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2017 (2) TMI 1527 - HC - Indian LawsAllocation of sum of Rs. 10 Crores for payment to the affected employees for payment on account of various reasons such as marriage of daughters, ailment, old age disease, payment of loan etc. - Company incorporated under the Companies Act is a juristic person which has a distinct and separate entity or not - Whether the State of Bihar being a sole shareholder of the Boards, Corporations or the Companies incorporated under the Companies Act, 1956 have the responsibility to pay salary and allowances of the employees of the Boards, Corporations and Companies who are unable to pay salary on account of financial constraints? - HELD THAT - A precedent is a judicial decision containing a principle, which forms an authoritative element termed as ratio decidendi. An interim order which does not finally and conclusively decide an issue cannot be a precedent. Any reasons assigned in support of such non-final interim order containing prima facie findings, are only tentative. Any interim directions issued on the basis of such prima facie findings are temporary arrangements to preserve the status quo till the matter is finally decided, to ensure that the matter does not become either infructuous or a fait accompli before the final hearing. The resume of the precedents on the issue of the liability of the State Government to pay salary and allowances of the employees of the Boards, Corporations and the Companies of which State is a shareholder and are State within the meaning of Article 12, that there is unanimity that the State Government is not liable to pay salary and allowances as they are separate juristic entity. Therefore, neither in law, as the companies are separate and distinct juristic entity than the State Government, the State cannot be directed to pay salary and wages of the employees of such juristic entity. The judgments in Kapila Hingorani 2003 (5) TMI 359 - SUPREME COURT and Kapila Hingorani 2005 (1) TMI 754 - SUPREME COURT have left the question of liability of the State Government to pay salary and allowances open. The intervention of the Supreme Court was to address humane problem of financial stringency suffered by such employees. Therefore, neither the Kapila Hingorani 2003 (5) TMI 359 - SUPREME COURT nor Kapila Hingorni 2005 (1) TMI 754 - SUPREME COURT or Harihar Yadav's case 2013 (11) TMI 1795 - SUPREME COURT unequivocally holds the State Government responsible for payment of salary and allowances to the employees of the Boards, Corporations and the Companies, if such Boards, Corporations and the Companies are not able to pay salary and allowances due to financial stringency on any ground whatsoever. Whether there is any final direction on the basis of interim orders passed in Kapila Hingorani 2003 (5) TMI 359 - SUPREME COURT and Kapila Hingorani 2005 (1) TMI 754 - SUPREME COURT , when the matter was remitted back to this Court to examine the legal issues? - HELD THAT - In Barak Upatyaka's case 2009 (3) TMI 992 - SUPREME COURT , the Supreme Court has observed that the observations and directions in Kapila Hingorani 2003 (5) TMI 359 - SUPREME COURT and Kapila Hingorani 2005 (1) TMI 754 - SUPREME COURT are the interim directions based on tentative reasons and have no value as precedent. Such interim directions were given in extraordinary power under Article 142 of the Constitution - The final order of the Supreme Court is a direction to the High Court to examine the legal issues and that the legal issue requires to be examined by this Court is as to whether the State can be called upon to pay salary and allowances to the workers of the Boards, Corporations and Companies incorporated at one stage by the State Government. Therefore, the issue as to whether the State Government is liable for payment of salary and allowance has been left open by the Supreme Court for appropriate decision by this Court. Whether the observations made in Kapila Hingorani cases are to address the humane problems faced by certain employees of the Boards and Corporations alone? - HELD THAT - The observations in Kapila Hingorani (I) and Kapila Hingorani (II) are in fact to address the humane problem as it left the question of liability of the State open - Even in Harihar Yadav's case, the dispute was on account of bifurcation of the State and consequently, the liability of the State of Bihar and Jharkhand but again the problem was addressed as a humane problem. Whether the judgment in Harihar Yadav's case 2013 (11) TMI 1795 - SUPREME COURT mandates the State of Bihar to pay salary of the employees of all Boards, Corporations and Companies having huge financial burden and whether such financial burden can be passed on to the State of Bihar when the financial allocation towards the salary and allowances of the Boards, Corporations and Companies is a policy decision in economic matters? - HELD THAT - There are no merit in the Letters Patent Appeal filed by the writ-applicants bearing L.P.A. No. 1940 of 2015. The learned Single Bench has ordered the State to deposit Rs. 10 crores to meet any financial emergency required by any of the employees is without any mechanism as to how any claim of any of the employees can be examined and paid. It is not found that such direction warrants any interference in the present Letters Patent Appeals as it is to address the humane problem but we direct that Hon'ble Mr. Justice Udai Sinha shall constitute one member Committee to disburse the said amount in accordance with law and the procedure to be devised by him. Both the Letters Patent Appeals are dismissed.
Issues Involved:
1. Liability of the State of Bihar to pay salary and allowances to employees of Boards, Corporations, and Companies. 2. Finality of interim orders in Kapila Hingorani (I) and Kapila Hingorani (II). 3. Addressing humane problems in judgments. 4. Financial burden on the State of Bihar due to policy decisions. Detailed Analysis: Issue 1: Liability of the State of Bihar to Pay Salary and Allowances The court examined whether the State of Bihar, as the sole shareholder of certain Boards, Corporations, and Companies, is responsible for paying the salaries and allowances of their employees. The court highlighted that these entities are separate juristic persons governed by their statutes. Employees' wages are secured debts under Section 529A of the Companies Act, 1956, and the State's liability does not extend to paying these wages. The court emphasized that the distinction between the State and these entities must be maintained, and the employees cannot claim to be State employees. The court referenced several precedents, including State of Himachal Pradesh v. Rajesh Chander Sood and Steel Authority of India Ltd. v. National Union Waterfront Workers, which support the notion that the State is not liable for the financial obligations of these separate entities. Issue 2: Finality of Interim Orders in Kapila Hingorani (I) and Kapila Hingorani (II) The court noted that the observations and directions in Kapila Hingorani (I) and Kapila Hingorani (II) were interim measures to address immediate humane problems and do not serve as precedents. The Supreme Court's directions were based on the extraordinary circumstances of human rights violations due to non-payment of salaries, and these directions were not intended to establish a legal obligation for the State to pay salaries in all situations. The court cited Barak Upatyaka D.U. Karmachari Sanstha to emphasize that these interim directions were not final conclusions. Issue 3: Addressing Humane Problems in Judgments The court recognized that the Supreme Court's intervention in Kapila Hingorani (I) and Kapila Hingorani (II) was to address humane problems arising from financial stringency faced by employees. The court noted that the Supreme Court left the question of the State's liability open, focusing instead on immediate relief for the affected employees. This approach was also evident in Harihar Yadav's case, where the issue was addressed as a humane problem rather than establishing a legal precedent. Issue 4: Financial Burden on the State of Bihar Due to Policy Decisions The court discussed the implications of imposing financial burdens on the State due to the financial difficulties of Boards, Corporations, and Companies. The court referenced A.K. Bindal v. Union of India and State of Himachal Pradesh v. Rajesh Chander Sood, which highlight that budgetary allocations and financial support are policy decisions. The court concluded that the State cannot be required to bear the financial burden of these entities, as it would undermine the purpose of establishing separate companies for focused growth and flexibility in decision-making. Conclusion: The court dismissed the Letters Patent Appeals, affirming that the State of Bihar is not liable to pay the salaries and allowances of employees of Boards, Corporations, and Companies. The court directed that the Rs. 10 crores allocated by the State to address financial emergencies be disbursed by a committee constituted by Hon'ble Mr. Justice Udai Sinha.
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