# STATE OF JHARKHAND AND ANOTHER v. HARIHAR YADAV AND OTHERS

- **Citation:** [2013] 14 S.C.R. 904
- **Court:** Supreme Court of India
- **Decided:** 2013-11-22
- **Case number:** Civil Appeal No. 10515 of 2013
- **Bench:** Anil R. Dave, Dipak Misra
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/state-of-jharkhand-and-another-v-harihar-yadav-and-others-29193
- **Pages:** 43

## Headnote

Government Company - Liability of - Company owned
by State of Bihar (BHALCO) - Non-payment of salary to its
C employees -
On bifurcation of the State of Bihar, the
Company taken over by the State of Jharkhand and named
(JHALCO) -
Only some of the employees of BHALCO
absorbed by )ha/co - Writ petition before High Court by
employees seeking their absorption in JHALCO and payment
D of their due salaries - Both the States denying their liability
to pay the salary- Direction by High Court to JHALCO to pay
the salaries and absorb the employees of BHALCO - In
appeal, the States took the plea that appropriate remedy for
the employees was under Companies Act and Industrial
E Disputes Act - Employees conceded to forego their claim for
absorption - Held: When a State is bifurcated, both the States
and the Centre are required to take certain decisions under
the Act and cannot leave the poor employees high and dry
and suffer for no fault of theirs - The employees cannot be
F
directed to seek remedy under Companies Act or Industrial
Disputes Act, 1947, since the problem in the present case,
is of great magnitude affecting human rights and the purpose
of living as enshrined u!Art. 21 of the Constitution - It is also
not a case where services of employees have been retrenched
G or terminated or posts have been abolished - It is not a case
where the relief can be confined to the litigant-employees
alone - Hence in view of the facts and circumstances of the
case, direction to the States to pay the due salary to the
employees with interest - Claim for absorption stands closed
H
904
STATE OF JHARKHAND v. HARIHAR YADAV
905
- Bihar Re-organization Act, 2000 - s. 65 - Companies Act,
A
1956 - Industrial Disputes Act, 1947.
Constitution of India, 1950 - Preamble and Art. 12 -
Government Companies - Duty of, as an employer - Held:
The employer within the meaning of Art. 12 has a sacrosanct 8
duty to act in terms of the sacred objectives of social and
economic justice - In a State of good governance, the
Government cannot act like an alien - It has an active role
to pay.
A Government Company 'Bihar Hill Area Lift C
Irrigation Corporation Limited' (BHALCO) was floated by
the State of Bihar, and the Company was registered
under the Companies Act, 1956. After bifurcation of the
State of Bihar into State of Bihar and State of Jharkhand,
by Bihar Re-organization Act, 2000, the assets and D
liabilities of erstwhile BHALCO was merged/taken over by
JHALCO (Jharkhand Hill Area Lift Irrigation Corporation
Ltd.) and the State of Jharkhand.
A writ petition was filed by the employees of E
erstwhile BHALCO in the Jharkhand High Court claiming
their absorption with JHALCO and also their past salaries,
not paid to them by erstwhile BHALCO from the year
1995.
In the meantime, a writ petition was filed before
F
Supreme Court in public interest, stating therein that the
Government Companies and Public Undertakings in the
State of Bihar had not paid salaries to their workmen and
other employees for a long time resulting in deaths and
miseries on large number of families, dependant on such G
employees. BHALCO was also named as one of such
companies. This Court issued number of directions
including liquidation proceedings, formation of a
Committee to scrutinize the assets and liabilities of the
Companies and also directed State of Bihar to deposit Rs.
H
906
SUPREME COURT REPORTS
[2013] 14 S.C.R.
A 50 crores before High Court for the purpose of payment
of the salaries to the employees of the companies. The
Committee was constituted as per the direction of this
Court. State of Jharkhand took the stand before this
Court that it was not the successor of BHALCO and was·
B
a newtCorporation and hence does not owe the liability.
State of Bihar also denied its obligation. This Court
directed the High Court of Jharkhal}d to dispose of the
writ petition pending before it, determining the questions
of final absorption, past salaries and the liability to pay
c the same.
