Holding

The Supreme Court held that the State of Bihar remains liable for the salary arrears of BHALCO employees and that the State of Jharkhand’s misleading statements do not warrant contempt proceedings, directing the Jharkhand High Court to resolve the pending writ petition and the parties to assess liability.

Summary

The case arose from the division of the original State of Bihar into Bihar and Jharkhand under the Bihar Reorganisation Act, 2000, which created the Jharkhand Hill Area Lift Irrigation Corporation (JHALCO) to take over the Bihar Hill Area Lift Irrigation Corporation (BHALCO). Employees of BHALCO alleged non‑payment of salaries and sought absorption into JHALCO, leading to a public interest litigation under Article 32. The Supreme Court had earlier directed the State of Bihar to deposit Rs 50 crore for salary payment and ordered the absorption of eligible employees without requiring them to forgo salary claims. Subsequent interim applications questioned the compliance with the 13 January 2005 order, the accuracy of statements made by the State of Jharkhand, and the financial viability of JHALCO. The Court found that the State’s statements were misleading, that JHALCO was attempting to limit its liability by curtailing staff, and that the liability for salary arrears rested with the State of Bihar under the Reorganisation Act. Consequently, the Court directed the Jharkhand High Court to dispose of the pending writ petition promptly, ordered the secretaries and managing directors of both states to meet and assess liability, and instructed the Central Government to ensure compliance with the 13 September 2004 order. The interim application and the appeal were disposed of without further substantive orders.

Issues considered

The applicability of Sections 47(1), 56, 65 and 85 of the Bihar Reorganisation Act, 2000 to the liability for BHALCO employees' salary arrears.
Whether the State of Jharkhand’s statements regarding absorption of 302 employees were false and amount to contempt.
The proper procedure for enforcing the Supreme Court’s 13 January 2005 order on employee absorption.
The extent of the State of Bihar’s liability for arrears of salary after the bifurcation of the corporation.
The appropriateness of initiating contempt proceedings under the Contempt of Courts Act, 1970 in this context.

Legislation cited

Bihar Reorganisation Act, 2000s. 47(1), s. 56, s. 65, s. 85
Companies Acts. 529-A

Subjects

Bihar Reorganisation ActJharkhand Hill Area Lift Irrigation CorporationBihar Hill Area Lift Irrigation Corporationsalary arrearsemployee absorptionpublic interest litigationArticle 21contempt of courtstate liabilitycorporate succession

Judgment

[2008] 10 S.C.R. 195

J. ~
KAPILA HINGORANI & ANR. A
v.
STATE OF BIHAR & ANR.
(I.A. No. 21 of 2007 in Writ Petition (Civil) No. 488 of
2002)
"'""' JULY 8, 2008 B

[S.B. SINHA AND V.S. SIRPURKAR, JJ.]

Bihar Reorganisation Act, 2000 - ss. 65 and 85 - Divi- "
sion of original State of Bihar into existing State of Bihar and
' c
State of Jharkhand - Bihar Hill Area Lift Irrigation Corpora-
'

tion-(BHALCO) operating in State of Jharkhand -Constitution
of Jharkhand Hill Area Lift Irrigation Corporation-(JHALCO) -
Non-payment of salaries to employees - Publi9 interest liti-
~ gation before Supreme Court - Direction to State of Bihar to
D
meet the liability of salaries of employees - Meanwhile, ad-
vertisements by JHALCO for absorption of employees of erst-
while BHALCO with the condition that such employees would
forego their earlier claim - Out of 389 applications, only 302
employees found eligible and absorbed - Interim applications
- By order dated 13. 1. 2005, direction issued fqr absorption of E
employees of BHALCO who opted for employment without any
undertaking at this stage - Non compliance - On interim ap-
plications, held: Order dated 13.01.2005 would have been
, >(
enforced by initiating contempt proceeding - Initiation thereM
and consequent punishment of officers guilty, on basis of in- F
. correct statement would not subserve any purpose, thus such
--;
is desisted - In view of. the pendency of writ petition in
Jharkhand High Court by employees claiming absorption as
a/so past salaries, High Court directed to dispose of the writ
l petition at the earliest - It would determine. the question of G
I~ ~.
final absorption, past salaries and liability to pay the same.
The original State of Blhar was divided into existing
State of Bihar and State of Jharkhand by the Bih~r
195 H
196 SUPREME COURT REPORTS [2008] 10 S.C.R.

A Reorganisation Act, 2000. Thereafter, the area of opera-
tion of Bihar Hill Area Lift Irrigation Corporation-(BHALCO)
fell within the boundaries of Jharkhand. The State of I

Jharkhand constituted Jh~rkhand Hill Area Lift Irrigation );--
'
Corporation-JHALCO, with effect from 29.12.2001. There ~
B were allegations that the salaries of the employees of the ;"41 I
'
·~
said corporation were not paid for a long time which re- I
sulted in starvation of the employees. Thereafter, a PIL F=
was filed under Article 32 of the Constitution. On
09.05.2003 this Court issued interim direction against
r
c State of Bihar to meet the liability of salaries of employ-
ees of State Corporation and also directed the Central
Government to take decision as regard division of assets
and liabilities. The High Court was directed to dispose of
all liquidation proceedings in respect of the government
companies owned and controlled by the State of Bihar.
0 ,.>- '
Meanwhile, on 27.3.2003 and 31.7.2003 JHALCO issued
advertisement for absorption of employees of erstwhile
employees/workmen of BHALCO which was subject to
the condition that such employees had to forego their
earlier claims of the unpaid salaries. 398 applications were
E filed for employment by employees of BHALCO, out of
which 302 were found eligible and were absorbed. On
13.8.2004, this Court issued directions to the State Gov-
ernment, to take decision regarding the division of assets
and liabilities of the government companies/public sec-
F tor undert~kings in terms of provisions of s·tate
).- ~ L
r
Reorganisation Act, 2000.
'
~

Thereafter, I.As were filed. On 13.1.2005, this Court
passed an order to absorb the employees of BHALCO ' i

G who opted for empl~yment without any undertaking at
t--
this stage and the IAs were disposed of. I.A. No.11 /2005 '
and I.A. No.13/2005 were filed for modification/clarifica-
tion of Order dated 13.1.2005. JHALCO was directed to
file the· status report. State of Jharkhand contended that
pursuant to order dated 13.1.2005, 398 workman of
H
I

t=
KAPILA HINGORANI & ANR. v. STATE OF 197
.,~ _.,. BIHAR &ANR.

