Salary arrears liability after State bifurcation apportioned between successor States; absorption claim for employees was closed

In a bifurcation-related dispute over employees of an erstwhile public corporation, the Supreme Court considered how salary arrears should be allocated between Bihar and Jharkhand under the Bihar Reorganization Act, 2000. It treated the statutory reorganization framework, the Central Government's order under Section 65, and the States' prior conduct as relevant to fixing liability for different periods, and apportioned unpaid salary accordingly with adjustment for amounts already paid. The Court also declined to sustain a continuing claim for absorption in JHALCO, holding that the controversy should end with payment of dues, including interest and pay revision benefits taken into account in computing arrears.

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Issues: (i) Whether the State of Bihar or the State of Jharkhand was liable to bear the salary arrears of employees of the erstwhile corporation after bifurcation and the Central Government's order under the Bihar Reorganization Act, 2000. (ii) Whether the claim for absorption in JHALCO and continuation of service benefits could be sustained.

Issue (i): Whether the State of Bihar or the State of Jharkhand was liable to bear the salary arrears of employees of the erstwhile corporation after bifurcation and the Central Government's order under the Bihar Reorganization Act, 2000.

Analysis: The dispute arose from the bifurcation of the erstwhile State and the shifting of the corporation's operations between the successor States. The record showed that employees had been left unpaid for long periods, and earlier proceedings had already recognised that the States and the corporation could not disown responsibility in a manner inconsistent with social justice, the right to life, and the conduct expected of a model employer. The Central Government's order under Section 65 of the Bihar Reorganization Act, 2000, and the prior conduct of the two States were treated as decisive for fixing liability for different periods.

Conclusion: Liability for unpaid salary was apportioned between the States for the relevant periods, with the State of Bihar directed to pay for the earlier period and the State of Jharkhand for the later period, subject to adjustment for amounts already paid.

Issue (ii): Whether the claim for absorption in JHALCO and continuation of service benefits could be sustained.

Analysis: The earlier course of dealings, including notices inviting applications and the absorption of some employees, was not treated as creating an enforceable basis for a continuing claim to absorption for all remaining employees. In the final moulding of relief, the Court focused on securing salary dues and bringing the prolonged controversy to an end rather than directing further absorption. Pay revision benefits were directed to be taken into account while computing dues.

Conclusion: The claim for absorption stood closed, while salary dues and interest were directed to be paid.

Final Conclusion: The Court modified the Division Bench's order, apportioned salary liability between the two States for the relevant periods, directed payment with interest, and brought the absorption controversy to an end.

Ratio Decidendi: In a bifurcation-driven employment dispute involving a public corporation, constitutional courts may, to enforce social justice and the right to life, apportion salary liability between successor States on the basis of the statutory reorganization framework and the States' conduct, while refusing to extend absorption claims beyond the relief necessary to secure unpaid dues.

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