Single Judge of

## Text

_Characters 0–39,821 of 77,108. This is a partial read: ask again with offset=39821 for what follows._

A
B
[2013] 14 S.C.R. 904
STATE OF JHARKHAND AND ANOTHER
v.
HARIHAR YADAV AND OTHERS
(Civil Appeal No. 10515 of 2013)
NOVEMBER 22, 2013
[ANIL R. DAVE AND DIPAK MISRA, JJ.)
Government Company - Liability of - Company owned
by State of Bihar (BHALCO) - Non-payment of salary to its
C employees -
On bifurcation of the State of Bihar, the
Company taken over by the State of Jharkhand and named
(JHALCO) -
Only some of the employees of BHALCO
absorbed by )ha/co - Writ petition before High Court by
employees seeking their absorption in JHALCO and payment
D of their due salaries - Both the States denying their liability
to pay the salary- Direction by High Court to JHALCO to pay
the salaries and absorb the employees of BHALCO - In
appeal, the States took the plea that appropriate remedy for
the employees was under Companies Act and Industrial
E Disputes Act - Employees conceded to forego their claim for
absorption - Held: When a State is bifurcated, both the States
and the Centre are required to take certain decisions under
the Act and cannot leave the poor employees high and dry
and suffer for no fault of theirs - The employees cannot be
F
directed to seek remedy under Companies Act or Industrial
Disputes Act, 1947, since the problem in the present case,
is of great magnitude affecting human rights and the purpose
of living as enshrined u!Art. 21 of the Constitution - It is also
not a case where services of employees have been retrenched
G or terminated or posts have been abolished - It is not a case
where the relief can be confined to the litigant-employees
alone - Hence in view of the facts and circumstances of the
case, direction to the States to pay the due salary to the
employees with interest - Claim for absorption stands closed
H
904
STATE OF JHARKHAND v. HARIHAR YADAV
905
- Bihar Re-organization Act, 2000 - s. 65 - Companies Act,
A
1956 - Industrial Disputes Act, 1947.
Constitution of India, 1950 - Preamble and Art. 12 -
Government Companies - Duty of, as an employer - Held:
The employer within the meaning of Art. 12 has a sacrosanct 8
duty to act in terms of the sacred objectives of social and
economic justice - In a State of good governance, the
Government cannot act like an alien - It has an active role
to pay.
A Government Company 'Bihar Hill Area Lift C
Irrigation Corporation Limited' (BHALCO) was floated by
the State of Bihar, and the Company was registered
under the Companies Act, 1956. After bifurcation of the
State of Bihar into State of Bihar and State of Jharkhand,
by Bihar Re-organization Act, 2000, the assets and D
liabilities of erstwhile BHALCO was merged/taken over by
JHALCO (Jharkhand Hill Area Lift Irrigation Corporation
Ltd.) and the State of Jharkhand.
A writ petition was filed by the employees of E
erstwhile BHALCO in the Jharkhand High Court claiming
their absorption with JHALCO and also their past salaries,
not paid to them by erstwhile BHALCO from the year
1995.
In the meantime, a writ petition was filed before
F
Supreme Court in public interest, stating therein that the
Government Companies and Public Undertakings in the
State of Bihar had not paid salaries to their workmen and
other employees for a long time resulting in deaths and
miseries on large number of families, dependant on such G
employees. BHALCO was also named as one of such
companies. This Court issued number of directions
including liquidation proceedings, formation of a
Committee to scrutinize the assets and liabilities of the
Companies and also directed State of Bihar to deposit Rs.
H
906
SUPREME COURT REPORTS
[2013] 14 S.C.R.
A 50 crores before High Court for the purpose of payment
of the salaries to the employees of the companies. The
Committee was constituted as per the direction of this
Court. State of Jharkhand took the stand before this
Court that it was not the successor of BHALCO and was·
B
a newtCorporation and hence does not owe the liability.
State of Bihar also denied its obligation. This Court
directed the High Court of Jharkhal}d to dispose of the
writ petition pending before it, determining the questions
of final absorption, past salaries and the liability to pay
c the same.
