PATNA HIGH COURT
B.P.Singh and Indu Prabha Singh JJ.
Bihar Rajya Khadi Gram Udyog Board Karyakarta Sangh
Versus
State Of Bihar
Civil Writ Jurisdiction Case No. 12124 of 1993 ;
Decided On : JANUARY 18, 1996
Constitution of India, Art 226 & 227-petitioner seeking direction and issuance of writ directing the State Govt. to allocate sufficient fund to the Bihar Rajya Khadi Gram Udyog Board for meeting establishment expenses-Board constituted by the State Govt. under the Act and under provisions of the Act the State is obligated to allocate funds besides the grants by the Khadi Board Commission-State contending that the Board being a dist-not legal entity the State has no obligation to advance any fund to the board-where a Govt. Corporation is created by a statute and the statute creates legal obligation and casts a duty upon the State Govt. to meet its liabilities such liability can not he disowned by the State and can certainly be enforced by the High Court in exercise of writ jurisdiction-where the slate by enacted legislation creates an agency with enumerated functions, the obligations that arise from its creation arid maintenance of such an agency are implicitly the obligations of the State-the State Govt. must and is directed to allocate additional funds to the Board to meet such obligation including arrears due within three months. (Paras 4, 12, 13 & 15)
1. The petitioners herein have prayed for issuance of a writ, order or direction commanding the respondent State of Bihar and its officials, including respondents 1 to 4 herein, to release immediately funds in favour of respondent No. 5, Board, to enable it to meet its establishment expense for the financial year 1993-94, and such arrears relating to previous years which are payable by the State. They have also prayed for an order directing the State of Bihar and its officials to sanction, the annual programme, including the annual schedule of the officers an servants of the Board prepared and submitted by the respondent-Board, within the stipulated time-frame, so that there is no delay in actual release of the funds by the State Government for meeting the expenditure of the establishment of the respondent Board. Petitioner No. 1 herein is the Bihar Rajya Khadi Gram Udyog Board Karyakarta Sangh which espouses the cause of its members numbering 314, who are employees of the respondent - Khadi Board. Petitioners 2 and 3, apart from being the office bearers of the petitioner Sangh, are also the employees of the respondent-Board. Respondents 1 to 4 are the State of Bihar and its Officers, whereas respondent No. 5 is the Bihar State Khadi and Village Industries Board (hereinafter referred to as the Board) and respondent No. 6 is the Chairman of the aforesaid Board.
2. The case of the petitioners is that the employees of the respondent Board are entitled to the payment of their salaries and wages through the respondent Board, but, in view of the fact that the respondent/ Board has no source of income, nor does it carry on any activity of commercial nature, it is not in a position to raise funds so as to discharge its obligation, in particular those in relation to its establishment. It has, therefore, necessarily to depend upon the State of Bihar. The submission urged on behalf of the petitioners is to the effect that the provisions of the Act under which the respondent Board has been created, cast an obligation upon the State of Bihar to provide sufficient funds to the Board to meet its obligations and to perform its functions. The statutory obligations cast by the statute must be enforced by issuance of a writ, because the employees of the respondentBoard have not been paid their wages for the last several months. The respondent-Board has clearly expressed its inability to pay the salary and wages to its employees on the ground that sufficient funds have not been made available to it to enable it to discharge its financial obligations. It is in this background that the instant writ application has been filed.
3. Counsel appearing on behalf of respondent Board submits that so far as the Board is concerned, it has no objection to paying to its employees the salaries, wages and allowances due to them, but it is helpless in the matter because it does not have necessary funds to make payment. He has also emphasised that the provisions of the Act, under which the Board has been constituted, do not provide for the Board carrying on any activity of a commercial nature which can yield profits so as to enable the Board to meet its financial obligations out of its own earnings. The Boards stand is that there is no activity carried on by it under the Act which can result in the generation of funds. The primary objective of the Board is to organise, develop and regulate the Khadi and Village industries. In the performance of its duties under the Act, it incurs expenses, but does not earn any income. That is why the provisions of the Act, under which the respondent Board has been constituted, in terms provide for complete control by the Government of the respondent Board which is a body corporate, and also enjoin upon the State Government a duty to provide the necessary funds to enable the Board to perform the functions entrusted to it by law.
4. The learned Advocate-General appearing on behalf of the State of Bihar and its officers subm
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