, could not be permitted to say that it did not know
the actual state of affairs of the State Government
undertakings and/or it was kept in the dark that the
salaries of their employees had not been paid for years
leading to starvation death and/or commission of suicide
by a large number of employees. It has been ruled
therein that concept of accountability arises out of the
power conferred on an authority. That apart, the failure
on the part of the State in a case of this nature must also
be viewed from the angle that the statutory authorities
had failed and/or neglected to enforce the social-welfare
legislations enacted in this behalf e.g. Payment of Wages
Act, Minimum Wages Act, etc. Such welfare activities as
adumbrated in Part IV of the Constitution of India
indisputably would cast a duty upon the State being a
welfare State and its statutory authorities to do all things
which they are statutorily obligated to perform.
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20. Thereafter the Court adverted to the concept of human
rights, the duty of the Constitutional Court, financial
stringency and other aspects and expressed thus: -
“72. We are of the opinion that the State, thus, has made itself liable to mitigate the sufferings of the employees of the public sector undertakings or the government companies.
xxx xxx xxx
74. We, 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 undertakings for such a long time. We are 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.”
21. Regard being had to the totality of circumstances in the
interest of justice, the Court issued number of directions a
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part of which relates to liquidation proceedings pending in
the High Court, formation of a committee to be headed by
a retired High Court Judge or a sitting District Judge, to
scrutinize the assets and liabilities of the companies and
the High Court to issue directions/direction from time to
time. The directions which are relevant in the context of
the present lis are as follows: -
“4. 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. The amount of Rs 50 crores be deposited in two instalments. Half of the amount shall be payable within one month and the balance amount within a month thereafter. The High Court shall see to it that the sum so deposited and/or otherwise received from any source including by way of sale of assets of the government companies/public sector undertakings be paid proportionately to the employee concerned wherefor, the parties may file their claims before it.
5. The High Court, however, in its discretion may direct disbursement of some funds to the needy employees, on ad hoc basis so as to enable them to sustain themselves for the time being.
6. The rights of the workmen shall be considered in terms of Section 529-A of the Companies Act.
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7. The Central Government is hereby directed to take a decision as regards division of assets and liabilities of the government companies/public sector undertakings in terms of the provisions of the State Reorganisation Act, 2000.”
22. In the said case I.As 7 and 9 were filed which were
decided on 13.1.2005 as reported in Kapila Hingorani v.
State of Bihar13. The Court took note of the fact that in
pursuance of the order dated 9.5.2003 it had directed to
deposit Rs.50 crores and in furtherance of the said
direction the State of Bihar had deposited a sum of Rs.50
crores and the High Court of judicature at Patna had
constituted a Committee headed by Justice Udai Sinha,
former Judge of Patna High Court. From the report of the
Committee which was placed before the Court it appeared
that a sum of Rs.25,98,65,883.00 had been recommended
for payment to the employees of most of the
undertakings. While dealing with JHALCO and BHALCO the
Court addressed I.A. No. 7 of 2004 and took note of the
respective affidavits. The stand of JHALCO in the said
case, as has been noticed by this Court, is as follows:-
13 (2005) 2 SCC 262
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“8. The 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 instead and in place of BHALCO, a new corporation known as JHALCO had been incorporated and registered with the Registrar of Companies, Jharkhand on or about 22- 3-2002. The said JHALCO is, thus, said to be a new corporation and has nothing to do with BHALCO and in any event, it is not the successor of BHALCO.”
The Court also took note of the fact that the Central
Government had taken a decision under Section 65 of the
Act. A contention was raised by the State of Bihar that it
was not under obligation to pay the dues of the employees.
Referring to the earlier order and various other authorities,
the Court observed thus: -
“26. 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.
xxx xxx xxx
28. It is really a matter of regret that despite statutory power as also the power of control
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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.”
After so stating, the Court proceeded to deal with the
stand of the State of Bihar and BHALCO and observed as
follows: -
“33. It is 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 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 employees concerned 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 appropriate proceedings.”
The Court reiterated the principle stating as follows: -
“37. We make it clear that we have not issued the aforementioned directions to the States of Bihar and Jharkhand on the premise that they are bound
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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 9-5-2003 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 employees or workmen concerned 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.”
