Wrongful dismissal under Article 311(2) may create transferable liability, but Section 116 protects only those actually in service.

A wrongful dismissal in breach of Article 311(2) was treated as an actionable wrong for purposes of apportionment under Section 88 of the States Reorganisation Act, 1956, and liability could pass to the successor State where the entire cause of action arose within its territory. Where a material part of the cause of action arose outside that territory, clause (b) of Section 88 did not apply. Section 116 was confined to persons actually holding or discharging the duties of a post immediately before the appointed day, so it did not preserve service status after dismissal orders had been made, even if those orders were later argued to be invalid.

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Issues: (i) Whether the liability arising from dismissal of government servants in breach of Article 311(2) of the Constitution was a liability in respect of an actionable wrong within Section 88 of the States Reorganisation Act, 1956, and if so whether that liability passed to the State of Bombay under clause (b) of that section. (ii) Whether the petitioners could rely on Section 116 of the States Reorganisation Act, 1956 to contend that they continued to hold the posts despite the dismissal orders.

Issue (i): Whether the liability arising from dismissal of government servants in breach of Article 311(2) of the Constitution was a liability in respect of an actionable wrong within Section 88 of the States Reorganisation Act, 1956, and if so whether that liability passed to the State of Bombay under clause (b) of that section.

Analysis: The expression "liability" in the Act was construed in a wide sense so as to include not merely financial obligations but liabilities of every kind, including reinstatement of a wrongfully dismissed servant. The phrase "actionable wrong" was held to cover an illegal or unauthorised act infringing a legal right and affording a ground for action in law. A dismissal contrary to Article 311(2) was treated as such a wrong. The Court further held that the cause of action arose where the dismissal order was made and where its consequences were felt. In the two petitions where those consequences arose within the territories now forming part of the State of Bombay, clause (b) of Section 88 applied. In the petition where the consequences arose outside Bombay, clause (b) did not apply.

Conclusion: The liability under Section 88 was transferable to the State of Bombay in the cases where the entire cause of action arose within Bombay territory, but not in the petition where a material part of the cause of action arose outside Bombay.

Issue (ii): Whether the petitioners could rely on Section 116 of the States Reorganisation Act, 1956 to contend that they continued to hold the posts despite the dismissal orders.

Analysis: Section 116 was held to apply only where a person was actually holding or discharging the duties of a post immediately before the appointed day. The petitioners' services had already been terminated before that date. An order of dismissal made by a competent authority, even if erroneous or invalid for breach of Article 311(2), was not treated as non est merely because it was said to be illegal; therefore the petitioners could not be deemed to be in service on the appointed day. The argument that the post should be treated as still held in law was rejected.

Conclusion: Section 116 did not assist the petitioners.

Final Conclusion: The preliminary objection succeeded only in one matter, while the other two petitions were held maintainable against the State of Bombay and were directed to proceed to hearing on merits.

Ratio Decidendi: For the purpose of apportionment under Section 88 of the States Reorganisation Act, 1956, a wrongful dismissal in violation of Article 311(2) constitutes an actionable wrong, and the successor State on whose territory the entire cause of action arose bears the liability; Section 116 applies only to persons actually holding office immediately before the appointed day.

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