TaxTMI 
TaxTMI 
2013 (11) TMI 1795
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.... 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 Jharkhand and State of Bihar deliberately have chosen to create an Evershine 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 o....
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..... In D.S. Nakara v. Union of India (1983)1 SCC 305, 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 India AIR 1964 SC 737, 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 Mines AIR 1958 SC 923 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. 10. In Y.A. Mamarde v. Authority under the Minimum Wages Act: (1972) 2 SCC 108, the Court observed that under our present Constitution the State is now e....
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....ous 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 deviancy. The employer, within 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 passa....
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.... 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 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 Bihar (2003) 6 SCC 1 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 arrear....
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....ringed. 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 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 statuto....
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....alaries 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 wherefore, 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 529A of the Companies Act. 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.....
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....fective 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 Sta....
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....ment 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 13.1.2005, 216 more employees had applied and that too without foregoing their claims over ....
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....f 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 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....
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.... (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 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 ....
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.... 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 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 ....
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.... (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 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 unde....
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....LCO. 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. 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 sal....
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....ken 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 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 releva....
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....he 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 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 earli....
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....y 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 India (1981) 1 SCC 449, Krishna Iyer, J., has stated thus: 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 Ors. v. State of Punjab and Ors. (1991) 1 SCC 189 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 Anr. 1987 (Supp) SC 228, the Court observed ....
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....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. 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 t....