23. In the said writ petition I.A. No. 21 of 2007 was filed
which was decided on 8.7.2008 vide Kapila Hingorani
and another v. State of Bihar and another14, wherein
the principal relief sought was for issue of a direction to
the respondent State/JHALCO to immediately comply with
the order dated 13.1.2005 and pass the order of
absorption in JHALCO with respect to 213 employees listed
in the letters issued by MD, JHALCO on various dates
14 (2008) 17 SCC 394
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(annexed to the IA), pursuant to the order dated
13.1.2005 leaving the employees who have died.
24. While dealing with the prayer the Court adverted to the
history of the litigation, the further death that had
occurred with the efflux of time as the employees had
committed suicide due to starvation and thereafter
proceeded to dwell upon various facets. We think it
appropriate to summarise what the Court had stated in
the said case: -
(i) It is obvious that while passing an order on I.A. No. 11, this
Court was kept in the dark about two factors - firstly, that
advertisement were already made even before the order
dated 13.1.2005 and secondly, that nothing was done in
pursuance of the order dated 13.1.2005 excepting that
the fresh applications of 216 employees were accepted by
JHALCO and that they were kept in the cold storage.
(ii)It must be remembered that all this was in the wake of
this Court’s order dated 9-5-2003 wherein, this Court had
required the State of Bihar to deposit a sum of 50 crores
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of rupees for disbursement of the salaries to the
employees of the corporations and also had directed the
disbursement of the funds to the needy employees on ad
hoc basis. The Court had also directed creation of a
committee for scrutinising the assets and liabilities of the
companies. Therefore, when the advertisements were
issued with the cut-off date of 7.8.2003, JHALCO had a
distinct advantage. However, thereafter came the order of
this Court dated 13.1.2005, whereby, this Court took the
notice of coming into being of JHALCO and further directed
that the employees concerned who were to be absorbed
need not give an undertaking of foregoing their claims for
the past unpaid salaries. Till then, it seems from the
language of the order dated 13.1.2005 that no formal
order was passed for absorption. Probably, therefore, this
Court gave six weeks’ time to such employees.
(iii) Again, as in the earlier advertisements, only the
employees foregoing their claims over salaries could
apply, all the employees probably did not apply restricting
the number to only 302. In pursuance of the order dated
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13.1.2005, 216 more employees had applied and that too
without foregoing their claims over salaries. Because of
the said situation a decision was taken in a meeting dated
8.8.2005 to review the financial position of JHALCO to
curtail the number of employees and to limit the total
number of employees to 214. From Para A(f) of the
additional affidavit is seen, it will be clear that though
there were 152 excess Class IV employees, there was still
requirement of 64 officers, as only 14 officers were
engaged as against the total sanctioned strength of 78
officers. The exercise of curtailing the employees and
limiting the total number of employees to 214 appears to
be a deliberate exercise in the wake of the order dated
13.1.2005 of this Court, and incidentally, even that order
was not followed in its true spirit which ultimately required
the petitioners to file IA No. 11. The figures given in the
additional affidavit’s Para A(f) were misleading, for if
properly calculated as against the total sanctioned
strength of 214, 302 employees were engaged. Thus, only
88 excess employees could be said to have been engaged
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and that too prior to the decision dated 8.8.2005. The
figure of 152 as the excess employees is, therefore,
clearly misleading.
(iv) There does not appear any explanation, nor any
statistics to justify the curtailing of the employees by
JHALCO. After all, there was no curtailment of area or the
activities and the decision to curtail the number of
employees of JHALCO itself appears to be neither sound,
reasonable, nor justifiable and only appears to be taken to
get out of the rigour of this Court’s order dated 13.1.2005.
However, this Court is not in a position to pass any order
in favour of the applicants even if their contentions with
regard to the existence of vacancies are accepted.
(v) It has been pleaded in the additional affidavit that JHALCO
was running in deficit by 3.16 crores up to 2005-2006. Its
annual wages on date are 3.60 crores and it has already
sought 2.60 crores from the State of Jharkhand to make
the payment for Financial Year 2008-2009. The affidavit,
however, does not give any clear idea about the
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contribution which will be required to be made by the
State of Bihar on account of the arrears of salaries.