BALCO were asked to report for duty within three weeks A
but only 302 turned up and were absorbed, •though 158
employees were found surplus. On 16.07.2007, this Court
issued directions to the State for bearing the expense of
-~ ...
those employees who were critically ill. In view of the statel
ment made by counsel for the State of Jharkhand, the B
court held that no direction would be passed with regard
to absorption of those who did not turn up for duty on
the appointed day and disposed of the IA No. 11/2005.
It was submitted that the statement was not correct
because the advertisements for absorption of erstwhile c
BHALCO employees were issued much earlier to the
Court's Order dated 13.1.2005 and that pursuant to the
Order dated 13.1.2005, only 216 fresh applications were
-1 filed by employees of erstwhile BHALCO and JHALCO
accepted the same and kept in the cold storage. On D
21.9.2007, the Court directed the State to file the Status
Report. Hence, the appellant filed the present I.A. No. 211
2007 seeking directions to the respondent State/JHALCO
"""' to pass absorption order of 213 employees in JHALCO in
terms of the order dated 13.1.2005. Thereafter, on E
13.12.2007, this Court passed an order that it was of the
opinion that the Secretaries of the State of Bihar and the
State of Jharkhand as also the Managing Directors of the
•-x BHALCO and JHALCO should have a dialogue in regard to
the absorption of the employees and submit a report and if F
necessary intervention of appropriate department of Cen-
tral Government may also be taken. When matter was taken
up, the State of Jharkhand tendered an unconditional apol·
ogy that the Status Report shown- in earlier affidavits which
were filed subsequent to the order dated 13.1.2005 was ac-
G
J~ •
tually that of the period prior to 13.1.2005, though it was purl
ported to be relating to subsequent period.
Disposing of the appeal, the Court
HELD: 1.1 In filing the report in pursuance of I.A. no.
H
198 SUPREME COURT REPORTS [2008] 10 S.C.R.

A 11 and making solemn stat~ment before this Cour:t that
302 employees were already .accommodated in pursuance
of the Order of this Courtdated 13.1.2005, a clear cut mis-
leading and false statement was made, but for which this
Court would not -have passed the Order dated ·16.7.2007
s on I.A. no. 11. Consternation is expressed. The bald apol-
ogy tendered by th:e State of Jharkhand is not satisfac-
tory. There is no explanation, whatsoever, as to how such , .
a statement came to be issued on behalf of the State Gov-
ernment by its standing counsel. It is obvious that the
C State merely made a poor attempt to extricate itself from
the difficult situation. [Para 14] [211 G 212 B]
1 ...2 The two affidavits on behalf of the State of
Jharkhand and JHALCO show that JHALCO and the State
are changing their stands from time to time. Their stands
D at times have become contradictory and inexplicable.' The
Cabinet note dated 9.1.2002 which was .I
filed by the writ ..
petitioner along with I.A. no. 11 of 2005 clearly suggests
that the Jharkhand State Cabinet had sanctioned that
BHALCO should be run in the form of JHALCO. In 2003,
E JHALCO gave two adverti'sements for absorption of
BHALCO employees and even later, it was admitted that
JHALCO requited the experienced employees of
BHALCO\ In pursuance of these advertisements, all the
. BHALCO employee$ could have applied for being regu-
F . larized, provided, their applications were found to be in
order. Accordingly, as many as 302 employees were ab:..
sorbed. The applications of others were rejected and
some others had not applied at all, perhaps because of
the condition that such employees had to forego their
G earlier claims of the unpaid salaries. At the time when the
advertisements were issued, there was no compulsion ·
by way of any Court Order to accommodate all the em-
ployees and it could have been. merely a humanitarian
consideration out of which the said advertisements came
to be issued. It cannot be forgotten that there was no
H
KAPILA HINGORANI & ANR. v. STATE OF 199
BIHAR &ANR.

trained staff available with JHALCO and, therefore, A
JHALCO required the experienced staff of BHALCO.
Therefore, this move was only ,to replace, the nomencla-
ture of BHALCO and to continue the same as JHALCO.
[Para 18] [21 GA-217A]
1.3 It seems that the non-payment of salaries to these · 8
employees was a non-factor and, therefore, JHALCO
wanted to reap double benefit, viz., firstly it could get all
the experienced employees and secondly, that too witti-
out _having to face the liability of their salary payments. It
must be remembered that all this was in the wake of this 'C
Court's Order dated 9.5.2003, wherein, this Court had re-
quired the State of Bihar to deposit a sum of 50 crores~of
rupees for disbursement of the salaries to the employees
of the corporations and also had directed the disburse-
ment of the funds _to the needy employees on ad-hoc ba- .D
sis. The Court had also directed creatio.n of a committee
for scrutinizing the assets and liabilities of the compa-
nies. 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 E
Court dated 13.1.2005, whereby, this Court took the no-
tice of coming into being of JHALCO and further directed
that the concerned employees 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 F
language of the Order dated 13.1.2005, that no formal Or-
der was passed for absorption. Probably, therefore, this
Court gave six weeks' time to such employees. Again as
in the earlier advertisements, only the employees forego-
ing their claims over salaries could apply, all the employ- G
> • ., ees probably did not apply restricting the number only to
302. Now, in pursuance of the Order dated 13.1.2005, 216
more employees had applied and that too without fore-
going their claims over salaries. It is probably because of
this that a decision was taken in a meeting dated 8.8.2005
H
i-
200 SUPREME COURT REPORTS [2008] 10 S.C.R.
'""'
. ...,.__

A to review the financial position_ of JHALCO, to curtail the '
number of employees and to limit the total number of em-
ployees to 214. In fact, if paragraph A(f) of the Additional
affidavit is seen, it will be clear that though there were
152 excess Class IV employees, there was still require- ~>

