KAPILA HINGORANI v STATE OF BIHAR

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DATE OF JUDGEMENT	9th March 2003
COURT	Supreme Court of India
CITATION	Kapila Hingorani v. State of Bihar (2003) 6 SCC 1
CASE TYPE	Civil case
APPELLANT	Kapila Hingorani
RESPONDENT	State of Bihar
BENCH	V.N. Khare Cj, S.B. Sinha
REFERRED	Companies Act (1 of 1956), Section 529AConstitution of India, Article 21, Article 23

FACTS OF THE CASE:

In the state of Bihar, India, a grave situation had arisen concerning the non-payment of salaries to employees of government-owned companies, corporations, and public sector undertakings. The petitioner, in this case, was Kapila Hingorani, a public-spirited citizen and a distinguished lawyer practising at the Supreme Court of India. The case brought to light the distressing and alarming circumstances faced by these employees due to their arrears of salaries remaining unpaid for extended periods.

One particular incident that significantly underscored the gravity of the situation was the tragic case of Chandan Bhattacharya, who was the son of an employee of the Bihar State Agro-Industries Development Corporation. Chandan Bhattacharya, driven to desperation by the non-payment of his father’s salary and the ensuing financial crisis, attempted self-immolation as a desperate act of protest against the dire circumstances. Tragically, Chandan Bhattacharya later succumbed to the severe burn injuries he sustained during his self-immolation attempt.

The distressing nature of this incident, along with the broader issue of non-payment of salaries, was highlighted by a newspaper report published in ‘The Hindustan Times,’ Delhi Edition, on 19th September 2002. The report, titled “Empty coffers drive staff to self-immolation bids,” brought attention to the plight of employees who were left without wages for extended periods, pushing some to the brink of starvation and drastic actions like self-immolation.

Kapila Hingorani, being deeply concerned by these distressing events and the apparent violation of fundamental rights, decided to file a writ petition in the Supreme Court of India. The writ petition (C) No. 488 of 2002 sought to address the larger issue of non-payment of salaries to employees of government-owned entities, which had led to a crisis affecting not only their livelihoods but also their very lives.

In response to the petition, the State of Bihar submitted a counter affidavit. While the State did not deny the factual allegations presented in the writ petition, it argued that it was not always directly or vicariously liable to pay the salaries of employees of government-owned enterprises. However, the State’s position was challenged on the grounds that such financial constraints could not justify the violation of fundamental rights, especially when the situation had led to starvation deaths or suicides among employees.

The Court’s analysis, in this case, delved into the constitutional obligations of the State towards its citizens, particularly in situations where non-payment of salaries resulted in human rights violations. The Court explored the concept of ‘life’ under Article 21 of the Constitution of India, which encompasses not only the basic right to existence but also the right to livelihood and the overall well-being of individuals.

In its final judgment on 9th May 2003, the Court emphasized that the State’s duty extended beyond economic considerations and required it to take necessary actions to mitigate the extreme hardships faced by employees in government-owned entities. The judgment acknowledged that financial constraints could not be a valid excuse for neglecting fundamental rights and that the State’s obligation extended to protecting the rights and lives of its citizens, including those employed by government-owned corporations.

LEGAL ISSUES INVOLVED:

1. Non-Payment of Salaries: The core legal issue, in this case, revolved around the non-payment of salaries to employees of government-owned companies, corporations, and public sector undertakings in the state of Bihar. This raised questions about the State’s responsibilities and liabilities in such situations, particularly when employees were facing severe financial hardships.

2. Violation of Fundamental Rights: The case also dealt with the potential violation of fundamental rights guaranteed by the Constitution, including the right to life (Article 21) and the right against exploitation (Article 23). The issue was whether the non-payment of salaries, leading to starvation deaths and suicides among employees, constituted a violation of these fundamental rights.

ARGUMENTS

Petitioner’s Contentions (Kapila Hingorani):

1. The petitioner contended that the non-payment of salaries to employees of government-owned entities, particularly over an extended period, was leading to severe financial distress, starvation, and even suicides. The tragic incident of Chandan Bhattacharya’s self-immolation was highlighted as a stark example of the dire consequences of this issue.

2. The petitioner argued that even though the State Government might not be directly or vicariously liable to pay salaries in all situations, it couldn’t escape its liability when human rights problems involving starvation deaths and suicides were caused by non-payment of salaries. The petitioner referred to Article 21 (right to life) and Article 23 (right against exploitation) to emphasize that the State had a constitutional obligation to ensure the well-being and protection of its citizens.

3. The petitioner also argued that the State, while expecting industrial houses and corporations to provide decent livelihoods to employees, couldn’t be insensitive to the plight of its own citizens. The petitioner contended that the corporate veil could be pierced or lifted in certain situations when corporate personality was contrary to justice, public interest, or human rights.

State of Bihar’s Contentions:

1. The State of Bihar acknowledged the factual allegations made in the writ petition regarding non-payment of salaries and the distressing circumstances faced by employees. However, the State contended that it wasn’t always directly or vicariously liable to pay employee salaries in every situation, particularly in cases of financial stringency.

2. The State argued that the responsibility for payment of salaries often rested with the respective statutory authorities and entities, and the State’s role might be limited to certain situations. The State’s counter-affidavit focused on the idea that it wasn’t the sole payer of employee salaries in these circumstances.

3. The State contended that financial constraints might impact its ability to immediately address the non-payment of salaries issue and that such constraints couldn’t be overlooked.

JUDGMENT:

In the judgment delivered on 9th May 2003, the court addressed the crucial issue of non-payment of salaries to employees of government-owned companies, corporations, and public sector undertakings in Bihar. The court acknowledged that the situation had led to severe financial distress, starvation deaths, and suicides among employees.

The court first considered the constitutional perspective, highlighting that the concept of ‘life’ under Article 21 of the Constitution of India encompassed not only mere existence but also livelihood and various facets that contribute to a dignified life. The court emphasized that the State Government’s obligations extended beyond financial considerations and included protecting the fundamental rights and well-being of its citizens.

The court recognized that while the State Government might not always be directly or vicariously liable to pay salaries, it could not escape its liability when human rights issues like starvation deaths and suicides emerged due to prolonged non-payment of salaries. The court held that financial stringency could not justify the violation of fundamental rights.

Furthermore, the court addressed the concept of piercing the corporate veil, stating that it could be applicable when the corporate personality was contrary to justice, convenience, interest of workers, public interest, or revenue. The court stressed that the State could not be insensitive to the plight of its own citizens, and it had a duty to mitigate the extreme hardships faced by employees.

The court’s judgment concluded that the State’s duty went beyond mere economic considerations. It declared that the State had an obligation to ensure the well-being and protection of its citizens, especially those employed by government-owned corporations. The court held that the State’s obligation extended to addressing the violation of human rights due to prolonged non-payment of salaries.

In essence, the judgment affirmed that the State Government had a constitutional responsibility to safeguard the fundamental rights of its citizens, even in situations of financial constraint. The court underscored the importance of upholding the dignity and livelihood of individuals and employees, thereby emphasizing the broader societal obligations of the State.

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