(vi) In response of the State of Bihar, barring reference
to the Letter dated 22.1.2001 by the Secretary of the
Government of Bihar to the Secretary of the Government
of Jharkhand recommending that all the employees of
BHALCO should be absorbed in JHALCO without any
condition, there does not appear to be anything more. In
the name of written submissions on behalf of the State of
Bihar, all that is stated is that since BHALCO was a
corporation situated in the State of Jharkhand and its area
of operation was also in the State of Jharkhand only,
therefore, under Sections 47(1) and 56 of the Bihar
Reorganisation Act, 2000, BHALCO is a corporation of the
Government of Jharkhand with all its liabilities and assets.
The State of Bihar then has further reiterated that the
decision of the Central Government to treat BHALCO as a
property of the State of Bihar and direction given vide
Letter dated 13.9.2004 to take steps for liquidation of
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BHALCO is not a correct decision, and that it had written a
letter to reconsider the same.
(vii) The stand taken by the State of Bihar is a bald
one. Seen from any angle, the liability could not be
altogether shaken off by the State of Bihar to avoid the
same on the specious plea that BHALCO has now become
JHALCO. That would be an over simplification of the issue.
That is apart from the fact that in the memorandum of
association of BHALCO, there is a reference to the six
districts of Bihar which continued to be in the State of
Bihar as its area of operation. That apart, the Order dated
13.9.2004 which is binding on the State of Bihar. By that
order, the Central Government had ordered that the State
Government of Bihar will initiate liquidation in respect of
BHALCO. If that is so, then by the necessary logic, the
liability to pay the arrears of salary is that of the State of
Bihar, which it must discharge.
(viii) As a writ petition is pending in the Jharkhand High
Court by the employees claiming absorption as also the
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past salaries, this Court would desist from giving final
directions, keeping in view it was a public interest
litigation directly filed before this Court. It would be better
if all the questions pending in the said writ petition are
finally decided as early as possible.
25. After so stating the two-Judge Bench issued the
following directions: -
“(A) The High Court of Jharkhand is requested to dispose of the writ petition pending before it at the earliest and, if possible, within six weeks from date. If the High Court finds it difficult to dispose of the matter within the aforementioned period, it may pass interim order as it may deem fit and proper. It is made clear that in the event the High Court finds that the applicants were entitled to be absorbed in the services of JHALCO from an earlier date it would be open to it to pass such an order as it may deem fit and proper so as to adjust the equities between the parties. It is made clear that the question of final absorption, past salaries and the liability to pay the same may be determined by the High Court in the said writ petition.
(B) Managing Director, BHALCO and Managing Director, JHALCO as also the Secretaries of the Government of Bihar and the Government of Jharkhand shall meet within one month from the date and decide upon and assess the liability on account of the arrears of the salaries payable to the employees already absorbed and to be absorbed, and make a report thereof within a
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week of the date of decision, to the High Court for taking final decision regarding the mode of payment, etc. to the employees, if any, so that the liability of JHALCO to that extent would stand reduced.
(C) The Central Government shall take immediate steps to see that the directions in the Order dated 13-9-2004, passed by it are complied with by the State of Bihar.”
THE LIS BEFORE THE HIGH COURT
26. After this Court disposed of the matter, the learned
single Judge took up the hearing of the writ petition and
keeping in view the directions of this Court he framed the
following issue for consideration: -
“Whether BHALCO in view of the provision as enshrined in section 65 of the Bihar Reorganisation Act would be considered to be the same entity only with a change in its name as JHALCO or JHALCO is a separate entity than BHALCO?”
27. Analyzing the language employed in Section 65 of the
Act and steps taken by JHALCO including the somersault
and further taking note of the interim order dated
8.7.2008 the learned single Judge opined as follows:-
“It be noticed that right from the beginning when decision was taken to allow the activities of
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BHALCO to continue in the territory of State of Bihar by the changed name of JHALCO, no such indication was ever given about the staffs being surplus. Moreover, even the advertisements issued by the JHALCO do indicate that applications were called upon from all the willing employees who want to join the services of JHALCO. At that time also no restriction was imposed over the number of employees to be absorbed. In this view of the matter, I do also subscribe the same view as has been expressed by the Hon'ble Supreme Court by observing "figure of 152 as the excess employees is, therefore, clearly misleading. There does not appear any explanation, nor any statistics to justify the curtailing of the employees of JHALCO and such plea seems to have been taken to get out of the rigor of the court's order dated 13.1.2005".
Thus, for the reasons discussed hereinabove BHALCO and JHALCO can not be said to be two separate entities rather BHALCO in terms of section 65 of Bihar Reorganization Act can be said to have been functioning as JHALCO.