8 ment of 64 Officers, as only 14 Officers were engaged as
against the total sanctioned strength of 78 Officers. This
exercise of curtailing the employees and limiting the total
number of employees to 214 appears to be a deliberate
exercise in the wake of the Order dated 13.1.2005 of this
c Court, and incidentally, even that Order was not followed
in its true spirit which ultimately required the petitioners
to file I.A. no. 11. Even the figures given in the Additional
affidavit's paragraph are misleading. If properly calculated
as against the total sanctioned strength of 214, 302 em-
ployees were engaged. Thus, only 88 excess employees
D
could be said to have been engaged and that too prior to
the decision dated 8.8.2005. The figure of 152 as the ex-
cess employees, is, therefore, clearly misleading. There
does not appear any explanation, nor any statistics to
justify the curtailing of the employees by JHALCO. After
E all, there was no curtailment of area or the activities at
least none is pleaded, in which case the decision to cur-
tail the number of employees of JHALCO itself appears
to be neither sound, reasonable, nor justifiable and only "Y""'
appears to get out of the rigour of this Court's Order dated
F 13.1.2005. [Para 18] [217-A-218-D]
1.4 There is a huge problem of the finance. It has been
pleaded in the Additional affidavit that JHALCO was run-
ning in deficit by 3.16 crores up to 2005-06. Its annual wages
on the date are 3.60 crores and it has already sought 2.60
G
crores from the State of Jharkhand to make the payment
~·
for the financial year 2008-09. The affidavit, however, does
not give any clear idea about the contribution which will
be required to be made by the State of Bihar on account of
the arrears of salaries [Para 19] [218 E-F]
H
KAPILA HINGORANI & ANR. v. STATE OF 201
.... -~ BIHAR &ANR.

1.5 When the response of the State of Bihar is seen A
barring reference to the letter dated 22.1.2001 by the Sec-
retary of the Government of Bihar to the Secretary of the
Government of Jharkhand recommending that all the
,...1-_ employees of BHALCO should be absorbed in JHALCO
without any condition, there does not appear to be any- B
. thing more. In the name of written submissions on behalf
of 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, u/s. 47 (1) and s. 56. of the Bihar c
Reorganisation Act, 2000, BHALCO is a corporation of the
Government of Jharkhand with all its liabilities and as-
sets. The State of Bihar further reiterated that the deci-
sion of the Central Government to treat BHALCO as a
--' property of the State of Bihar and direction given vi de let-
D
ter dated 13.9.2004 to take steps for liquidation of
BHALCO is not correct decision, and that it had written a
...,.- letter to reconsider the same. It is surprising that how such
a bald stand was taken. by the State of Bihar. Seen from
any angle, this liability could not be altogether shaken off
by the State of Bihar to avoid the same on the specious E
plea that BHALCO has now become JHALCO. That would
be the over simplification of the issue. That is apart from
,JC ·JI,
the fact that in the Memorandum of Association of
BHALCO, there is a reference of the six districts of Bihar
which continued to be in the State of Bihar as its area of F
operation. The Order dated 13.9.2004 which is binding on
the State of Bihar is seen. By that Order, the Central Gov-
ernment had ordered that the State Government of Bihar
will initiate liquidation in respect of BHALCO. If that is so,
, ., then by the necess~ry logic, the liability to pay the arrears
of salary is that of State of Bihar, wbich it must discharge.
G

[Para 20] [218 G- 219 E]
2. The mode of enforcing order dated 13.01.2005
would be by initiating a proceeding for contempt under
H
202 SUPREME COURT REPORTS [2008] 10 S.C.R.

A the Contempt of Courts Act, 1970. Such a proceeding, as is
well known, must be initiated by way of last resort. Only be-
. cause an incorrect statement had been made in respect
whereof comments have been made hereto before, initiation
and consequent punishment of the officers guilty therefor, ;J....-
8 would not subserve any purpose. [Para 21] [[219 G-220 F]
3. A writ petition is pending in the Jharkhand High
Court by the employees claiming absorption as also the
past salaries. Therefore, final directions are not given so
aiso a labour.dispute Jn a public interest litigation directly
C filed before this Court is not dealt with. It would be better
if all the· questions pending in the said writ petition are
finally decided as early as possible. [Para 21] [219-F] ·
Sushi/a Raje Holkar vs. Anil Kak (Retd.) 2008(7) SCALE
D 484 - referred to.
4.1 The High Court of Jharkhand is directe·d to dis-
pose of the writ petition pending before it at the earliest
and, if possible, within six weeks from date. It is made 'Clear
that the question of final absorption, past salaries and the
E liability to pay the same may be determined by the High
Court in the said writ petition. [Para 22] [220 A-221 C]
4.2 T!ie Managing Director, BHALCO and JHALCO
as also the Secretaries of the Government of Bih.ar and
Jharkhand are directed to meet within one month from
F the date and decide upon and assess the liability on ac-
count of the arrears of the salaries payable to the employ-
ees already absorbed and to be absorbed, and make a
report thereof within a week of the date of decision, to the
High Court for taking final decision. [Para 22] [221 C-D]
G
4.3 The Central Government shall take im·mediate
steps to see that the directions in the order dated
13.09:2004, passed by it are complied with by the State of
Bihar. [Para 22] [221 E-F]
H CIVIL ORIGINAL JURISDICTION: I.A. No. 21of2007
KAPILA HINGORANI & ANR. v. STATE OF 203
, -~ BIHAR & ANR. [V.S. SIRPURKAR, J]

IN A
Writ Petition (Civil) No. 488 of 2002
Attorney General for India (N.P.), P.S. Mishra (AC.), (N.P.),
Aman llingorani, Priya llingorani, (for M/s. Hingorani &Associ-
ates), Gopal Singh, Anil K. Jha, Anil K. Chopra; D.N. Goburdhan, B
Sandhya Goswami, Sushma Suri, Ajit Kumar Sinha, Amitabh,
S. Yasovardhan, A. Parimal, C.D. Singh and Amit Kumar for
the appearing parties.
The Judgment of the Court was delivered by
c
V.S. SIRPURKAR, J. 1. In the instant Application, the pe-
titioner seeks directions from this Court on the following:
(a) Direct the respondent State/JHALCO to immediately
comply with the Order dated 13.1.2005 and pass
the Order 9f absorption in JHALCO with respect .to D ·
213 employees listed in the letters issued by MD,
JHALCO on various dates (annexed to the I.A.),
pursuant to the Order dated 13.1.2005 leaving the
employees who have,..died.
(b) Pass any other Order (s) as may be deemed fit and E
proper.
2. The short history for proper decision would be neces-
sary.
History: F
3. Original State of Bihar came to be divided into existing
State of Bihar and State of Jharkhand by Bihar Reorganisation
Act with effect from 15.11.2000. The State of Jharkhand exer-
cising its power under Section 85 of the Bihar Reorgnisation G
Act constituted a Corporation called "Jharkhand Hill Area Utt
Irrigation Corporation" (hereinafter called 'JHALCO') by notifi-
cation no. 2580 with effect from 29.12.2001.
4. It may be recalled that there were press reports regard-
ing the non-payment of salaries for long time resulting in starva- H
204 SUPREME COURT REPO.RTS .[2008] 10 S.C.R.