Single Judge of High Court disposed of the writ
..
petition, holding that in view of s. 65 of Bihar
Reorganization Act, 2000, JHALCO is the same entity as
BHALCO and hence the respondent/employees were'
D entitled to be absorbed in the services of JHALCO from
the date, when they had made applications for their
absorption pursuant to direction given by Supreme Court
dated 13.1.2005 and were entitled to get salaries from the
date of their absorption to be paid by JHALCO. Order of
E Single Judge was challenged by way of LPA, which was
dismissed by Division Bench of High Court. Hence the
present appeals.
State of Bihar and BHALCO contended that assets
F
and liabilities of erstwhile BHALCO having been taken
over by JHALCO, it is duty of JHALCO to carry out the
obligations; and that grievance with regard to nonpayment of salary and service conditions including
absorption can be taken recourse to the statutory
G remedies as provided under the Companies Act, 1956 and
Industrial Disputes Act, 1947.
H
State of Jharkhand and JHAl..£0 intera/ia contended
that the High Court committed illegality by directing that
the absorbed employees shall be entitled to the benefit
STATE OF JHARKHAND v. HARIHAR YADAV
907
of past services rendered by them in BHALCO~
The respondent-employees, though initially pressed
for absorption, yet in the course of hearing, conceded for
direction of the Court regarding payment of salary and
A
to give a quietus to the /is.
8
Disposing of the appeals, the Court
HELD: 1. 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
C
economic security, for the Preamble of the Constitution
is the floodlight illuminating the path to be persuaded by
the State to set up a sovereign, socialist, secular,
democratic republic. It is the duty of the Court to see that
the philosophy which is ingrained in the Constitution is
not atrophied by the State paving a path of deviency. The
D
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. [Paras
14 and 15] [917-C-E]
Jagdish Saran (Or) vs. Union of India (1980) 2 SCC 768:
1980 (2) SCR 831; Chameli Singh and Ors. vs. State of U.P.
E
F
and Anr. (1996) 2 SCC 549: 1995 (6) Suppl. SCR 827; P.G.
Gupta vs. State of Gujarat and Ors. 1995 Supp. (2) SCC 182:
1994 (6) Suppl. SCR 628; D.S. Nakara vs. Union of India
(1983) 1 SCC 3051983 (2) SCR 165; J.K. Cotton Spinning
and Weaving Mills Co. vs. Labour Appellate Tribunal of India
AIR (1964) SC 737: 1964 SCR 724; State of Mysore vs.
Workers of Gold Mines AIR 1958 SC 923: 1959 SCR 895;
Y.A. Mamarde vs. Authority under the Minimum Wages Act G
(1972) 2 SCC 108: 1973 (1) SCR 161; S.P. Gupta vs. Union
of India (1981) Supp SCC 87: 1982 SCR 365; Ramon
Services (P) Ltd. vs. Subhash Kapoor (2001) 1 SCC 118:
2000 (4) Suppl. SCR 550; Harjinder Singh vs. Punjab State
Warehousing Corporation (2010) 3 SCC 192: 2010 (1) SCR
591; Balbir Kaur and Anr. vs. Steel Authority of India Ltd. and
H
908
SUPREME COURT REPORTS
[2013] 14 S.C.R.
A Ors. (2000) 6 SCC 493: 2000 (3) SCR 1053- relied on.
2. When a State is bifurcated by a Parliamentary
legislation, both the States and the Centre are required
to take certain decisions under the Act and they are
8 required to be taken in quite promptitude and not leaving
the poor employees high and dry and suffer for no fault
of theirs. [Para 37] [937-D-E]
3. The tragedy in the present case has fallen solely
because of the bifurcation. True it is, under the law there
C 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
D indubitably absolutely unconscionable. It hurts the soul
of the Constitution and no one has the right to do so.
