“Reportable”

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

I.A. NO. 21 OF 2007 IN  WRIT PETITION (CIVIL) NO. 488 OF 2002

Kapila Hingorani & Anr. …. Appellant

Versus

State of Bihar & Anr. …. Respondent

J U D G M E N T

V.S. SIRPURKAR, J.

1. In the instant Application,  the petitioner seeks directions from this

Court on the following:

(a) Direct  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 (annexed to the I.A.), pursuant to the

Order dated 13.1.2005 leaving the employees who have died.

(b) Pass any other Order (s) as may be deemed fit and proper.

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2. The short history for proper decision would be necessary.

History:

3. Original State of Bihar came to be divided into existing State of Bihar

and  State  of  Jharkhand  by  Bihar  Reorganisation  Act  with  effect  from

15.11.2000.  The State of Jharkhand exercising its power under Section 85

of the Bihar Reorgnisation Act constituted a Corporation called “Jharkhand

Hill  Area  Lift  Irrigation  Corporation”  (hereinafter  called  ‘JHALCO’)  by

notification no. 2580 with effect from 29.12.2001.

4. It may be recalled that there were press reports regarding the non-

payment of salaries for long time resulting in starvation of the employees of

this Corporation.  It was also reported that one Chandan Bhattacharya, son

of  an  employee  of  the  Bihar  State  Agro-Industries  Development

Corporation tried self-immolation, which incident was widely reported in the

press.  Ultimately, the said Chandan Bhattacharya succumbed to the burn

injuries.   A public spirited lawyer initiated public interest  litigation in this

Court  under  Article  32  of  the  Constitution  of  India,  inter  alia  raising  a

question  regarding  the liability  of  the  Government  of  State  of  Bihar  for

payment  of  arrears  of  salaries  to  the  employees  of  the  said  owned

corporations, public sector undertakings and statutory bodies.  The State of

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Bihar filed its counter affidavit  and claimed that the salaries were being

paid  by  the  statutory  authorities  and  further  that  all  the  salaries  upto

30.9.2002 were paid in the case of 26 undertakings.  In respect of some

other  Corporations,  however,  it  was  reported  that  large  number  of

employees were not paid the salaries and huge arrears remained involving

crores of rupees.  In case of as many as 16 undertakings including Bihar

Hill  Area Lift  Irrigation Corporation (hereinafter called ‘BHALCO’), it  was

also  admitted  that  14  employees  had  died  in  harness  and  9  after

retirement.  However, it was totally denied that there was any suicide or

death due to starvation of any of the employees of the corporation.  After

hearing the amicus curie,  who was appointed by this Court as also the

learned counsel who appeared on behalf of State of Bihar and Union of

India,  and  after  considering  the  law  in  details,  the  Court  issued  the

following interim directions in the matter on 9.5.2003:

“(i) The  High  Court  may  strive  to  dispose  of  all  liquidation proceedings in respect of the government companies owned and  controlled  by  the  State  of  Bihar  as  expeditiously  as possible.  For the said purpose and/or purposes ancillary to or incidental therewith, it may pass an interim order and/or orders by way of sale and/or disposal of the properties belonging to such public sector undertakings and/or government companies or to take such measure or measures as it may deem fit and proper.

(ii) For the aforementioned purposes a committee not consisting of more than three members chaired by a retired High Court Judge or a sitting District Judge may be appointed who may scrutinize  the  assets  and  liabilities  of  the  companies  and submit a report to the High Court as expeditiously as possible

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preferably within three months from the date of constitution of the Committee.  The terms and conditions for appointment of the said Committee may be determined by the High Court.  All expenses in this behalf shall be borne by the State of Bihar.

(iii) The  High  Court  shall  be  entitled  to  issue  requisite direction/directions to the said Committee from time to time as and when it deems fit and proper.

(iv) 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 installments.  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.

(v) 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.

(vi) The rights  of  the  workmen shall  be considered in  terms of Section 529-A of the Companies Act.

(vii) 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.

(viii) The State of Jharkhand is hereby impleaded as a respondent. let notice be issued to the newly added respondent.”