A tion of the employees of this Corporation. It was also reported
that one Chandan Bhattacharya, son of an employee of the Bihar
State Agro-Industries Development Corporation tried self-im-
molation, which incident was widely reported in the press. Ulti-
mately, the said Chandan Bhattacharya succumbed to the burn
B injuries. A public spirited lawyer initiated public interest litiga-
tion in this Court under Article 32 of the Constitutibr'l of India,
inter alia raising a question regarding the liability of the Gov-
ernment of State of Bihar for payment of arrears of salaries to
the employees of the said owned corporations, public sector
C undertakings and statutory bodies. The State of Bihar filed its
counter affidavit and claimed that the salaries were being paid
by the statutory authorities and further that all the salaries upto
30.9.2002 were paid in the case of 26 undertakings. In respect
of some other Corporations, however, it was reported that large
number of employees were not paid t~.e salaries and huge ar-
0
rears remained involving crores of rupees. In case of as many
as 16 undertakings including Sihar Hill Area Lift Irrigation Cor-
poration (hereinafter called 'BHALCO'), it was also admitted
that 14 employees had died in harness and 9 after retirement.
However, it was totally denied that there was any suicide or death
E due to starvation of any of the employees of the corporation.
After hearing the amicus curie, who was appointed by this Court
as also the learned counsel who appeared on behalf of State of
Bihar and Union of India, and after considering the law in de-
tails, the Court issued the following interim directions in the
F matter on 9.5.2003:
"(i) The High Court may strive to dispose of all liquidation
proceedings in respect of the government companies
owned and controlled by the State of Bihar as
expeditiously as possible. For the said purpose and/
G
or purposes ancillary to or incidental therewith, it may
pass an interim order and/or orders by way of sale
and/or disposal of the properties belonging to such
public sector undertakings and/or government
companies or to take such measure or measures as
H
KAPILA HINGORANI & ANR. v. STATE OF 205
BIHAR & ANR. [V.S. SIRPURKAR, J]

it may deem fit and proper. A
(ii) For the aforementioned purposes a committee not
consisting of more than three members chaired by a
retired High Court Judge or a sitting District Judge
may be appointed who may scrutinize the assets
and liabilities of the companies and submit a report B
to the High Court as expeditiously as possible
preferably within three months from the date of
constitution of the Committee. The terms and
conditions· for appointment of the said Committee
may be determined by the High Court. All expenses C
in this behalf shall be borne by the State of Bihar.
(iii) The High Court shall be entitled to issue requisite
direction/directions to the said Committee from time
to time as and when it deems fit and proper.
D
(iv) 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
installments. Half of the amount shall. be payable F
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 F
be paid proportionately to the employee concerned
wherefor, the parties may file their claims before it.
(v) 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 G
themselves for the time being.
(vi) The rights of the workmen shall be considered in
terms of Section 529-A of the Companies Act.
(vii) The Central Government is hereby directed to take · H
206 SUPREME COURT REPORTS [2008] 10 S.C.R.

A 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 .
. (viii) The State of Jharkhand is hereby impleaded as a
B respondent. let notice be issued to the newly added ~· I

respondent."
It is clear that these directions were only to meet the exi-
gencies which were then prevailing.
C 5. It seems that thereafter, number of developments took
J?lace including constitution of the committee by the High C_ourt
of Patna, as also the disbursement of 50 crores of rupees which
were directed to be paid by the State of Bihar and which were
deposited as per the directions. This Court on 13.8.2004 is-
D sued a direction, directing the State Government,·in consulta- ';-
tion with the concerned Ministries, to take the decision regard-
ing the division of assets and liabilities of the government com-
panies/public sector undertakings iri terms of provisions of State
Reorganisation Act, 2000.
E 6. Two I.As. being I.A. no. 7 of 2004 and I.A. no. 9 of 2004
came to be filed. In I.A. no. 7 of2004, a clarification was sought
in respect of JHALCO with the prayer that JHALCO should be
>--
treated as a successor of BHALCO from 15.11.2000 onwards.
This was nece_ssitated on account of the alleged offer by
F JHA!-CO by. way of advertisements on 27 .3.2003 and
31.7.2003. While by 1st advertisement the last date to submit
the applications was· 5.4.2003, by 2nd advertisement it-was ex- 1-·
I
tended to 7.8.2003. 398 applications were filed out of which
302 were found eligible and those applicants were absorped.
G Thus 14 officers, 44 Class Ill employees a!ld 244 Class IV em-
ployees were absorbed. It was clearly stated in the advertise-
ment that the employees of BHALCO would be absorbed by
JHALCO only if they forego their claim of salary for period prior
to their respective date of absorption. By I.A. no. 9 of 2004, a
H direction was sought that respondent State of Bihar and/or State
KAPILA HINGORANI & ANR. v. STATE OF 207
BIHAR & ANR. [V.S. SIRPURKAR, J]
r ->t
of Jharkhand should deposit sufficient sum of money with the A
Patna High Court, so that at least the employees of the Corpe-
rations listed iri the Order dated 9.5.2003 be paid their sala-
ries.
7. These I.As were opposed by the State of Bihar by filing
). ...... counter affidavits. The State of Jharkhand which was impleaded B
as a party also filed its counter affidavit which was affirmed by
one Binod Kum·arVerma, Managing Director, JHALCO, Ranchi.
The stand taken by State of Jharkhand was that BHALCO was
still under the control of State of Bihar and in place of BHALCO,
a new Corporation known as J HAL CO had been incorporated c
and registered by the Registrar of Companies, Jharkhand on
or about 22.3.2002. In short, the stand was taken that JHALCO
has nothing to do with BHALCO and it could not be treated as a
successor of JHALCO. The Union of India had also filed an
affidavit, wherein it was pointed out that winding up applica- D
tions had already been filed by the State of Bihar in respect of "
as many as 18 companies, and in view of that, no order was
required to be passed under Section 65 by the Central Govern-
ment.. It was also pointed out that 8 companies operated only
within the territories of Bihar and as such, there was no neces- E
., sity of bifurcation thereof. It was also pointed out that in respect
of the 4 companies which were operating both within the terri-
tories of State of Bihar and Jharkhand, a direction was already
issued for the division of assets and liabilities. It was pointed
.,. ,.. out in respect of such companies that they would continue to
F
function as the inter-state corporations in the State of Bihar and
State of Jharkhand. A Committee was also constituted for the
implementation of the orders passed by the Central Govern.:
ment, which comprised of the Chief Secretary, Bihar or his/her
nominee and Chief Secretary, Jharkhand or his/her nominee.
G
The State of Bihar took the stand that the State had no liability
to pay the salaries of the employees of the statutory corpora-
> t- I
tions/companies ·incorporated under the Indian Companies Act.
The Court passed a detailed Order dated 13.1.2005. It firstly
expressed its dissatisfaction on the stand taken by the State of
H

..i.
208 SUPREME COURT REPORTS [2008] 10 S.C.R.

