2003 (5) TMI 359 - SUPREME COURT

Whether in a case of this nature, the Court would take a sheer legalistic approach in holding that the corporate veil would not be lifted although its conscience stands satisfied that there has been violations of citizens’ right to life and liberty as adumbrated under article 21 of the Constitution of India?

Whether having regard to the admitted position that the Government Companies or Corporations referred to hereinbefore are States within the meaning of article 12 of the Constitution of India, the State of Bihar having deep and pervasive control over the affairs thereof can be held to be liable to render all assistance to the said companies so as to fulfil its own and/or the corporations’ obligations to comply with the citizens’ right under articles 21 and 23 of the Constitution of India?

Whether the State of Bihar can escape its liability having regard to the human rights problem involved in the matter?

Whether in a case of this nature the liability of the State of Bihar, if any, can be shifted to the Union of India?

Held that:- 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/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 undertaking and/or Government companies or to take such measure or measures as it may deem fit and proper.

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 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 in this behalf shall be borne by the State of Bihar. 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. The State for the present shall deposit a sum of ₹ 50 crores before the High Court for disbursement of salaries to the employees of the corporations. 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. The rights of the workmen shall be considered in terms of section 529A of the Companies Act.

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 terms of the provisions of the State Reorganisation Act, 2000. The State of Jharkhand is hereby impleaded as a respondent.