It  is  clear  that  these directions were only to  meet  the exigencies

which were then prevailing.   

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5. It  seems  that  thereafter,  number  of  developments  took  place

including constitution of the committee by the High Court of Patna, as also

the disbursement of 50 crores of rupees which were directed to be paid by

the State of Bihar and which were deposited as per the directions.  This

Court on 13.8.2004 issued a direction, directing the State Government, in

consultation with the concerned Ministries, to take the decision regarding

the division of  assets and liabilities of the government companies/public

sector  undertakings  in  terms of  provisions of  State  Reorganisation  Act,

2000.   

6. Two I.As. being I.A. no. 7 of 2004 and I.A. no. 9 of 2004 came to be

filed.  In I.A. no. 7 of 2004, a clarification was sought in respect of JHALCO

with the prayer that JHALCO should be treated as a successor of BHALCO

from  15.11.2000  onwards.   This  was  necessitated  on  account  of  the

alleged  offer  by  JHALCO by  way  of  advertisements  on  27.3.2003  and

31.7.2003.   While  by  1st advertisement  the  last  date  to  submit  the

applications  was  5.4.2003,  by  2nd advertisement  it  was  extended  to

7.8.2003.  398 applications were filed out of which 302 were found eligible

and  those  applicants  were  absorbed.   Thus  14  officers,  44  Class  III

employees and 244 Class IV employees were absorbed.  It  was clearly

stated  in  the  advertisement  that  the  employees  of  BHALCO would  be

absorbed by JHALCO only if  they forego their claim of salary for period

prior  to  their  respective date  of  absorption.    By  I.A.  no.  9  of  2004,  a

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direction  was  sought  that  respondent  State  of  Bihar  and/or  State  of

Jharkhand should deposit  sufficient  sum of  money with the Patna High

Court, so that at least the employees of the Corporations listed in the Order

dated 9.5.2003 be paid their salaries.   

7. These I.As  were opposed by  the  State  of  Bihar  by filing  counter

affidavits.  The State of Jharkhand which was impleaded as a party also

filed its counter affidavit which was affirmed by one Binod Kumar Verma,

Managing  Director,  JHALCO,  Ranchi.   The  stand  taken  by  State  of

Jharkhand was that BHALCO was still under the control of State of Bihar

and in place of BHALCO, a new Corporation known as JHALCO had been

incorporated and registered by the Registrar of Companies, Jharkhand on

or  about  22.3.2002.   In  short,  the  stand  was  taken  that  JHALCO has

nothing to do with BHALCO and it could not be treated as a successor of

JHALCO.  The Union of India had also filed an affidavit, wherein it  was

pointed out that winding up applications had already been filed by the State

of Bihar in respect of as many as 18 companies, and in view of that, no

order  was  required  to  be  passed  under  Section  65  by  the  Central

Government.  It was also pointed out that 8 companies operated only within

the territories of Bihar and as such, there was no necessity of bifurcation

thereof.  It was also pointed out that in respect of the 4 companies which

were operating both within the territories of State of Bihar and Jharkhand, a

direction was already issued for the division of assets and liabilities.  It was

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pointed  out  in  respect  of  such  companies  that  they  would  continue  to

function as the inter-state corporations in the State of Bihar and State of

Jharkhand.  A Committee was also constituted for the implementation of

the orders  passed by the Central  Government,  which comprised of  the

Chief Secretary, Bihar or his/her nominee and Chief Secretary, Jharkhand

or his/her nominee.  The State of Bihar took the stand that the State had no

liability  to  pay  the  salaries  of  the  employees  of  the  statutory

corporations/companies  incorporated  under  the  Indian  Companies  Act.

The Court passed a detailed Order dated 13.1.2005.   It firstly expressed its

dissatisfaction on the stand taken by the State of Bihar and then observed

as under:

“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 of the fact that the State of  Jharkhand  itself  has  given  option  to  the  employees  of BHALCO, the order of absorption of those employees who opt for employment may be passed at an early date and not later than six weeks from date.  The concerned employees need not  file  any undertaking at  this stage as the question as to whether the State of Jharkhand is liable to pay any salary and other emoluments to the employees of BHALCO is a question which would  fall  for  decision  in  an appropriate  proceedings (emphasis supplied).”