~-
A Bihar and then observed as under: ~

"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 of the fact that
the State of Jharkhand itself has given option to the
B employees of BHALCO, the order of absorption of those ,j_,4,

employees who opt for employment may be passed ' at
an early date and not later than six weeks from date.
The concerned employees need not file any undertaking
at this stage as the question as to whether the State of
c Jharkhand is liable to pay any salary and other
emoluments to the employees of BHALCO is a question
which would fall for decision in an appropriate
proceedings

D
(emphasis supplied)." L
t r
The Court also further held:
~
"We make it clear that we have not issued aforementioned
directions to the States of Bihar and Jharkhand on the
premise that they are bound to pay the salaries of the
E
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 States are
bound to protect. The directions, which have been issued
by this Court on 9.5.2003 as also which are being issued
F herein, are in furtherance of the human and fundamental
)c •

rights of the employees concerned and not by way of an
enforcement of their legal right to arrears of salaries. The
i..-
amount of salary payable to the concerned employees or r

workmen would undoubtedly be adjudicated upon in the
G proper proceedings. However, these directions are issued
which are necessary for their survival. Undoubtedly, any
amount paid by Justice Uday _Sinha Committee pursuant j _., ;_,

to these directions shall be duly credited for."

This is how I.A. nos. 7, 9 and 10 were disposed of.
H
KAPILA HINGORANI & ANR. v. STATE OF 209
BIHAR & ANR. [V.S. SIRPURKAR, J]

8. However, thereafter, I.A. no. 11 was filed for modifica- A
tion of the Court's Order dated 13.1.2005 in I.A. no. 7, 9 and
10. There was another I.A. no. 13, which was filed for clarifica-
tion of the Order dated 13.1.2005. An affidavit came to be filed
by JHALCO in I.A. no. 11, and it was directed to place on record,
the details of the sanctioned posts, filled up posts and the bal- B
ance.; On 11.9.2006, another order came to be passed on I.A.
nos. 8 and 11. By Order dated 3.11.2006, further time was
granted to the State of Jharkhand to file the reponse to the Sta-
tus Report which was already filed. The matter was adjourned
from time to time, thereafter. Ultimately, an Order came to be c
passed on 16.7.2007, where firstly, the Court issued the same
humanitarian directions to the State for bearing the expense of
those employees who were critically ill and insofar as I.A. no.
11 of 2005 was concerned, the following Order was passed:
"It is stated by Mr. Ajit Kumar Sinha, learned counsel D
appearing on behalf of the State of Jharkhand that pursuant
to this Court's Order dated 13.1.2005 out of 398 workmen
who had been working with BHALCO and who had been
asked to report for duty within three weeks, only 302 turned
up and they have been absorbed. Learned counsel states E
that order of absorption had been passed despite the fact
that 158 people have been found to be surplus. In this
view of the matter learned counsel submits that those who
had not turned up for their absorption within the
aforementioned period may not be directed to be F
absorbed pursuant to this Court's Order dated 13.1.2005.
In view of the statement of Mr. Ajit Kumar Sinha, learned
counsel that 158 persons are surplus, we are of the opinion
that those who have not turned up for duty on the appointed
date may seek their remedies in the matter as are available G
to them in law. We need not issue any direction in regard
to their absorption.
I.A. no. 11 is disposed of accordingly.
I.A. no. 8
210 SUPREME COURT REPORTS [2008] 10 S.C.R.

A I.A. no. 8 for intervention is dismissed as not pressed." ·).... ~

- I

........ 9. The statement was obviously an incorrect one because
the absorption of 302 employees was obviously not done in
pursuance of the Court's Order dated 13.1.2005. In fact, those
advertisements for absorption of the erstwhile of BHALCO
B employees were issued much earlier to the Court's Order dated -"'· ...
13.1.2005. It seems that after the Order dated 13.1.2005, as .,.
many as 216 applications were filed by the erstwhile BHALCO
employees. Out of these 216 employees, 5 were officers, 31
were Class Ill employees and 180 were Class IV employees.
c Therefore, it is obvious that while passing an Order on I.A. no.
11, this Court was kept in dark about. two factors. Firstly that
advertisements were already made even before the Order
dated 13.1.2005 and secondly that nothing was done in pursu-
ance of the Order dated 13.1.2005 excepting that the fresh
D applications of 216 employees were accepted by.JHALCO and
that they were kept in the cold storage. t
10. Again on 21.9.2007, the Court directed the counsel
for the State to file the Status Report.

E 11. It is on this background, that the present I.A. no. 21 has
been filed. The Court issued notice on I.A. no. 21, which notice
~-
was accepted by Mr. Ajit Kumar Sinha, counsel for the State of
Jharkhand .and he was given two weeks' time to file reply by
Order dated 12.11.2007. Ultimately, on 13.12.2007, this Court
F passed the following Order; ;. ~