Therefore, I do find that the petitioners are entitled to be absorbed in the services of JHALCO from the date when they have made applications for their absorption, pursuant to direction given by the Hon'ble Supreme Court on 13.1.2005 and they are entitled to get their salaries from the date of their absorption which is to be paid by the JHALCO as other employees whose services were accepted by the JHALCO are also paid from the date of joining.”
28. Being dissatisfied with the aforesaid judgment and
order the State of Jharkhand and its functionaries
preferred LPA no. 77 of 2009 and JHALCO preferred LPA
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No. 79 of 2009. The Division Bench, after chronologically
stating the developments and referring to the provisions
of the Act, posed three questions for consideration: -
“(1) Whether BHALCO vests in the State of Jharkhand by the operation of the Act of 2000?
(2) Whether BHALCO and JHALCO are two separate entities or one and same?
(3) If not as contended by the appellant, then whether the petitioners have any right to seek absorption in JHALCO, being employees of BHALCO?”
29. Dealing with the first issue the Division Bench referred
to the Sections 47, 65 and 85 of the Act and taking note of
the order dated 13.9.2004 passed by this Court in W.P. (C)
no. 488 of 2002 came to hold that the conclusion arrived
at by the learned Single Judge to the effect that BHALCO
and JHALCO cannot be regarded as two separate entities
was unsustainable. Thereafter, the Division Bench
referred to the decisions rendered by this Court and
keeping in view the fact that the employees were made to
suffer for no fault of theirs and had been deprived of
salary for 11 years when the matter was decided by the
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court came to hold that the relationship between the
employees and the employer had not become extinct by
any proceeding or operation of law. Thereafter it directed
as follows:-
“Therefore, taking this equitable ground also in consideration with the legal basis in the claim of the employees, we are of the view that BHALCO is liable to pay all the arrears of salary to the employees who have no been absorbed by the JHALCO till date and also to the heirs of the deceased employees who died during this period.”
30. Thereafter, the Division Bench dealing with the
intra-court appeal addressed the issue with regard to
absorption and opined that there was no reason that the
respondent employees should face non-absorption by
JHALCO and, accordingly, directed as follows:-
“36. We are also of the considered opinion in view of the fact that these employees continued in service in BHALCO the salaries be paid to the employees by the BHALCO till they are absorbed or stand absorbed in the JHALCO and thereafter JHALCO shall pay the salaries of those employees. However, JHALCO can take a policy decision to deal with the employees stand absorbed by virtue of this order passed by this Court whether they are to be retrenched. If retrenched, then it can be done by paying adequate compensation and that decision is to be taken by the management by
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application of mind judiciously, and keeping in mind the humanitarian approach and our observation may not be treated to be the direction or licence to the JHALCO to remove those employees without there being any just reasons.
37. Since it was the offer of the JHALCO to absorb the employees then as we have already discussed that the JHALCO shall absorb the employees now from the date of order of this Court i.e. today 16th June, 2011 and they shall be deemed to have been absorbed in JHALCO with the employees entitled to the benefits of past service rendered by the employees in the BHALCO. But the State of Bihar and BHALCO are directed to pay the arrears of salary and other service benefits to the employees of erstwhile BHALCO upto order of this date within a period of three months from today and the liability to pay the salary of the employees who stand absorbed in JHALCO, shall be of JHALCO, however, from the date of joining of these petitioners and other employees, if they approach JHALCO within a period of two months form the date of this order.”
31. It is apt to note here that prayer for award of interest
was not accepted by the High Court. The aforesaid
judgment and order by the Division Bench has been
assailed by the State of Jharkhand, State of Bihar, JHALCO
and BHALCO. Be it noted, two review applications that
had been filed by BHALCO having been rejected it has
preferred two appeals, by special leave, assailing the said
orders of rejection.
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THE SUBMISSIONS
32. We have heard Mr. Ranjit Kumar, learned senior
counsel, and Mr. Gopal Singh, learned counsel, for the
State of Bihar and BHALCO, Mr. Amarendra Saran, learned
senior counsel, for the State of Jharkhand and JHALCO and
Ms. Priya Hingorani, learned Advocate for the respondent-
workmen in all the appeals.