[Para 50] [944-D-E]
4. The State of Jharkhand took up the responsibility
E and the State of Bihar, as it appears, tacitly acceded to
the position as a result of which the employees remained
at the mercy of JHALCO. At a later stage controversy
cropped up, due to disagreement and difference between
the two States and it was stated that a decision was taken
F to initiate the liquidation proceedings and the Central
Government in exercise of its power under Section 65 of
the Act directed the State of Bihar to initiate liquidation
proceedings. Government of Jharkhand conceded to the
same. Because of the vacillating stand of the State of
Jharkhand a distressing and unusual situation has
G arisen. It is not in dispute that JHALCO absorbed some
of the employees but did not take any steps to deal with
the other employees on some pretext or the other. There
is a cavil over the assets and liabilities. [Para 43] [941-H,
942-A-C]
H
STATE OF JHARKHAND v. HARIHAR YADAV
909
5. Both the States and the Corporations have A
conveniently ostracized the concept of "model
employer". It would not be wrong to say that they have
done so with Pacific calmness, sans vision, shorn of
responsibility and oblivious of their role in such a
situation. Their action reflects the attitude of B
emotionlessness, proclivity of impassivity and deviancy
with cruel impassibility. Neither of the States nor the
Corporations have even thought for a moment about the
livelihood of the employees. They have remained totally
alien to the situation to which the employees have been
C
driven to. In a State of good governance the Government
cannot act like an alien. It has an active role to play. It has
to have a constructive and progressive vision. [Para 50)
[943-G, 944-A-C]
6. The plea that it is open to the employees to seek D
their remedy under the Companies Act, 1956 or under
the provisions of the Industrial Disputes Act, 1947, it is
not acceptable regard being had to the facts and
circumstances of the case and the plight in which the
employees have been put in. This Court on earlier E
occasion had also categorically clarified that this is a
different situation and it is not laying down the law that
in every case the State Government should come forward
to pay. It is a problem of great magnitude affecting
human rights and the purpose of living as enshrined
F
under Article 21 of the Constitution. That apart, it is not a
case where the services of the employees have been
terminated or retrenched or even there is no decision that
the posts have been abolished. [Para 38) [937-E-H]
7. It is not a case where the Court shall confine the G
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 H
910
SUPREME COURT REPORTS
[2013] 14 S.C.R.
A
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 that all should be paid their dues as this Court may
B think fit. [Para 51] [944-F-H, 945-A]
8. Keeping in view the totality of facts and
circumstances of the case and taking note of the concept
of social justice under the Constitution, role of a model
employer in a welfare State and the conduct of both the
C States, the Court directs that (i) The employees who were
paid certain amount after this Court had directed for
deposit of rupees fifty crores by the State of Bihar and
have not been absorbed by JHALCO, they should be paid
their salary from 1.1.1995 till 29.12.2001. (ii) The State of
D Jharkhand is directed to pay from 29.12.2001 till 13.9.2004.
The cut-off date has been fixed for the State of Jharkhand
as it had issued the notification on 29.12.2001 creating an
erroneous impression and confusion. The date for State
of Bihar has been determined regard being had to the
E
date the Central Government took a decision asking the
State of Bihar to go for liquidation. (iii) The State of Bihar
is also directed to deduct the amount already paid by
virtue of the order passed by this Court. However, the
State of Jharkhand shall pay the entire amount of salary
F
for the period as directed by this Court as it has not paid
anything to the employees. (iv) Both the States shall
compute the salary component after granting the benefit
of pay revision which has been extended to other
employees. (v) The amount, as directed to be paid, shall
G be paid with 7.5% simple interest per annum. The claim
for absorption stands closed. [Para 52] [945-A-C, E-F, H;
946-A-C]
Som Prakash Rekhi vs. Union of India (1981) 1 SCC
449: 1981 (2) SCR 111; Gurmail Singh and Ors. vs. State of
H Punjab and Ors. (1991) 1 SCC 189: 1990 (2) Suppl. SCR
STATE OF JHARKHAND v. HARIHAR YADAV
911
367; Bairam Gupta vs. Union of India and Anr. 1987 (Supp)
A
SC 228: 1987 SCR 1173; State of Haryana vs. Piara Singh
(1992) 4 SCC 118: 1992 (3) SCR 826; Bhupendra Nath
Hazarika and Anr. vs. State of Assam and Ors.(2013) 2 SCC
516: 2012 (12) SCR 587 - relied on.