"Having heard the learned counsel for the parties1 we are
of the opinion that as the situation in which the employees
I
l
of the erstwhile BHALCO arises out of a statement before
us by the counsel for JHALCO,.,from which the State now
G seeks to wriggle out, we are of the opinion that the
Secretaries of the State of Bihar and the State of Jharkhand
as also the Managing Directors of the BHALCO and .\ ' <\
JHALCO should have a dialogue in regard to the
absorption of the concerned employees and a report be
H submitted to this Court. If necessary, intervention of the
KAPILA HINGORANI & ANR. v. STATE OF 211
BIHAR & ANR. [V.S. SIRPURKAR, J]

appropriate Department of the Central Government may A
also be taken.
List the matter on 31.1.2008.
The Secretary of the Irrigation Department of the State of
Jharkhand as also the Managing Director of JHALCO s
shall remain present before us on that date."
12. When the matter was taken up on 31.1.2008, there
were two reply affidavits filed. The Managing Director of
JHALCO in the initial reply specifically owned that the Status
Report shown in the earlier affidavits which were filed subse- C
quent to the Order dated 13.1.2005, was actually that of the
.period prior to 13.1.2005, though it was purported to be relat-
ing to subsequent period. An unconditional apology was ten-
dered as under:
D
"The State through its counsel gives an unconditional
apology since it was only intended to mention prior to
13.1.2005 and not pursuant to 13.1.2005."
The matter was left at that. This so-called parawise reply
does not seem to convey anything new. In paragraph 9, how- E
ever, it was stated that in pursuance of the Order dated
13.8.2004 of this Court, the Government of India vide letter no.
12025/24/2004-SR dated 13.9.2004 had decided that
BHALCO continued to be under the control of the Government
of Bihar in terms of Section 65 of the Bihar Reorganisation Act, F
2000. It was, therefore, pleaded in that paragraph that BHALCO
and JHALCO were two different corporations having no con-
nection of inter dependence between them. It was only on this
basis that ultimately it was prayed that I.A. no. 21 should be
dismissed.
14. We are constrained to say that in filing the said report
--+ •· ~ in pursuance of I.A. no. 11 and making solemn statement be-
fore this Court that 302 employees were already accommo-
dated in pursuance of the Order of this Court dated 13.1.2005,
a clear tut misleading and false statement was made, but for H
212 SUPREME COURT REPORTS [2008] 10 S.C.R.

A which this Court would not have passed the Order dated
16.7.2007 on I.A. no. 11. We express our consternation. We
must also say that we are not at all satisfied with the bald apol-
ogy which we have already quoted above. There is no explana-
tion, whatsoever, as to how such a statement came to be is-
8 sued on behalf of the State Government by its standing coun-
a
sel. It is obvious that the State merely made poor attempt to
extricate itself from the difficult situation.
15. The State filed an additional affidavit. In the additional
affidavit, however, it was reiterated that a meeting was arranged
C to be held between the concerned Secretaries and the Manag-
ing Directors on 17 .1.2008 at Ranchi, wherein, the relevant facts
and issues were discussed. The affidavit once again stated
about the erstwhile absorption of 302 employees, and further
that as on date, 216 employees were left with BHALCO who
D had not so far been absorbed. It was then pointed out that there
was already a surplus of 152 Class IV employees with JHALCO
and if 216 employees were further directed to be absorbed,
JHALCO would become a sick company. The affidavit further
asserted ,that initial responsibility rests with BHALCO owing to
E the order passed by the Central Government on 13.9.2004. It
was also further reiterated in the affidavit that the Government
of Bihar and the Managing Director of BHALCO did not accept
this order dated 13.9.2004 and had protested against the Min-
istry of Home Affairs and submitted that all the· employees of
F BHALCO should be absorbed by JHALCO. The affidavit then
goes on giving certain chronology of events, showing as to how
JHALCO was brought under the existence. It was accepted that
JHALCO adopted the rules and regulations of BHALCO and
that some assistance was received from the financial institu-
G tioris for execution of its schemes. Further, it was expressed
that the services of BHALCO's employees would be taken only
as per the requirement. Again, a reference was made to the
two advertisements by which the BHALCO's employees were
given the opportunity to apply for absorption. It was also pointed
out that the Muster-Roll employees, employees deputed in the
H
KAPILA HINGORANI & ANR. v. STATE OF 213
BIHAR & ANR. [V.S. SIRPURKAR, J]

Government Department and employees who presented muti- A
lated documents were not accepted by JHALCO. Reference
was then made to the earlier Order dated 9.5.2003 of this Court
and it was pointed out further that by Order dated 13.9.2004,
• ~ the State Government had decided that as on date, BHALCO
continued to be under the control of the Government of Bihar. In B
para (i), a very curious statement is made, which is as under:
"Therefore, after the Central Government order dated
13.9.2004, the Jharkhand State Government sought to
annul its earlier decision to correct the technical error
committed earlier in its order no. 2580 dated 29.12.2001 C
issued by Water Resource Department, Government of
Jharkhand for which approval was given to this proposal
by the Departmental Minister in October 2004. However,
the process COUid not be completed because Of elections I
in the State. Thereafter, the Cabinet revised its earlier D
decision in its meetings of 4.4.2005 and the order was
issued vide WRD, Government of Jharkhand notification
no. 1283 dated 26.4.2005."
16. A reference was then made to an application for modi- 1

fication of this Court's Order dated 13.1.2005, allegedly filed by E
the State of Jharkhand on 15.2.2005. Further, the rejoinder affi-
davit filed by the State of Jharkhand dated 28.4.2005, showing
. r _.. the inability to absorb the remaining BHALCO employees was
I also referred to. Paragraph 8 (a) and 8 (b) of this additional affi-
davit suggested that JHALCO had adopted the rules and regula- F
tions of BHALCO, and that JHALCO will receive assistance from
financial institutions. It is then admitted that to start and run
JHALCO, experienced employees were needed. As BHALCO
employees were sitting idle, an opportunity was given to them on
humanitarian grounds. Again, the same table regarding the 302 G

- absorbed employees was presented. It is then reiterated that
the financial position of JHALCO could not be improved due to
the excess staff already absorbed. In para 8 (e), a reference
was made to the decision of the Government of Jharkhand is-
sued by WRD notification no. 1283 dated 26.4.2005 and a meet- H
214 SUPREME COURT REPORTS [2008] 10 S.C.R.
~ ......
A ing in pursuance of this decision held on 8.8.2005 to review the
financial position of the JHALCO together with its work perfor-
mance. This para is extremely important and reads as under:
"(e) As per Government of Jharkhand decision issued
,J_ ~

by WRD notification no. 1283 dated 26.4.2005 the
B Board of Directors of JHALCO held a meeting dated
8.8.2005 to review the financial position of JHALCO
together with its work performance. It decided to
curtail the number of the employee, seeing the nature
of the work which the corporation is executing, as all
c schemes are executed by the beneficiary of the
concerned schemes and handed over to the
beneficiary committee after completion of the
scheme. The strength sanctioned by Board of
Directors is as under: ;-
D
S.No. Category of Post Total Engaged Employees
(i) Officers 78
(ii) Class Ill 44