The Court also further held:

“We make it  clear  that  we have not  issued 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

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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 concerned employees or workmen would undoubtedly be adjudicated upon in the proper proceedings.  However, these directions are issued which are necessary for  their  survival. Undoubtedly,  any  amount  paid  by  Justice  Uday  Sinha Committee pursuant to these directions shall be duly credited for.”

This is how I.A. nos. 7, 9 and 10 were disposed of.

8. However,  thereafter,  I.A.  no.  11  was  filed  for  modification  of  the

Court’s Order dated 13.1.2005 in I.A. no. 7, 9 and 10.  There was another

I.A. no. 13, which was filed for clarification of the Order dated 13.1.2005.

An affidavit came to be filed by JHALCO in I.A. no. 11, and it was directed

to place on record, the details of the sanctioned posts, filled up posts and

the balance.  On 11.9.2006, another order came to be passed on I.A. nos.

8 and 11.  By Order dated 3.11.2006, further time was granted to the State

of Jharkhand to file the reponse to the Status Report which was already

filed.  The matter was adjourned from time to time, thereafter.  Ultimately,

an Order came to be passed on 16.7.2007, where firstly, the Court issued

the same humanitarian directions to the State for bearing the expense of

those employees who were critically ill and insofar as I.A. no. 11 of 2005

was concerned, the following Order was passed:

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“It  is  stated  by  Mr.  Ajit  Kumar  Sinha,  learned  counsel appearing on behalf of the State of Jharkhand that pursuant to this Court’s Order dated 13.1.2005 out of 398 workmen who had been working with BHALCO and who had been asked to report for duty within three weeks, only 302 turned up and they have been absorbed.  Learned counsel states that order of absorption had been passed despite the fact that 158 people have been found to  be surplus.   In  this  view of  the matter learned counsel submits that those who had not turned up for their absorption within the aforementioned period may not be directed to be absorbed pursuant to this Court’s Order dated 13.1.2005.   

In  view of  the  statement  of  Mr.  Ajit  Kumar  Sinha,  learned counsel that 158 persons are surplus, we are of the opinion that those who have not turned up for duty on the appointed date may seek their remedies in the matter as are available to them in law.  We need not issue any direction in regard to their absorption.

I.A. no. 11 is disposed of accordingly.

I.A. no. 8

I.A. no. 8 for intervention is dismissed as not pressed.”

9. The  statement  was  obviously  an  incorrect  one  because  the

absorption of 302 employees was obviously not done in pursuance of the

Court’s  Order  dated  13.1.2005.   In  fact,  those  advertisements  for

absorption  of  the  erstwhile  of  BHALCO  employees  were  issued  much

earlier to the Court’s Order dated 13.1.2005.  It seems that after the Order

dated 13.1.2005, as many as 216 applications were filed by the erstwhile

BHALCO employees.  Out of these 216 employees, 5 were officers, 31

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were Class III employees and 180 were Class IV employees.  Therefore, it

is obvious that while passing an Order on I.A. no. 11, this Court was kept in

dark about  two factors.   Firstly  that  advertisements 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.

10. Again on 21.9.2007, the Court directed the counsel for the State to

file the Status Report.

11. It is on this background, that the present I.A. no. 21 has been filed.

The Court issued notice on I.A. no. 21, which notice was accepted by Mr.

Ajit Kumar Sinha, counsel for the State of Jharkhand and he was given two

weeks’  time  to  file  reply  by  Order  dated  12.11.2007.   Ultimately,  on

13.12.2007, this Court passed the following Order;

“Having heard the learned counsel for the parties, we are of the  opinion that as the situation in which the employees of the erstwhile BHALCO arises out of a statement before us by the counsel  for  JHALCO,  from  which  the  State  now  seeks  to wriggle out, we are of the opinion that the Secretaries of the State  of  Bihar  and  the  State  of  Jharkhand  as  also  the Managing Directors of the BHALCO and JHALCO should have a  dialogue  in  regard  to  the  absorption  of  the  concerned employees  and  a  report  be  submitted  to  this  Court.   If necessary, intervention of the appropriate Department of the Central Government may also be taken.

