Supreme Court Holds Bihar in Contempt for Non-Compliance in Pension Case (18 January 2022)

Introduction

Date of the Judgment: 18 January 2022
Citation: Contempt Petition (C) …/2022 Diary No.13110 of 2021
Judges: L. Nageswara Rao J., B.R. Gavai J.
Can a state government be held in contempt for not following court orders regarding employee pensions? The Supreme Court of India recently addressed this question, finding the State of Bihar in contempt for failing to implement orders related to pensionary benefits for employees who were deputed from various corporations to the Treasury Department of the erstwhile State of Bihar. The court found that the State of Bihar had willfully and deliberately failed to comply with previous orders, and directed the contemnors to appear before the court to show cause as to why they should not be punished for contempt. The judgment was delivered by a two-judge bench comprising Justice L. Nageswara Rao and Justice B.R. Gavai.

Case Background

The petitioners were initially employed in various corporations in the erstwhile State of Bihar before 1996. Following the fodder scam in 1996, many Treasury Department employees were dismissed or suspended. Due to staff shortages, the Finance Department of the Government of Bihar directed various corporations, including the petitioners’ employers, to send employees on deputation to the Treasury Department via letter No. 447 dated 24th August 1996. Subsequently, the petitioners and other employees were transferred to different treasuries. On 15th November 2000, the State of Bihar was divided into the State of Bihar and the State of Jharkhand, and employees were allocated between the two states.

Timeline:

Course of Proceedings

Employees allocated to the State of Jharkhand filed a writ petition (WP(S) No.1693 of 2012) in the Jharkhand High Court, arguing that their services with the Corporations should be considered for pensionary and retiral benefits. The Jharkhand High Court ruled in their favor on 31st July 2013. The State of Jharkhand’s appeal (LPA No. 357 of 2013) was dismissed by the Division Bench on 14th January 2015. The Supreme Court, in Civil Appeal No.13372 of 2015, refused to interfere with the Jharkhand High Court’s order on 7th September 2017, directing that pension and retiral benefits be calculated within six months.

Simultaneously, employees allocated to the State of Bihar pursued similar remedies in the High Court of Judicature at Patna. The Division Bench of the High Court of Patna, in LPA No. 763 of 2017, passed an order on 12th December 2017, directing the State of Bihar to grant benefits to the employees by counting their services in the Boards, Corporations, and Public Sector Undertakings before their absorption and to grant them pensionary benefits. The State of Bihar appealed to the Supreme Court (SLP(C) D. No.15567 of 2018), which was dismissed on 4th March 2020. The Supreme Court directed the State of Bihar to implement the Patna High Court order within six months. The State of Bihar then issued a Government Resolution on 14th September 2020, which was deemed non-compliant by the Court. The petitioners filed a contempt petition, which was disposed of on 15th February 2021, granting the State of Bihar another three months to comply. The State of Bihar sought an extension, which was granted until 29th June 2021 as a last opportunity. The present contempt petition was filed due to continued non-compliance.

Legal Framework

The core of the legal framework revolves around the orders passed by the High Court of Judicature at Patna and the subsequent orders of the Supreme Court of India. The High Court of Patna’s order dated 12th December 2017, in LPA No. 763 of 2017, directed the State of Bihar to grant benefits to employees by counting their services in Boards, Corporations, and Public Sector Undertakings before their absorption. This order was to ensure that employees received pensionary benefits after considering their prior service. The Supreme Court, in its order dated 4th March 2020, dismissed the State of Bihar’s appeal and directed the implementation of the Patna High Court’s order within six months. The Supreme Court, in its order dated 15th February 2021, clarified that the State of Bihar was to pay all employees exactly what was paid by the State of Jharkhand to similarly situated employees. This clarification was made in response to the State of Bihar’s contention that it had complied with the order through a Government Resolution dated 14th September 2020. The Supreme Court reiterated the order on 29th June 2021, granting one month as a last opportunity to comply with the directions.

Arguments

Petitioners’ Arguments:

• The petitioners contended that the State of Bihar had committed contempt of court by failing to comply with the orders passed by the Supreme Court on 4th March 2020 and 15th February 2021.
• They argued that the State of Bihar had not granted the pensionary benefits as directed by the High Court of Patna and affirmed by the Supreme Court.
• The petitioners emphasized that the State of Bihar was required to count the services rendered by them in the Boards, Corporations, and Public Sector Undertakings prior to their absorption, and to grant them pensionary benefits accordingly.
• They highlighted that the State of Bihar has not paid the employees the same amount as was paid by the State of Jharkhand to its employees.