E (iii) Class IV 92
Total =· 214
(f) In view of the strength sanctioned by the Board of
Directors of JHALCO seeing the nature of the work .~ {

F executed by the corporation the comparative statement
of BHALCO employees already engaged in JHALCO
in comparison to its need strength is as under:

SI. NO. Category of Total Total en- Balance
Post strength gaged
G
sanctioned employees
(i) Officers 78 14 (-)64
(ii) Class Ill 44 44 Nil

H (iii) Class IV 92 244 (+) 152
KAPILA HINGORANI & ANR. v. STATE OF 215
BIHAR & ANR. [V.S. SIRPURKAR, J]

The above comparative statement itself shows that A
152 excess of BHALCO Class IV employees have
already been engaged, regarding which an affidavit
has been filed by the Government of Jharkhand in
the Hon'ble Supreme Court.
(g) The remaining BHALCO employees are 8
approximately 216. As per l.A.-21 filed by the
petitioner (BHALCO employees) category wise
position of these employees are as follow:
S.No. Category of Post Remaining BHALCO Emplo. c
(i) Officers 05
(ii) Class Ill 31
(iii) Class IV 180

Total = 216 D

(h) As mentioned above in the remaining 216 employees .
of BHALCO, Class Ill employees are 31 which are
not needed in JHALCO and Class IV employees are
180 while JHALCO has already engaged 152 excess E
Class IV employees of BHALCO.
(i) As per audit report 2005-06, JHALCO is already
running in 3.16 crores deficit.
The annual wages of JHALCO employees is about F
3.60 crores, while the profit earned by JHALCO has
been estimated to be approximately Rs. One crore.
Thus, 2.60 crores have been sought from the WRD,
State of Jharkhand to make the JHALCO employees
payment for the financial year 2008-09".
17. It was then submitted in the further paragraphs that
JHALCO was trying to become 'financially viable with the help
of the Government of Jharkhand. It was also pointed out that in
the erstwhile BHALCO, excess employees were engaged and
the organization could not sustain the burden of its employees. H
216 SUPREME COURT REPORTS [2008] 10 S.C.R.

A It was, therefore, reiterated that the estimate of taking the re-
maining BHALCO employees had to be seen in the light of the
precarious financial situation and the excess staff. It was, there-
fore, reiterated that if those employees are taken, JHALCO also
will be a sick company. In the rest of the paragraphs, other facts ,.._ ..
B relating to the liquidation of BHALCO, as also the failure of the
meeting dated 17.1.2008 which was ordered by this Court, were
referred.
18. We have deliberately referred to the two affidavits on
behalf of the State of Jharkhand and JHALCO only to show that
C JHALCO and the State are changing their stands from time to
time. Their stands at times have become contradictory and in-
explicable. It has already been noted that JHALCO came into
existence long back on 29.12.2001, because the area of op-
eration of BHALCO fell within the boundaries of Jharkhand af-
D ter the State of Jharkhand came into existence. The Cabinet
note dated 9.1.2002 which was filed by the writ petitioner along
with I.A. no. 11 of 2005 clearly suggests that the Jharkhand State
Cabinet had sanctioned that BHALCO should be run in the form
of JHALCO. In 2003, JHALCO gave two advertisements for
E absorption of BHALCO employees and even later, it was ad-
mitted that JHALCO required the experienced employees of
BHALCO. In pursuance of these advertisements, all the
BHALCO employees could have applied for being regularized,
provided, their applications were found to be in order. Accord-
F ingly, as many as 302 employees were absorbed. The applica-
tions of others were rejected and some others had not applied
at all, perhaps because of the condition that such employees
had to forego their earlier claims of the unpaid salaries. At the
time when the advertisements were issued, there was nocom-
G pulsion by way of any Court Order to accommodate all the em-
ployees and it could have been merely a humanitarian consid-
eration out of which the said advertisements came to be is.,
sued. It cannot be forgotten that there was no trained staff avail-
able with JHALCO and, therefore, JHALCO required the expe-
rienced staff of BHALCO. Therefore, this move was only to re-
H
KAPILA HINGORANI & ANR. v. STATE OF 217
~
BIHAR & ANR. [VS. SIRPURKAR, J]
~

place the nomenclature of BHALCO and to continue the same A
as JHALCO. It seems that the non-payment of salaries to these
employees was a non-factor and, therefore, JHALCO wanted
to reap double benefit, viz., ·firstly it could get all the experienced
t ......_ employees and secondly, that too without having to face the
liability of their salary payments. It must be remembered that all 8
this was in the wake of this Court's Order dated 9.5.2003,
wherein, this Court had required the State of Bihar to deposit a
sum of 50 crores of rupees for disbursement 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 c
basis. The Court had also directed creation of a committee for
scrutinizing the assets and liabilities of the companies. There-
fore, when the advertisements were issued with the cut-off date
of 7.8.2003, JHALCO had a distinct advantage. However, there-
~ after, came the Order of this Co1 ''"'' dated 13.1.2005, whereby,
D
this Court took the notice of coming into being of JHALCO and
further directed that the concerned employees 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 Ian-
guage of the Order dated 13.1.2005, that no formal Order was
passed for absorption. Probably, therefore, this Court gave six E
weeks' time to such employees. Again as in the earlier adver-
tisements, only the employees foregoing their claims over sala-
ries could apply, all the employees probably did not apply re-
~ ~ stricting the number only to 302. Now, in pursuance of the Order
dated 13.1.2005, 216 more employees had applied and that F
too without foregoing their claims over salaries. It is probably
because of this that a decision was taken in a meeting dated
8.8.2005 to review the financial position.of JHALCO, to curtail
the number of employees and to limit the total number of em-
ployees to 214. In fact, if paragraph A(f) of the Additional affi- G
--.. " ~ davit is seen, it will be clear that though there were 152 excess
Class IV employees, there was still requirement of 64 Officers,
as only 14 Officers were engaged as against -the total sane-
tioned strength of 78 Officers. This exercise of curtailing the
employees and limiting the total number of employees to 214 H

..
218 SUPREME COURT REPORTS [2008] 10 S.C.R.