33. Mr. Ranjit Kumar and Mr. Gopal Singh, appearing for the
State of Bihar, have raised the following contentions:-
(a) The High Court has clearly gone wrong in imposing the
liability on the State of Bihar, for enrichment of area of
Jharkhand and all the assets including Bank Accounts,
fixed deposits, office, trained employees the irrigation
instruments, huge machineries and other equipments
were taken over by the State of Jharkhand and now the
liability is sought to be imposed on the State of Bihar.
This factual position becomes significant in view of
Section 47 of the Act which stipulates that the assets
and liabilities relating to any commercial or industrial
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undertaking of the existing State of Bihar shall pass to
the State in which the undertaking is located.
(b) The assets and liabilities of the erstwhile BHALCO has
been merged/taken over by JHALCO and State of
Jharkhand by their conscious decision. The area of
operation, infrastructures, office records/files have been
amalgamated into the JHALCO and the Head Office of
the BHALCO is situate in Ranchi, Jharkhand. It is
evident from the notification dated 29.12.2001 issued
by the State of Jharkhand that the Head Office of
BHALCO which has been changed as JHALCO would be
at Ranchi as before and under these circumstances to
mulct the liability on the State of Bihar is neither just
nor fair.
(c) The State of Jharkhand has arbitrarily accepted 300
employees of BHALCO to be absorbed in JHALCO
without ascertaining as to how many workmen were
working in BHALCO at the time the decision was taken
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and hence, it is the duty of JHALCO to carry out the
obligations.
(d) In any case, if the employees have any grievance with
regard to their non-payment of salary and service
conditions including absorption they can take recourse
to the statutory remedies as provided under the
Companies Act, 1956 and the Industrial Disputes Act,
1947.
34. Mr. Saran, learned senior counsel, and Mr. Tapas Kumar
Sen, appearing for the State of Jharkhand, have advanced
the following contentions: -
(i) The High Court has fallen into grave error by not
appreciating that JHALCO had issued various
advertisements to take the employees of BHALCO on
deputation basis only and there was no unconditional
offer to absorb all the employees of BHALCO in JHALCO.
(ii) JHALCO is a commercial organization and it has to
arrange for its establishment expenditure from its own
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resources and when it is running in loss it was
inappropriate by the High Court to command JHALCO to
absorb and pay the salaries to those employees. That
apart, the High Court has committed further illegality
by directing that the absorbed employees shall be
entitled to the benefit of past service rendered by the
employees in BHALCO.
(iii) Five respondents/employees had approached the Court
and if any order is passed, it should be restricted to
them and there should not be a general order, more so,
when I.A. No. 3 of 2012 for impleadment has been
dismissed on 29.8.2013 as withdrawn.
(iv) No record is available with JHALCO or BHALCO about
the employees and hence, it would be difficult to
ascertain whether a person is entitled to any benefit.
35. Ms. Priya Hingorani, learned counsel appearing for the
workmen-respondents, resisting the aforesaid contentions
urged by the appellants, has contended that the
respondents are extremely unfortunate to have worked in
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BHALCO without payment of salary since 1995 and
thereafter being not absorbed by JHALCO, despite JHALCO
having absorbed more than 300 employees of BHALCO.
Number of orders passed by this Court in this case would
go a long way to show the apathy exhibited by both the
States and the statutory corporations despite the
existence of employer and employee relationship. The
attitude of the appellants clearly reflects a callous and
insensitive attitude. It is further urged by her that the
Central Government has taken the decision under Section
65 of the Act determining the liabilities but the same is
not properly appreciated and applied as a consequence of
which such a disastrous stage has come in. The learned
counsel has seriously controverted about the identification
of the employees on the foundation that the names of the
employees mentioned in the list annexed to the written
note of arguments find place in the report submitted by
Justice Udai Sinha and their original service books are
available.
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36. A chart has been annexed indicating the sum payable
to the respondents and other employees who are similarly
situated. Though the learned counsel for the respondents
initially pressed for absorption, yet in course of hearing
she conceded that this Court may mould the relief and
issue appropriate direction with regard to payment of
salary and give a quietus to the lis.
THE NECESSITOUS APPROACH IN PRAESENTI
37. We have already adverted to the orders passed by the
High Court, noted the respective contentions at the Bar
and stated the chequered history of the litigation. The
factual expose, as is evident, reflects a very sad scenario.
We call it sad as we are disposed to think that when a
State is bifurcated by a Parliamentary legislation, both the
States and the Centre are required to take certain
decisions under the Act and they are required to be taken
in quite promptitude and not leaving the poor employees
high and dry and suffer for no fault of theirs.