Kapila Hingorani vs. State of Bihar (2003) 6 SCC 1: 2003
B
(11) Suppl. SCR 175; Kapila Hingorani vs. State of Bihar
(2005) 2 SCC 262: 2005 (1) SCR 456; Kapila Hingorani and
Anr. vs. State of Bihar and Anr. (2008) 17 SCC 394: 2008
(10) SCR 195 - referred to.
c
Case Law Reference:
1980 (2) SCR 831
relied on
Para 4
1995 (6) Suppl. SCR 827
relied on
Para 5
D
1994 (6) Suppl. SCR 628
relied on
Para 6
1964 SCR 724
relied on
Para 8
1959 SCR 895
relied on
Para 9
E
1973 (1) SCR 161
relied on
Para 10
1982 SCR 365
relied on
Para 11
2000 (4) Suppl. SCR 550
relied on
Para 12
F
2010 (1) SCR 591
relied on
Para 13
1983 (2) SCR 165
relied on
Para 14
2000 (3) SCR 1053
relied on
Para 15
2003 (11) Suppl. SCR 175
referred to
Para 18
G
2005 (1) SCR 456
referred to
Para 22
2008 (10) SCR 195
referred to
Para 23
1981 (2) SCR 111
relied on
Para 45
H
A
B
912
SUPREME COURT REPORTS
[2013] 14 S.C.R.
1990 (2) Suppl. SCR 367
1987 SCR 1173
1992 (3) SCR 826
2012 (12) SCR 587
relied on
relied on
relied on
relied on
Para 46
Para 47
Para 48
Para 49
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
10515 of 2013.
From the Judgment & Order dated 16.06.2011 of the High
c
Court of Jharkhand at Ranchi in LP.A. No. 77 of 2009.
D
E
WITH
C.A. Nos. 10516, 10517-18 & 10519-20 of 2013.
Ranjit Kumar, Tapesh Kumar Singh, Mohd. Waquas Kumar
Anurag Singh, Rajiv Shankar Dwivedi, Gopal Singh, Manish
Kumar, Chandan Kumar, Priya Hingorani (for Hingorani &
Associates) for the appearing party.
The Judgment of the Court was delivered by
DIPAK MISRA, J. 1. Leave granted in all these Special
Leave Petitions.
THE IMPERATIVE PROLOGUE
F
2. How does a constitutional court respond to a situation
when a human problem of great magnitude frescoed on
constitutional canvas gets painfully projected with intense
sincerity, possibly realizing pain is one of the "sovereign
masters of mankind"? How is the Court required to react in law
G when the workmen are forced to grapple with a colossal
predicament of sense of belonging due to a situation created
making them feel that they are neither here nor there? We
consider it as an unbearable tragedy faced by the unfortunate
employees warranting serious attention of this Court, for some
H
STATE OF JHARKHAND v. HARIHAR YADAV
913
[DIPAK MISRA, J.]
employees have b'reathed their last due to starvation, constant A
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 B
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 Everstine
catastrophe by their act of abandonment of responsibility to pay
despite availing work for some years and thereafter disowning c
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 0
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 of their constitutional accountability and statutory
answerability. In a way, it seem\) to be orchestrated by some
kind of abstruse and unfathomable idea fostered in fertile mind
E
that loves to keep helpless and hapless people in a state of
despair where hope dies an unceremonial death or it lives in
a state of "Trishanku". It indubitably depicts a startlingly unhappy
situation commanding urgent surgical intervention so that the
injury does not become malignant.
F
3. Before we proceed to exposit the facts, regard being
had to the questions posed by us, we think it seemly to refer to
certain principles laid down by this Court.
G
4. In Jagdish Saran (Dr) v. Union of lndia, 1 it has been
stated as under:-
"Law, constitutional law, is not an omnipotent abstraction
1.
(1980) 2 sec 768.
H
914
SUPREME COURT REPORTS
[2013] 14 S.C.R.
A
or distant idealization but a principled, yet pragmatic,
value-laden and result-oriented, set of propositions
applicable to and conditioned by a concrete stage of
social development of the nation and aspirational
imperatives of the people. India Today - that is the
B
inarticulate major premise of our constitutional law and life."
5. In Chameli Singh and Others v. State of U.P. and
Anothefl, after referring to Article 11 (1) of the International
Covenant on Economic, Social and Cultural Rights, 1966 which
laid down that the State parties to the Covenant recognize "the
C
right of everyone to an adequate standard of living for himself
and for his family including food, clothing, housing and to the
continuous improvement of living conditions", the Court opined
that the State parties are required to'{ake appropriate action
D
to ensure that the said right is realized.