A appears to be a deliberate exercise in the wake of the Order
dated 13.1.2005 of this Court, and incidentally, even that Order
was not followed in its true spirit which ultimately required the
petitioners to file I.A. no. 11. Even the figures given in the Addi-
tional affidavit's paragraph A(f) are misleading. If properly cal-
B culated as against the total sanctioned strength of 214, 302
employees were engaged. Thus, only 88 excess employees
could be said to have been engaged and that too prior to the
decision dated 8.8.2005. The figure of 152 as the excess em-
ployees, is, therefore, clearly misleading. There does not ap-
e pear any explanation, nor any statistics to justify the curtailing of
the employees by JHALCO. After all, there was no curtailment
of area or the activities at least none pleaded before us, in which
case the decision to curtail the number of employees of
JHALCO itself appears to be neither sound, reasonable, nor
justifiable and only appears to get out of the rigour of this Court's
0
Order dated 13.1.2005. Be that as it may we are, in view of the
discussions made thereafter, not in a position to pass any or-
der in favour of the applicants even if their contentions with re-
gard to existence of vacancies are ac?epted.
E 19. However, there is a huge problem of the finance. It
has been pleaded in the Additional affidavit that JHALCO wa~
running in deficit by 3.16 crores up to 2005-06. Its annual wages
on the date are 3.60 crores and it has already sought 2.60 crores
from the State of Jharkhand to make the payment for the finan-
F cial year 2008-09. The affidavit, however, does not give any
clear idea about the contribution which will be required to be
made by the State of Bihar on account of the arrears o.f sala-
ries.
20. When we see the response of the State of Bihar, bar-
G ring reference to the letter dated 22.1.2001 by the Secretary of
the Government of Bihar to the Secretary of the Government of
Jharkhand recommending that all the employees of BHALCO
should be absorbed in JHALCO without any condition, their does
not appear to be anything more. In the name of written submis-
H sions on behalf of State of Bihar, all that is stated is that since
KAPILA HINGORANI & ANR. v. STATE OF 219
_. .... BIHAR & ANR. [V.S. SIRPURKAR, J]

BHALCO was a corporation situated in the State of Jharkhand A
and its area of operation was also in the State of Jharkhand,
only, therefore, under Section 47 (1) and Section 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 further has reiterated that the decision of the B
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 correct decision, and
that it had written a letter to reconsider the same. We express
our surprise as to how such a bald stand was taken by the State c
of Bihar. Seen from any angle, this liability could not be alto-
gether shaken off by the State of Bihar to avoid the same on the
specious plea that BHALCO has now become JHALCO. That
would be the over simplification of the issue. That is apart from
t{
the fact that in the Memorandum of Association of BHALCO,
D
there is a reference of the six districts of Bihar which continued
to be in the State of Bihar as its area of operation. We have
carefully seen the Order dated 13.9.2004 which is binding on
the State of Bihar. By that Order, the Central Government had
ordered that the State Government of Bihar will initiate liquida-
tion in respect of BHALCO. If that is so, then by the necessary E
logic, the liability to pay the arrears of salary is that of State of
Bihar, which it must discharge.
' I .., 21. However, we are told that a writ petition is pending in
the Jharkhand High Court by the employees claiming absorp- F
tion as also the past salaries. We would, therefore, desist from
giving final directions, so also we do not wish to deal with a
labour dispute in a public interest litigation directly filed before
this Court. It would be better if all the questions pending in the
said writ petition are finally decided as early as possible.
G
; ~
There is another aspect of the matter which cannot be lost
sight of. The mode of enforcing our order dated 13th January,
· 2005 would be by initiating a proceeding for contempt under
the Contempt of Courts Act, 1970. Such a proceeding, as is
well known, must be initiated by way of last resort. H
220 SUPREME COURT REPORTS [2008] 10 S.C.R.

A In Sushi/a Raje Ho/kar vs. Anil Kak (Retd.) [2008(7)
SCALE 484), this Court held :
"14. A proceeding under the Contempt of Courts Act has
a serious consequence. Whether the alleged contemnor
has willfully committed breach of the order passed by a
B competent court of law or not having regard to the civil/evil
consequences ensuing therefor require strict scrutiny. For
the said purpose, it may be permissible to read the order
of the court in its entirety. The effect and purport of the
order should be taken into consideration.
c
Whereas the court shall always zealously enforce its order
but a mere technicality should not be a ground to punish
the contemnor.
A proceeding for contempt should be initiated with utomost
D reservation. It should be exercised with due care and
caution. The power ofthe court in imposing punishment
for contempt of the court is not an uncontrolled or unlimited
power. It is a controlled power and restrictive in nature
'(see Re: PC. Sen [ (1969) 2 SCR 649) and Jhareswar
E Prasad Paul and Another vs. Tarak Nath Ganguly & Ors.
[(2002) s sec 352)}.
A contemnor, thus, may be punished only when a clear
case for contumacious conduct has been made out."
F Only because an incorrect statement had been made be-
fore us in respect whereof we have made our comments hereto
before, initiation and consequent punishment of the officers
guilty before us therefor, in our opinion, would n_ot subserve any
purpose. We, therefore, desist ourselves from doing so.
G 22. In view of the above, we give the .following directions:
(A) The High Court of Jharkhand is requested to dispose
of the writ petition pending before it at the earliest
and, if possible, within six weeks from date. If the
High Court finds it difficult to dispose of the matter
H
KAPILA HINGORANI & ANR. v. STATE OF 221
BIHAR & ANR. [V.S. SIRPURKAR, J]

within the aforementioned period, it may pass interim A
order as it may deem fit and proper. It is made clear
that in the event the High Court finds that the
applicants were entitled to be absorbed in the
services of JHALCO from an earlier date it would be
open to it to pass such an order as it may deem fit 8
'J -
and proper so as to adjust the equities between the
parties. It is made clear that the question of final
absorption, past salaries and the liability to pay the
same may be determined by the High Court in the
said writ petition. c
(B) Managing Director, BHALCO and Managing Director,
JHALCO as also the Secretaries of the Government
of Bihar and the Government of Jharkhand shall meet
within one month from the date and decide upon
and assess the liability on accountof the arrears of D
the salaries payable to the employees already
absorbed and to be absorbed, and make a report
thereof within a week of the date of decision, to the
High Court for taking final decision regarding the
mode of payment etc. to the employees, if any, so E
that the liability of JHALCO to that extent would stand
reduced.
(C) The Central Government shall take immediate steps
to see that the directions in the order dated
: ; -'. 13.09.2004, passed by it are complied with by the F
State of Bihar
The Interim Application is accordingly disposed of.
N.J. Appeal disposed of.