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38. The submission, so assiduously made, that it is open to
the employees to seek their remedy under the Companies
Act, 1956 or under the provisions of the Industrial
Disputes Act, 1947, leaves us totally unimpressed regard
being had to the facts and circumstances of the case and
the plight in which the employees have been put in. This
Court on earlier occasion had also categorically clarified
that this is a different situation and it is not laying down
the law that in every case the State Government should
come forward to pay. It has been held earlier that it is a
problem of great magnitude affecting human rights and
the purpose of living as enshrined under Article 21 of the
Constitution. That apart, it is not a case where the
services of the employees have been terminated or
retrenched or even there is no decision that the posts
have been abolished.
39. As is manifest, initially the State of Jharkhand took a
decision to take over BHALCO and thereafter resiled. The
Division Bench has correctly opined that such a decision
could not have been taken unilaterally by the State of
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Jharkhand but the fact remains that it had been taken and
some employees were absorbed. We do not intend to say
anything on the status of the employees who have already
been absorbed as the application for impleadment I.A. No.
3 of 2012, has been dismissed as withdrawn by order
dated 29.8.2013, because the controversy pertaining to
the same is pending before the High Court. We are only
going to focus on the plight of the employees who have
not been absorbed and not got salary from any quarter.
40. At this juncture, it is necessary to refer to the order
dated 13.9.2004 issued by the Government of India,
Ministry of Home Affairs. The said decision was taken in
pursuance of the order passed by this Court on 13.8.2004
in Writ Petition No. 488 of 2002. The Competent Authority
of the Central Government, after referring to what
transpired in the meetings and noting the difference in
regard to the views by the State of Bihar and State of
Jharkhand, passed the following order: -
“And whereas, the Central Government considers that as on date BHALCO continues to be
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under the control of the Government of Bihar in terms of Section 65 of the Bihar Reorganization Act, 2000 and as Government of Bihar has already initiated proceedings for liquidation of fifteen companies and has decided to initiate liquidation proceedings in respect of Bihar Hill Area Lift Irrigation Corporation Ltd. (BHALCO)
Now therefore, in exercise of the powers conferred upon it under section 65(1) & (2) of the Bihar Reorganization Act, 2000, the Central Government hereby directs that Government of Bihar will initiate liquidation proceedings in respect of Bihar Hill Area Lift Irrigation Corporation Ltd. (BHALCO) to which the Government of Jharkhand has no objection.”
41. At this stage the conduct of the State of Jharkhand is
relevant to be noticed. We repeat, we have already
approved the view of the Division Bench that the State of
Jharkhand could not have taken the decision in a
unilateral manner. But what steps it had taken are
significant for what we are going to direct at a later stage.
From the uncurtaining of facts it is demonstrable that the
issue pertaining to employees of BHALCO came up for
consideration before the State of Jharkhand for post facto
approval of acquisition of BHALCO and making it
functional as JHALCO. On 9.1.2002 a memorandum of
cabinet was drawn for post facto approval. The proposal
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of acquisition and adoption of BHALCO as JHALCO was
placed before the following conditions:-
“6. Thus under the circumstances the proposal of acquisition and adoption of BHALCO as JHALCO is proposed with the following conditions:
A. The establishment expenditure of JHALCO will be brought down. For this the services of those employees who have irregularly been appointed would be terminated as per rules.
B. JHALCO will be given full autonomy and it shall function on commercial lines and shall arrange for salaries of its employees from its own sources. '
C. Arrear of salary pertaining to period prior to 15.11.2000 shall not be paid.
D. No new appointment under any circumstances will be done in JHALCO.
E. The memorandum and articles of Association of JHALCO shall be accepted in totality and Bihar state and Bihar, wherever it has been mentioned shall be replaced by Jharkhand State and Jharkhand respectively. Accordingly, the memorandum shall be treated as modified.
F. Govt. will provide JHALCO a sum of Rs. 5.00(five) Crores as its share capital and also 5.25 Crores for payment of salaries to its employees for the period from 15.11.2000 to 31.3.2000.
7. The proposal under para 6 has the approval of the Law Department.
8. The proposal under para 6 has the approval of the Chief Secretary.
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9. The proposal under para 6 has the approval of Minister Water Resources Department.