6. In P. G. Gupta v. State of Gujarat and Others, 3 it has
been opined that the Preamble to the Constitution says that the
people of India having resolved to secure to all its citizens
social and economic justice also made it subject to equality of
E
status and opportunity to promote the dignity of the individual
in the united and integrated Bharat. Reference was made to
Article 37 that declares the rights in Part IV or fundamental law
in the governance of the country and also to Article 39(b) which
enjoins that the ownership and control of the material resources
F
of the community are to promote the welfare of the people by
securing social and economic justice to the weaker sections.
7. In D.S. Nakara v. Union of lndia, 4 the court stated that
the basic framework of socialism is to provide a proper
standard of life to the people, especially, security from cradle
G to grave. Emphasis has been laid on a vibrant, throbbing
2.
(1996) 2 sec 549.
3.
1995 Supp. (2) sec 182.
H
4.
(1983) 1 sec 305.
STATE OF JHARKHAND v. HARIHAR YADAV
915
[DIPAK MISRA, J.]
socialist welfare society and what is the duty of the State to
A
achieve the said goal.
8. In J.K. Cotton Spinning and Weaving Mills Co. v.
Labour Appellate Tribunal of lnpia, 5 this Court clearly stated
that the concept of social justice is not narrow, one-sided or
8
pedantic, and is not confined to industrial adjudication alone. It
is comprehensive. It is founded on the basic ideal of socioeconomic equality and its aim is to eliminate disparities and
inequalities.
9. In State of Mysore v. Workers of Gold Mines6 the Court
C
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 o
of welfare State."
10. In Y.A. Mamarde v. Authority under the Minimum
Wages Act7, the Court observed that under our present
Constitution the State is now expressly directed to endeavour
to secure to all workers (whether agricultural, industrial or
E
otherwise) not only bare physical subsistence but a living wage
and conditions of work ensuring a decent standard of life and
full enjoyment of leisure. This directive principle of State policy
being conducive to the general interest of the nation as a whole,
merely lays down the foundation for appropriate social structure
F
in which the labour will find its place of dignity, legitimately due
to it in lieu of its contribution to the progress of national
economic prosperity.
11. In S.P. Gupta v. Union of lndia, 6 this Court held as
G
under:-
5.
AIR 1964 SC 737.
6.
AIR 1958 SC 923.
7.
(1972) 2 sec 100.
8.
(1981) supp sec 87.
H
916
SUPREME COURT REPORTS
[2013] 14 S.C.R.
A
"27 .... The judiciary has. therefore. a socio-economic
destination and a creative function. It has to use the words
of Glanville Austin, to become an arm of the socioeconomic revolution and perform an active role calculated
to bring social justice within the reach of the common man.
B
It cannot remain content to act merely as an umpire but it
must be functionally involved in the goal of socio-economic
justice."
c
D
E
F
[Emphasis added]
12. In Ramon Services (P) Ltd. v. Subhash Kapoor9, R.P.
Sethi, J. observed thus: - ·
"21. After independence the concept of social justice has
become a part of our legal system. This concept gives
meaning and significance to the democratic ways of life
and of making the life dynamic. The concept of welfare
State would remain in oblivion unless social justice is
dispensed. Dispensation of social justice and achieving
the goals set forth in the Constitution are not possible
without the active, concerted and dynamic efforts made by
the person concerned with the justice dispensation
system."
13. In Harjinder Singh v. Punjab State Warehousing
Corporation10 Singhvi, J. opined thus: -
"It need no emphasis that if a man is deprived of his
livelihood, he is deprived of all his fundamental and
constitutional rights and for him the goal of social and
economic justice, equality of status and of opportunity, the
G
freedoms enshrined in the Constitution remain illusory.
Therefore, the approach of the courts must be compatible
with the constitutional philosophy of which the directive
9.
c2001) 1sec11a.
H
10. c2010) 3 sec 192.
STATE OF JHARKHAND v. HARIHAR YADAV
917
[DIPAK MISRA, J.]
principles of State policy constitute an integral part and
A
justice due to the workman should not be denied by
entertaining the specious and untenable grounds put
forward by the employer-public or private."