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List the matter on 31.1.2008.

The  Secretary  of  the  Irrigation  Department  of  the  State  of Jharkhand as also the Managing Director  of  JHALCO shall remain present before us on that date.”

12. When the matter was taken up on 31.1.2008, there were two reply

affidavits  filed.   The  Managing  Director  of  JHALCO in  the  initial  reply

specifically owned that the Status Report  shown in the earlier  affidavits

which were filed subsequent to the Order dated 13.1.2005, was actually

that of the period prior to 13.1.2005, though it was purported to be relating

to subsequent period.  An unconditional apology was tendered as under:

“The State through its counsel gives an unconditional apology since it was only intended to mention prior to 13.1.2005 and not pursuant to 13.1.2005.”

The matter was left at that.  This so-called parawise reply does not

seem to convey anything new.  In paragraph 9, however, it was stated that

in pursuance of the Order dated 13.8.2004 of this Court, the Government of

India vide letter no. 12025/24/2004-SR dated 13.9.2004 had decided that

BHALCO continued to be under the control of the Government of Bihar in

terms  of  Section  65  of  the  Bihar  Reorganisation  Act,  2000.   It  was,

therefore, pleaded in that paragraph that BHALCO and JHALCO were two

different corporations having no connection of inter dependence between

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them.  It was only on this basis that ultimately it was prayed that I.A. no. 21

should be dismissed.

14. We are constrained to say that in filing the said report in pursuance

of  I.A.  no.  11 and making solemn statement  before this Court  that  302

employees were already accommodated in pursuance of the Order of this

Court  dated 13.1.2005,  a clear  cut  misleading and false statement was

made, but for which this Court would not have passed the Order dated

16.7.2007 on I.A. no. 11.  We express our consternation.  We must also

say that we are not at all satisfied with the bald apology which we have

already quoted above.  There is no explanation, whatsoever, as to how

such a statement came to be issued on behalf of the State Government by

its  standing  counsel.   It  is  obvious that  the State  merely  made a poor

attempt to extricate itself from the difficult situation.   

15. The  State  filed  an  additional  affidavit.   In  the  additional  affidavit,

however, it was reiterated that a meeting was arranged to be held between

the concerned Secretaries  and the Managing Directors  on 17.1.2008 at

Ranchi,  wherein,  the  relevant  facts  and  issues  were  discussed.   The

affidavit  once  again  stated  about  the  erstwhile  absorption  of  302

employees,  and further  that  as  on  date,  216  employees  were left  with

BHALCO who had not so far been absorbed.  It was then pointed out that

there was already a surplus of 152 Class IV employees with JHALCO and

if  216 employees were further directed to be absorbed, JHALCO would

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become  a  sick  company.   The  affidavit  further  asserted  that  initial

responsibility rests with BHALCO owing to the order passed by the Central

Government on 13.9.2004.  It was also further reiterated in the affidavit that

the Government of Bihar and the Managing Director of BHALCO did not

accept this order dated 13.9.2004 and had protested against the Ministry of

Home Affairs and submitted that all the employees of BHALCO should be

absorbed  by  JHALCO.   The  affidavit  then  goes  on  giving  certain

chronology of events, showing as to how JHALCO was brought under the

existence.  It was accepted that JHALCO adopted the rules and regulations

of  BHALCO and that  some assistance was received from the  financial

institutions for execution of its schemes.  Further, it was expressed that the

services  of  BHALCO’s  employees  would  be  taken  only  as  per  the

requirement. Again, a reference was made to the two advertisements by

which the BHALCO’s employees were given the opportunity to apply for

absorption.   It  was  also  pointed  out  that  the  Muster-Roll  employees,

employees deputed in the Government Department and employees who

presented  mutilated  documents  were  not  accepted  by  JHALCO.