10. The proposal under para 4 has the approval of Hon'ble Chief Minister.
11. The post facto approval of the cabinet is solicited on proposals laid in para 4 above."
42. Be it noted, before the High Court a stand was taken by
the State that the proposal that put forth before the
Government on 9.1.2002 was not approved. The plea of
the employees was that it had been approved. Be that as
it may, as is manifest, thereafter JHALCO issued notices in
the local newspaper calling for applications from the
employees of BHALCO for absorption of their services in
JHALCO. The notice dated 23.2.2003 stipulated that the
officers/employees of BHALCO who wish to serve JHALCO
on the basis of deputation can apply to the scrutiny
committee constituted for the said purpose. The
officers/employees at the time of submission of
application were required to show proof of being validly
appointed employees of BHALCO. Vide notice dated
11.3.2003 time for submission of application was
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extended to 15.3.2003. On 27.3.2003 a notice was issued
to the effect that the employees of BHALCO who had
earlier submitted applications would only submit their
joining letter and the employees who had not submitted
applications earlier they shall submit the application Form
in the prescribed format and joining letter as well. It was
stipulated that after the joining letter being accepted they
would be treated as employees of JHALCO from the date
of acceptance of joining letter and their salary would be
payable by JHALCO from that date. Vide notice dated
31.7.2003 time was extended till 7.8.2003. Eventually,
the Managing Director of JHALCO passed an office order
on 17.4.2004 in respect of one of the employees of
BHALCO which has been brought on record as a sample
order. The conditions laid down in the said office order
are reproduced below:-
“1. This arrangement is totally temporary.
2. Last basic pay and dearness allowance thereon paid in BHALCO shall be paid.
3. No arrears shall be payable of period prior to date of joining.
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4. As per requirement and scheme may be posted/appointed anywhere, in JHALCO.
5. He shall be liable to departmental action if nay information found in the joining and application is found false.”
It is relevant to mention here that the services of the
said category of employees were made effective from the
date of joining in JHALCO, i.e., 20.4.2004.
43. From the aforesaid action taken by the State of
Jharkhand it is clear as crystal that it took up the
responsibility and the State of Bihar, as it appears, tacitly
acceded to the position as a result of which the
employees remained at the mercy of JHALCO. At a later
stage controversy cropped up, as noticed earlier, due to
disagreement and difference between the two States and
it was stated that a decision was taken to initiate the
liquidation proceedings and the Central Government in
exercise of its power under Section 65 of the Act directed
the State of Bihar to initiate liquidation proceedings.
Government of Jharkhand conceded to the same.
Because of the vacillating stand of the State of Jharkhand
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a distressing and unusual situation has arisen. It is not in
dispute that JHALCO absorbed some of the employees but
did not take any steps to deal with the other employees
on some pretext or the other. There is a cavil over the
assets and liabilities. We are neither concerned with the
said controversy nor do we intend to express any opinion.
44. The High Court has directed the State of Bihar to pay
the salary till 16.6.2011 and has directed JHALCO to
absorb the unabsorbed employees. Learned counsel for
the State of Jharkhand and JHALCO has painted a picture
of frustrated affairs and further advanced the plea that
there is no vacancy. As stated earlier, the learned counsel
for the respondents-employees has suggested for
moulding the relief to give a quietus to the litigation.
45. Having regard to the position that has emerged, we are
compelled to dwell upon the role of the State as a model
employer. In Som Prakash Rekhi v. Union of India15,
Krishna Iyer, J., has stated thus: -
15 (1981) 1 SCC 449
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“Social justice is the conscience of our Constitution, the State is the promoter of economic justice, the founding faith which sustains the Constitution and the country is Indian humanity. The public sector is a model employer with a social conscience not an artificial person without soul to be damned or body to be burnt.”
46. In Gurmail Singh and others v. State of Punjab
and others16 it has been held that the State as a model
employer is expected to show fairness in action.
47. In Balram Gupta v. Union of India and Another17,
the Court observed that as a model employer the
Government must conduct itself with high probity and
candour with its employees.
48. In State of Haryana v. Piara Singh18 the Court has
ruled that the main concern of the court in such matters is
to ensure the rule of law and to see that the Executive
acts fairly and gives a fair deal to its employees consistent
with the requirements of Articles 14 and 16.