14. We have referred to the aforesaid authorities to
8
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 -
C
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.
D
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 deviency. The employer, within the meaning
E
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 passage from
Balbir Kaur and Another v. Steel Authority of India Ltd. and
Others11 :-
F
"The concept of social justice is the yardstick to the justice
administration system or the legal justice and as Roscoe
Pound pointed out the greatest virtue of law is in it~
adaptability and flexibility and thus it would be otherwise
an obligation for the law courts also to apply the law G
depending upon the situation since the law is made for the
society and whatever is beneficial for the society, the
11. (2000) 6 sec 493.
H
918
SUPREME COURT REPORTS
[2013] 14 S.C.R.
A
endeavour of the law court would be to administer justice
having due regard in that direction."
THE CHEQUERED HISTORY OF THE LITIGATION
16. Instead of mentioning only history, we have deliberately
B
stated chequered history as we are at pains to say that this
Court has dealt with this lis on earlier occasion in many a
context and thereafter left it to the High Court to adjudicate.
Before we chronolo~ically refer to the earlier judgments it can
be stated without any hesitation that the facts which have been
c unfurled are not only disturbing but also reflective of the
scenario how a pyramid of suffering, strain and starvation can
be ingenuously built by both the States, as if they are
determined to compete with each other about gaining s'uccess
in effectively creating a sanctuary of errors.
D
17. A Government company was floated by the State of
Bihar in the name of Bihar Hill Area Lift Irrigation Corporation
Limited and got it registered under the Companies Act, 1956.
The object of that company was to explore, execute, install,
develop, promote, improve, establish, finance, manage,
E
administer and maintain water resources for the purposes of
ensuring regular irrigation facilities to the cultivators in the hilly
areas of Chotanagpur and Santhal Pargana and also for other
areas like the districts of Rohtas, Aurangabad, Nawadah,
Gaya, Bhagalpur (South of Ganga) and Monghyr (south of
F
Ganga) through the means of bigger diameter wells intake,
wells lift irrigation schemes as well as other suitable devices
appropriate for such irrigation facilities and to manufacture
spare parts, machinery, tools, implements, materials,
substances, goods or things of any description which in the
G opinion of the company are likely to promote or advance the
development of irrigation facilities to the cultivators in the
aforesaid area. As the object of the company would project, it
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
H
Bihar.
STATE OF JHARKHAND v. HARIHAR YADAV
919
[DIPAK MISRA, J.]
18. As the events have been unfolded, in the State of Bihar A
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
B
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 c
resulting in deaths and insurmountable miseries befell on large
number of families dependant on such employees. The twoJudge Bench, dealing with the case of Kapila Hingorani v.
State of Bihar12 encapsulated the pivotal controversy thus:. -
"If at all and to what extent the Government of the State of D
Bihar is vicariously liable for payment of arrears of salaries
to the employees of the State-owned corporations, public
sector undertakings or the statutory bodies is the core
question involved in this writ petition."
E
19. Be it noted, a list was provided to this Court on
12.3.2003 and the name of BHALCO featured at SI. No. 19.
The Court addressed the lis at length and took note of the
dismal atmosphere in the State, as the deaths had occurred
owing to starvation or malnutrition and the fact that employees
F
had not been paid their salaries for a long time and in some
cases for a decade or more as admitted. A stand was taken
by the State of Bihar that having regard to the fact that most of
the undertakings are companies registered or incorporated
under the Companies Act, 1956, the rights and liabilities of the
G
shareholders would be governed by the provisions of the said
Act and the liabilities of the said companies cannot be passed
on to the State by taking recourse to the doctrine of "lifting of
12. (2003) e sec 1.
H
920
SUPREME COURT REPORTS
[2013] 14 S.C.R.
