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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.