16 (1991) 1 SCC 189 17 1987 (Supp) SC 228 18 (1992) 4 SCC 118
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49. In Bhupendra Nath Hazarika and another v. State
of Assam and others19, while laying emphasis on the
role of the State as a model employer, though in a
different context, the Court observed:
“It should always be borne in mind that legitimate aspirations of the employees are not guillotined and a situation is not created where hopes end in despair. Hope for everyone is gloriously precious and a model employer should not convert it to be deceitful and treacherous by playing a game of chess with their seniority. A sense of calm sensibility and concerned sincerity should be reflected in every step. An atmosphere of trust has to prevail and when the employees are absolutely sure that their trust shall not be betrayed and they shall be treated with dignified fairness then only the concept of good governance can be concretized.”
50. If the present factual matrix is tested on the anvil of the
aforesaid principles, there can be no trace of doubt that
both the States and the Corporations have conveniently
ostracized the concept of “model employer”. It would not
be wrong to say that they have done so with Pacific
calmness, sans vision, shorn of responsibility and oblivious
of their role in such a situation. Their action reflects the
attitude of emotionlessness, proclivity of impassivity and 19 (2013) 2 SCC 516
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deviancy with cruel impassibility. Neither of the States
nor the Corporations have even thought for a moment
about the livelihood of the employees. They have
remained totally alien to the situation to which the
employees have been driven to. In a State of good
governance the Government cannot act like an alien. It
has an active role to play. It has to have a constructive
and progressive vision. What would have ordinarily
happened had there not been bifurcation of the State and
what fate of the employees of BHALCO would have faced
is a different matter altogether. The tragedy has fallen
solely because of the bifurcation. True it is, under the law
there has been bifurcation and the Central Government
has been assigned the role to settle the controversies that
had to arise between the two States. But the
experimentation that has been done with the employees
as if they are guinea pigs is legally not permissible and
indubitably absolutely unconscionable. It hurts the soul of
the Constitution and no one has the right to do so.
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51. Be it noted, a contention was canvassed with immense
vehemence by the appellants that the directions may be
issued in respect of the respondents-employees who
approached the Court. It is not a case where we shall
confine the relief to the respondents alone. Earlier this
Court had constituted a Committee and the State of Bihar
had deposited rupees fifty crores for all the Corporations
and the employees working in BHALCO who were not paid
salary from 1995 were proportionately paid. Their
identities are known. The employees who have died, their
legal representatives are easily identifiable. A man in dire
need cannot fight a litigation against two experimenting
States to get his dues. It is the duty of the constitutional
court, as submitted by Ms. Priya Hingorani, that all should
be paid their dues as this Court may think fit.
52. Keeping in view the totality of facts and circumstances
of the case and taking note of the concept of social justice
under the Constitution, role of a model employer in a
welfare State and the conduct of both the States we
proceed to issue the following directions: -
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(i) The employees who were paid certain amount after this
Court had directed for deposit of rupees fifty crores by the
State of Bihar and have not been absorbed by JHALCO,
they should be paid their salary from 1.1.1995 till
29.12.2001.
(ii)The State of Bihar shall comply with the directions within
a period of three months from today as they are aware of
the names of employees who had been paid proportionally
out of the deposit made earlier.
(iii) The State of Jharkhand shall pay from 29.12.2001
till 13.9.2004. We have fixed the cut-off date for the State
of Jharkhand as it had issued the notification on
29.12.2001 creating an erroneous impression and
confusion. The date for State of Bihar has been
determined regard being had to the date the Central
Government took a decision asking the State of Bihar to
go for liquidation.
(iv) The State of Jharkhand shall pay the amount
within a period of four months to those employees or their
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legal representatives of the employees who have received
the amount in proportion from the State of Bihar.
(v)The State of Bihar shall deduct the amount already paid
by virtue of the order passed by this Court. However, the
State of Jharkhand shall pay the entire amount of salary
for the period as directed by us as it is clear from the
record that it has not paid anything to the employees.
(vi) Both the States shall compute the salary
component after granting the benefit of pay revision
which has been extended to other employees.
(vii) The amount, as directed to be paid, shall be paid
with 7.5% simple interest per annum.
(viii) The claim for absorption stands closed.
53. The appeals stand disposed of with the above directions
and, accordingly, the judgment and order passed by the
Division Bench is modified. There shall be no order as to
costs.
……………………………….J. [Anil R. Dave]
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……………………………….J. [Dipak Misra]
New Delhi; November 22, 2013.