A
veil" or otherwise. A further contention was advanced that having
regard to the magnitude of the problem it would be just and
proper if liabilities directed is met with to the extent of 80% by
the Union of India and 10% by the State Government and the
B
remaining from the sale of properties belonging to the
respective companies. The public spirited person, Kapila
Hingorani, appearing in person, contended that the State
cannot escape its liability in the matter of payment of salary to
its own employees though ostensibly they are working in
companies incorporated under the Companies Act, 1956. The
c Court referred to number of authorities and came to hold that
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 and, therefore, they must do so in cases of their own
0
employees. It was further opined that the Government of the
State of Bihar for all intent and purport is the 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
E
F
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. The learned Judges further
observed that the righ1 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
G
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
H
affairs of the State Government undertakings and/or it was kept
in the dark that the salaries of their employees had not been
STATE OF JHARKHAND v. HARIHAR YADAV
921
[DIPAK MISRA, J.]
paid for years leading to starvation death and/or commission
A
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 statutory authorities had failed and/or neglected
B
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 c
they are statutorily obligated to perform.
20. Thereafter the Court adverted to the concept of human
rights, the duty of the Constitutional Court, financial stringency
and other aspects and expressed thus: -
"72. We are of the opinion that the State, thus, has made
itself liable to mitigate the sufferings of the employees of
the public sector undertakings or the government
companies.
xxx
xxx
xxx
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
D
E
of the employees of the public sector undertakings or the
F
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 G
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
H
922
SUPREME COURT REPORTS
[2013] 14 S.C.R.
A
four public sector undertakings have been transferred to
the State of Jharkhand in respect whereof the petitioner
does not make any grievance."
21. Regard being had to the totality of circumstances in
8
the interest of justice, the Court issued number of directions a
part of which relates to liquidation proceedings pending in the
High Court, formation of a committee to be headed by a retired
High Court Judge or a sitting District Judge, to scrutinize the
assets and liabilities of the companies and the High Court to
issue directions/direction from time to time. The directions
C
which are relevant in the context of the present lis are as
follows:-
D
E
F
G
H
"4. 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 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 wherefor, 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 529-A 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
STATE OF JHARKHAND v. HARIHAR YADAV
923
[DIPAK MISRA, J.]
terms of the provisions of the State Reorganisation Act,
A
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. State
of Bihar13• The Court took note of the fact that in pursuance of 8
the order dated 9.5.2003 it had directed to deposit Rs.50
crores and in furtherance of the said direction the State of Bihar
had deposited a sum of Rs.50 crores and the High Court' of
judicature at Patna had constituted a Committee headed by
Justice Udai Sinha, former Judge of Patna High Court. From
C
the report of the Committee which was placed before the Court
it appeared that a sum of Rs.25,98,65,883.00 had been
recommended for payment to the employees of most of the
undertakings. While dealing with JHALCO and BHALCO the
Court addressed I.A. No. 7 of 2004 and took note of the
respective affidavits. The stand of JHALCO in the said case,
D
as has been noticed by this Court, is as follows:-
"8. The State of Jharkhand has also been impleaded as
a party herein and it has filed a counter-affidavit affirmed
by one Shri Binod Kumar Verma, Managing Director,
E
JHALCO, Ranchi wherein a contention is raised that
BHALCO is still under the control of the State of Bihar. It
has further been affirmed that instead and in place of
BHALCO, a new corporation known as JHALCO had been
incorporated and registered with the Registrar of
F
Companies, Jharkhand on or about 22-3-2002. The said
JHALCO is, thus, said to be a new corporation and has
nothing to do with BHALCO and in any event, it is not the
successor of BHALCO."
The Court also took note of the fact that the Central
G
Government had taken a decision under Section 65 of the Act.
A contention was raised by the State of Bihar that it was not
under obligation to pay the dues of the employees. Referring
13. (2005) 2 sec 262.
H
924
SUPREME COURT REPORTS
(2013] 14 S.C.R.
A
to the earlier order and various other authorities, the Court
B
c
D
E
F
G
H
observed thus: -
"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.
)()()(
)()()(
)()()(
28. It is really a matter of regret th~t despite statutory power
as also the power of control vested in the State of Bihar
either under the statutes or in terms of articles and
memorandum of association of the respective government
companies, it did not exercise the same and now raised
a contention that the State had no effective 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: -
STATE OF JHARKHAND v. HARIHAR YADAV
925
[DIPAK MISRA, J.]
"37. We make it clear that we have not issued the A
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
B
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 c
. 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 0
Committee pursuant to these directions shall be duly
credited for."
23. In the said writ petition I.A. No. 21 of 2007 was filed
which was decided on 8.7.2008 vide Kapila Hingorani and
another v.