KAPILA HINGORANI V. STATE OF BIHAR (2003) 6 SCC 1

 KAPILA HINGORANI V. STATE OF BIHAR (2003) 6 SCC 1

                                               

FACTS

• 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.
• 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.
• A newspaper report highlighted the above mentioned incident, which caught the eyes of Kapila Hingorani, who then 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.
• The petitioner alleges that about 250 employees died due to starvation or committed suicide owing to acute financial crisis resulting from non-payment of remunerations to them for a long time. The State of Bihar does not deny the factual statement made in the writ petition.

 

ISSUES

• Whether the Government of the State of Bihar is vicariously liable for the payment of arrears of salaries to employees of State-owned corporations, public sector undertakings, or statutory bodies?
• Whether the State of Bihar can escape its liability having regard to the human rights problem involved in the matter?
• Whether the non-payment of salaries, leading to starvation deaths and suicides among employees, constituted a violation of the fundamental rights of right to life (Article 21) and the right against exploitation (Article 23)?

 

HELD

 

The judgement 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 emphasising the broader societal obligations of the State.

 

• 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 emphasised 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.
• The corporate veil can be pierced when the corporate personality is found to be opposed to justice, convenience and interest of the revenue or workman or against public interest. 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. 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.
• The right to development in developing countries is itself a human right. A right to carry on business is subject to compliance with constitutional obligations as also limitations provided for in the Constitution.
• Financial difficulties of the institution cannot be above the fundamental right of a citizen. However, the liability of the State of Bihar cannot be shifted to the Union of India. 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 State of Jharkhand is hereby impleaded as a respondent.

 

COMMENTARY

“Kapila Hingorani (1) v State of Bihar, (2003) 6 SCC 1: (2003) 116 Comp Cas 133, the Government not allowed to shelter behind the lack of resources in discharging its obligation to pay wages of the employees of Government company.”