Letters Patent Appeal Nos. 1940 of 2015 and 88 of 2016. Case: Bihar State Ardh Sarkari Arajpati Karamchari Maha Sangh and Ors. Vs The State of Bihar and Ors.. High Court of Patna (India)

Case NumberLetters Patent Appeal Nos. 1940 of 2015 and 88 of 2016
CounselFor Appellant: Basant Choudhary, Sr. Advocate and For Respondents: Lalit Kishore, PAAG-I and Bishwa Bibhuti Kumar Singh, Advocate
JudgesHemant Gupta, Actg. C.J. and Dinesh Kumar Singh, J.
IssueConstitution of India - Articles 12, 142, 21, 311; States Reorganisation Act, 1956 - Section 65
Judgement DateFebruary 08, 2017
CourtHigh Court of Patna (India)


Hemant Gupta, Actg. C.J.

1. The challenge in the present Letters Patent Appeals is to an order passed by the learned Single Bench of this Court on 4th of March, 2015 in C.W.J.C. No. 21893 of 2011 whereby, the claim of the writ-applicants i.e. appellants in L.P.A. No. 1940 of 2015 for payment of salary and other allowances was disposed of with direction to the State to allocate a sum of Rs. 10 Crores for payment to the affected employees for payment on account of various reasons such as marriage of daughters, ailment, old age disease, payment of loan etc. On deposit of the said amount, the Managing Director/Administrator was to examine the individual cases and to make recommendations depending on the merit of the case for release of fund in his/her favour. The writ applicants have filed appeal claiming entire pay and allowance from the State whereas, the State has filed appeal against the direction to deposit sum of Rs. 10 Crores.

2. Firstly some facts. A writ application No. 488 of 2002 was filed in public interest in Supreme Court by Ms. Kapila Hingorani consequent to newspaper report regarding non-payment of salary for long time resulting in starvation and death of an employee of the Corporation wholly owned by the State of Bihar. In such petition, Supreme Court passed a detailed interim order since reported as Kapila Hingorani (I) v. State of Bihar (2003) 6 SCC 1. The question raised in the said petition was as to what extent the State of Bihar is vicariously liable for payment of arrears of salary to the employees of State-owned Corporations, Public Sector Undertakings or Statutory Bodies. It was brought to the notice of the Court that certain Boards and Corporations are not able to pay the salary to the employees.

3. The Supreme Court noticed the fact that the Company incorporated under the Companies Act is a juristic person which has a distinct and separate entity vis-à-vis its shareholders.

4. With this background, the Court in the aforesaid case reported as Kapila Hingorani (I)'s case (Supra) observed as under:-

"30. 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. They, therefore, must do so in cases of their own employees. The Government of the State of Bihar for all intent and purport is the sole shareholder. Although in law, its liability towards the debtors of the company may be confined to the shares held by it but having regard to the deep and pervasive control it exercises over the government companies; in the matter of enforcement of human rights and/or rights of the citizen to life and liberty, the State has also an additional duty to see that the rights of employees of such corporations are not infringed.

33. The State having regard to its right of supervision and/or deep and pervasive control, cannot 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. Concept of accountability arises out of the power conferred on an authority.

34. The State may not be liable in relation to the day-to-day functioning of the companies, but its liability would arise on its failure to perform the constitutional duties and functions by the public sector undertakings, as in relation thereto lie the State's constitutional obligations. The State acts in a fiduciary capacity. 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 have 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.

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."

5. After observing so, the Court issued interim directions directing the State of Bihar to deposit a sum of Rs. 50 crores for disbursement of salaries to the employees of the Corporations. In a later interim order since reported as Kapila Hingorani (II) v. State of Bihar, (2005) 2 SCC 262 the Supreme Court directed the State of Bihar to deposit another sum of Rs. 50 crores. The Court observed as under:-

25. The State of Bihar in response to the applications filed by the petitioner herein cannot, in our opinion, be permitted to raise questions which have expressly been rejected. It cannot seek a review of the said judgment indirectly which it could not do directly. Even for such matters, an application for clarification would not be maintainable. (See Ram Chandra Singh v. Savitri Devi, (2004) 12 SCC 713.)

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.

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 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 (1995) 3 SCC 413 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.

6. Subsequently, the Supreme Court passed an order on 9th of August, 2010 disposing of the writ application that the issues involved in these cases are legal issues, therefore, the High Court was requested to examine these matters in Public Interest Litigation and pass appropriate orders expeditiously. The order reads as under:-

The issues involved in these cases basically are legal issues. They will have to be gone into by the concerned High Courts. This Court has so far monitored the matter to its best possible ability. In the circumstances, we request the High Court to examine these matters in the PIL and pass appropriate orders in these PILs as expeditiously as possible. The Registry is directed to forward copy of this order to the Registrar General of the High Court. The attention of the Hon'ble Chief Justice of the High Court may be drawn to this order. We request the High Court to consider the orders passed by this Court giving appropriate directions from time to time in these cases. We also direct the High Court to consider making interim payments to the affected persons including medical treatment.

The writ petitions are disposed of accordingly.

In view of the order passed in the writ petition, no orders are required to be passed on the interlocutory applications.

7. A separate Public Interest Litigation was initiated suo motu by this Court leading to C.W.J.C. No. 11640 of 2003. The Bench who was monitoring the disbursement of funds released by the Government towards payment of terminal benefits to the employees of the Corporation through Justice retired Uday Sinha Committee with directions of the Hon'ble Supreme Court disbursed a sum of Rs. 1,24,81,20,863.78 crores out of the total amount of Rs. 125 crores deposited by the State. Such payment was 9 percent of the salary for the period February, 1997 to November, 2003 as an interim measure. The Committee mentioned that if the full salary till November, 2003 has to be paid, the amount required will be Rs. 200 crores and for salary due and payable up to 2006, a further sum of Rs. 150 crores would be required. Keeping in view retrial benefits payable to the employees, a sum of Rs. 500 crores would be required.

8. After the orders of the Supreme Court, the Committee was ordered to be wound up on 17th of September, 2007 by this Court and later, on 31st of August, 2010 the suo motu Public Interest Litigation Petition was disposed of as it was observed that the cause of action does not survive. Liberty was given to any individual to approach the appropriate forum. In terms of the direction of the Supreme Court, C.W.J.C. No. 20645 of 2010 (Awadh Kishore Sharma v. The State of Bihar & Ors.) was preferred consequent to an order passed by the Hon'ble Supreme Court on 9th of August, 2010. The Writ Petition was dismissed on 17th of May, 2011 with liberty to...

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