State of Bihar’s Arguments:

• The State of Bihar submitted that it had complied with the directions issued by the Supreme Court vide order dated 15th February 2021.
• The State contended that the Government Resolution dated 14th September 2020, implemented the directions issued by the Court.
• The State argued that the Supreme Court, in its order dated 15th February 2021, had for the first time observed that the State of Bihar should pay all employees exactly what was paid by the State of Jharkhand, which was not part of the order dated 4th March 2020.

Issues Framed by the Supreme Court

The Supreme Court framed the following issues:

1. Whether the respondents have committed contempt of the order dated 15th February 2021 passed by this Court?
2. Whether the State of Bihar has complied with the directions issued by this Court vide order dated 4th March 2020 and 15th February 2021?
3. Whether the non-compliance of the directions issued by this Court is wilful and deliberate and amounts to contempt of this Court?

Treatment of the Issue by the Court

Authorities

The Supreme Court considered the following authorities:

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

• The order of the Jharkhand High Court was followed by the Supreme Court in its order dated 7th September 2017.
• The order of the High Court of Judicature at Patna was upheld by the Supreme Court in its order dated 4th March 2020.
• The Supreme Court’s order dated 15th February 2021, was a clarification of the previous order and not a new direction.

What weighed in the mind of the Court?

The Supreme Court’s decision was heavily influenced by the need to ensure compliance with its orders and to uphold the rights of the employees to receive their pensionary benefits. The Court emphasized the following points:

• The State of Bihar had failed to implement the directions issued by the High Court of Patna, which were affirmed by the Supreme Court.
• The State of Bihar’s contention that it had complied with the orders through the Government Resolution dated 14th September 2020, was rejected by the Court.
• The Court clarified that its order dated 15th February 2021, was not a new direction but a clarification of the previous order.
• The Court noted that the State of Bihar had sought an extension of time to comply with the orders, which indicated that it was aware of its non-compliance.
• The Court found that the non-compliance was wilful and deliberate, thus amounting to contempt of court.

Fact:Law Ratio

Logical Reasoning:

The Supreme Court rejected the State of Bihar’s argument that the order dated 15th February 2021, introduced a new direction. The Court clarified that the order was merely a clarification of the previous order. The Court also noted that the State of Bihar had sought an extension of time to comply with the orders, which indicated that it was aware of its non-compliance. The final decision was reached based on the Court’s finding that the State of Bihar had wilfully and deliberately failed to comply with the orders.

The Court stated, “The perusal of the order dated 15th February 2021 would also reveal that the contention which is raised with regard to compliance in view of the Government Resolution dated 14th September 2020, was considered by this Court and this Court did not find favour with the same.” The Court further stated, “Though, it was not necessary, we had clarified that the directions meant payment to all the employees exactly what was paid by the State of Jharkhand to the employees who were covered by the said order.” And finally, “In that view of the matter, we, prima facie, find that the non-compliance of the directions issued by this Court dated 4th March 2020 and 15th February 2021, is wilful and deliberate and amounts to contempt of this Court.”

Key Takeaways

• State governments are expected to comply with court orders, especially those related to employee benefits.
• Non-compliance with court orders can lead to contempt proceedings and potential punishment.
• Clarifications of previous orders by the Supreme Court are binding and must be followed.
• Seeking extensions of time does not excuse non-compliance if the court finds the non-compliance to be wilful and deliberate.
• The Supreme Court will ensure that its orders are implemented and that the rights of employees are protected.

Directions

The Supreme Court directed the respondent-contemnors to remain present before the Court on 22nd February 2022 and show cause as to why they should not be held guilty for having committed contempt of court and be punished in accordance with law.

Specific Amendments Analysis

There is no specific amendment analysis in this judgment.

Development of Law

The ratio decidendi of this case is that non-compliance with the orders of the Supreme Court, especially when it is found to be wilful and deliberate, will be treated as contempt of court. This case reinforces the principle that state governments are bound to follow court orders and that the Supreme Court will take action to ensure compliance. There is no change in the previous position of law, but it reinforces the existing law on contempt of court.

Conclusion

The Supreme Court found the State of Bihar in contempt for failing to implement orders related to pensionary benefits for employees. The Court directed the contemnors to appear before the court to show cause as to why they should not be punished for contempt. This judgment underscores the importance of complying with court orders and protecting employee rights.