Reference was then made to the earlier Order dated 9.5.2003 of this Court

and it  was pointed out further that by Order dated 13.9.2004, the State

Government had decided that as on date, BHALCO continued to be under

the  control  of  the  Government  of  Bihar.   In  para  (i),  a  very  curious

statement is made, which is as under:

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“Therefore,  after  the  Central  Government  order  dated 13.9.2004, the Jharkhand State Government sought to annul its  earlier  decision  to  correct  the  technical  error  committed earlier in its order no. 2580 dated 29.12.2001 issued by Water Resource  Department,  Government  of  Jharkhand  for  which approval  was  given  to  this  proposal  by  the  Departmental Minister in October 2004.  However, the process could not be completed because of elections in the State.  Thereafter, the Cabinet revised its earlier decision in its meetings of 4.4.2005 and  the  order  was  issued  vide  WRD,  Government  of Jharkhand notification no. 1283 dated 26.4.2005.”

16. A reference was then made to an application for modification of this

Court’s Order dated 13.1.2005, allegedly filed by the State of Jharkhand on

15.2.2005.  Further, the rejoinder affidavit filed by the State of Jharkhand

dated 28.4.2005, showing the inability to absorb the remaining BHALCO

employees  was  also  referred  to.   Paragraph  8  (a)  and  8  (b)  of  this

additional  affidavit  suggested  that  JHALCO had adopted  the  rules  and

regulations of  BHALCO, and that  JHALCO will  receive assistance from

financial  institutions.   It  is  then admitted that  to start  and run JHALCO,

experienced  employees  were  needed.   As  BHALCO  employees  were

sitting idle,  an opportunity was given to them on humanitarian grounds.

Again,  the  same  table  regarding  the  302  absorbed  employees  was

presented.  It is then reiterated that the financial position of JHALCO could

not be improved due to the excess staff already absorbed.  In para   8 (e),

a reference was made to the decision of the Government of Jharkhand

issued by WRD notification no. 1283 dated 26.4.2005 and a meeting in

pursuance of this decision held on 8.8.2005 to review the financial position

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of the JHALCO together with its work performance.  This para is extremely

important and reads as under:

“(e)  As  per  Government  of  Jharkhand  decision  issued  by WRD notification no. 1283 dated 26.4.2005 the Board of Directors of JHALCO held a meeting dated 8.8.2005 to review the financial position of JHALCO together with its work performance.  It decided to curtail the number of the employee, seeing the nature of the work which the corporation is executing, as all schemes are executed by  the  beneficiary  of  the  concerned  schemes  and handed  over  to  the  beneficiary  committee  after completion of the scheme.  The strength sanctioned by Board of Directors is as under:

S.No.     Category of Post      Total Engaged Employees

(i) Officers 78 (ii) Class III 44 (iii) Class IV 92

Total  =          214

(f) In  view  of  the  strength  sanctioned  by  the  Board  of Directors  of  JHALCO  seeing  the  nature  of  the  work executed by the corporation the comparative statement of BHALCO employees already engaged in JHALCO in comparison to its need strength is as under:

Sl. NO.

Category of Post

Total strength sanctioned

Total engaged employees

Balance

(i) Officers 78 14 (-)64 (ii) Class III 44 44 Nil (iii) Class IV 92 244 (+) 152

The above comparative statement itself shows that 152 excess of BHALCO Class IV employees have already

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been engaged, regarding which an affidavit  has been filed  by the  Government  of  Jharkhand in  the  Hon’ble Supreme Court.

(g) The remaining BHALCO employees are approximately 216.   As per  I.A.-21  filed  by  the petitioner  (BHALCO employees) category wise position of these employees are as follow:

S.No.    Category of Post       Remaining BHALCO Employees

(i) Officers 05 (ii) Class III 31 (iii) Class IV         180

Total  =               216

(h) As mentioned above in the remaining 216 employees of BHALCO,  Class  III  employees  are  31  which  are  not needed in JHALCO and Class IV employees are 180 while JHALCO has already engaged 152 excess Class IV employees of BHALCO.

(i) As per audit report 2005-06, JHALCO is already running in 3.16 crores deficit.

(j) The annual wages of JHALCO employees is about 3.60 crores,  while  the  profit  earned by  JHALCO has been estimated to  be approximately  Rs.  One crore.   Thus, 2.60 crores have been sought from the WRD, State of Jharkhand to  make the JHALCO employees payment for the financial year 2008-09”.

17. It was then submitted in the further paragraphs that JHALCO was

trying  to  become financially  viable  with  the  help  of  the  Government  of

Jharkhand.  It was also pointed out that in the erstwhile BHALCO, excess

employees  were  engaged  and  the  organization  could  not  sustain  the

burden of its employees.  It was, therefore, reiterated that the estimate of

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taking the remaining BHALCO employees had to be seen in the light of the

precarious  financial  situation  and  the  excess  staff.   It  was,  therefore,

reiterated that if those employees are taken, JHALCO also will be a sick

company.   In  the  rest  of  the  paragraphs,  other  facts  relating  to  the

liquidation of BHALCO, as also the failure of the meeting dated 17.1.2008

which was ordered by this Court, were referred.   

18. We have deliberately referred to the two affidavits on behalf of the

State of Jharkhand and JHALCO only to show that JHALCO and the State

are changing their stands from time to time.  Their stands at times have

become contradictory and inexplicable.   It  has already been noted that

JHALCO came into existence long back on 29.12.2001, because the area

of operation of BHALCO fell within the boundaries of Jharkhand after the

State of Jharkhand came into existence.  The Cabinet note dated 9.1.2002

which was filed by the writ petitioner along with I.A. no. 11 of 2005 clearly

suggests that the Jharkhand State Cabinet had sanctioned that BHALCO

should  be  run  in  the  form  of  JHALCO.   In  2003,  JHALCO  gave  two

advertisements for  absorption of  BHALCO employees and even later,  it

was  admitted  that  JHALCO  required  the  experienced  employees  of

BHALCO.   In  pursuance  of  these  advertisements,  all  the  BHALCO

employees  could  have  applied  for  being  regularized,  provided,  their

applications  were  found  to  be  in  order.   Accordingly,  as  many as  302

employees were absorbed.  The applications of others were rejected and

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some others had not applied at all, perhaps because of the condition that

such employees had to forego their earlier claims of the unpaid salaries.  At

the time when the advertisements were issued, there was no compulsion

by way of any Court Order to accommodate all the employees and it could

have  been  merely  a  humanitarian  consideration  out  of  which  the  said

advertisements came to be issued.  It cannot be forgotten that there was

no trained staff available with JHALCO and, therefore, JHALCO required

the  experienced  staff  of  BHALCO.   Therefore,  this  move  was  only  to

replace  the  nomenclature  of  BHALCO  and  to  continue  the  same  as

JHALCO.  It seems that the non-payment of salaries to these employees

was a non-factor and, therefore, JHALCO wanted to reap double benefit,

viz., firstly it could get all the experienced employees and secondly, that too

without having to face the liability  of  their salary payments.   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  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 scrutinizing 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

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that the concerned employees 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.  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 only to 302.  Now,

in  pursuance  of  the  Order  dated  13.1.2005,  216  more  employees  had

applied  and that  too  without  foregoing  their  claims  over  salaries.   It  is

probably because of this  that 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.  In fact, if

paragraph 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.   This  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 I.A. no. 11.  Even the figures

given in the Additional affidavit’s paragraph A(f) are misleading.  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

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been engaged and that too prior to the decision dated 8.8.2005.  The 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 by JHALCO.  After all, there was no curtailment of area

or the activities at least none pleaded before us, in which case the decision

to curtail the number of employees of JHALCO itself appears to be neither

sound, reasonable, nor justifiable and only appears to get out of the rigour

of this Court’s Order dated 13.1.2005.  Be that as it may we are, in view of

the discussions made  thereafter, not in a position to pass any order in

favour of the applicants even if their contentions with regard to  existence

of vacancies are accepted.

19. However,  there  is  a  huge  problem  of  the  finance.   It  has  been

pleaded in the Additional affidavit that JHALCO was running in deficit by

3.16 crores up to 2005-06.  Its annual wages on the date are 3.60 crores

and it has already sought 2.60 crores from the State of Jharkhand to make

the payment for the financial year 2008-09. The affidavit, however, does

not give any clear idea about the contribution which will be required to be

made by the State of Bihar on account of the arrears of salaries.   

20. When we see the 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

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employees  of  BHALCO  should  be  absorbed  in  JHALCO  without  any

condition,  their  does not  appear to  be anything more.   In  the  name of

written submissions on behalf of 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

Section  47  (1)  and  Section  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 further has 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 BHALCO is not correct decision, and that it had written a

letter to reconsider the same.  We express our surprise as to how such a

bald stand was taken by the State of Bihar.  Seen from any angle, this

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 the over simplification of the issue.  That is apart from the fact

that in the Memorandum of Association of BHALCO, there is a reference of

the six districts of Bihar which continued to be in the State of Bihar as its

area of  operation.   We have carefully  seen 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,

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the liability to pay the arrears of salary is that of State of Bihar, which it

must discharge.

21. However, we are told that a writ petition is pending in the Jharkhand

High Court by the employees claiming absorption as also the past salaries.

We would, therefore, desist from giving final directions, so also we do not

wish to deal with a labour dispute in 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.   

There is another aspect of the matter which cannot be lost sight of.

The mode of enforcing our order dated 13th January, 2005 would be by

initiating  a  proceeding  for  contempt  under  the  Contempt  of  Courts  Act,

1970.  Such a proceeding, as is well known, must be initiated by way of last

resort.

In  Sushila Raje Holkar vs.  Anil Kak  (Retd.) [2008(7) SCALE 484],

this Court held :

“14.  A proceeding under the Contempt of Courts Act has a serious consequence.  Whether the alleged contemnor has  willfully  committed  breach  of  the  order  passed  by  a competent court  of  law or not having regard to the civil/evil consequences ensuing therefor require strict scrutiny.  For the said purpose, it may be permissible to read the order of the court in its entirety.  The effect and purport of the order should be taken into consideration.

Whereas  the  court  shall  always  zealously  enforce  its order but a mere technicality should not be a ground to punish the contemnor.

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A  proceeding  for  contempt  should  be  initiated  with utomost reservation.  It should be exercised with due care and caution.  The power of the court in imposing punishment for contempt  of  the  court  is  not  an  uncontrolled  or  unlimited power.  It is a controlled power and restrictive in nature (see Re: P.C. Sen [ (1969) 2 SCR 649] and Jhareswar Prasad Paul and Another vs.  Tarak Nath Ganguly & Ors. [(2002) 5 SCC 352]}.   

A contemnor, thus, may be punished only when a clear case for contumacious conduct has been made out.”

Only because an incorrect statement had been made before us in

respect whereof we have made our comments hereto before, initiation and

consequent  punishment  of  the  officers  guilty  before  us  therefor,  in  our

opinion, would not subserve any purpose.  We, therefore, desist ourselves

from doing so.

22.     In view of the above, we give 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

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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 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 13.09.2004, passed by it

are complied with by the State of Bihar

                                 The  Interim Application is accordingly disposed of.

………………………………..J. (S.B. Sinha)

………………………… ……..J.

(V.S. Sirpurkar)

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New Delhi; July 8, 2008.

25

 Digital  Performa

Case  No. : IA No.21 of 2007 In WP(C) No.488/2002

Date of Decision : 8.7.2008

Cause Title :  Kapila Hingorani & Anr.

Versus

   State of Bihar & Anr.

Coram :   Hon’ble Mr. Justice S.B. Sinha     Hon’ble Mr. Justice V.S. Sirpurkar      

Judgment delivered by :   Hon’ble Mr. Justice V.S. Sirpurkar

Nature of Judgment :    Reportable

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