IN THE HIGH COURT OF JUDICATURE AT PATNA Civil Writ Jurisdiction Case No.12289 of 2005 Prushottam Pharmaceuticals authorized stockiest of M/s Rajasthan Drugs & Pharmaceuticals Ltd., Jaipur ( a Government of India Enterprises), having its Office at Rastogi House, Goria Math, Patna- 1 through its Proprietor Naresh Kumar Rastogi son of late Prusuttam Lal Rastogi, resident of Rastogi House,Goria Math, P.S. Jakkanpur, Town and DistrictPatna. … Petitioner Versus 1. The State Of Bihar 2. Inspector General (Prison), Government of Bihar, Old Secretariat, Patna. 3. Inspector General (Prison), Government of Jharkhand, Secretariat, Ranchi. 4. Superintendent, District Jail, Giridih, Jharkhand 5. Superintendent, Central Jail, Hazaribagh, Jhrkhand. … Respondents ------------------- For the Petitioner : Mr. Laxmi Narayan Das, Advocate For the State of Bihar & : Mr. Shivam Singh, A.C. to A.A.G.1 its authorities (respondents no.1 to 2) For the State of Jharkhand &: Mr. Dhrub Mukherjee, Advocate its authorities(respondents no. 3 to 5) -------------------- P R E S E N T HON’BLE MR. JUSTICE S. N. HUSSAIN O R D E R 10/ 18.11.2011 This writ petition has been filed on behalf of the petitioner for payment of price of medicines along with penal interest and cost as the same were supplied by the petitioner to the District Jail, Giridih and Central Jail, Hazaribagh, both within the State of Jharkhand, as far back as in the years 1994, 1996 and 1997. 2. Mr. Lakmi Narayan Das, learned counsel for the petitioner submitted that the petitioner was an authorized Stockist of 2 M/s Rajasthan Drugs and Pharmaceuticals Limited, Jaipur, which was a Government of India Enterprise and the medicines required for the Jails in question were to be supplied by the said firm. 3. Accordingly, vide order no. 1206 dated 07.06.1994, the Superintendent, Central Jail, Hazaribagh directed the said firm to supply the required medicines, whereafter M/s Rajasthan Drugs and Pharmaceuticals Limited, Jaipur directed the Superintendent, Central Jail, Hazaribagh to receive medicines from the petitioner and pay the price of the said medicines to the petitioner and hence the petitioner supplied the medicines to the Central Jail, Hazaribagh (respondent no.5) and sent bills for a total sum of Rs.16,704.25 vide bill nos. 27 & 28, both dated 17.06.1994 but although the payment should have been released immediately by respondent no.5, the same has not been paid till date. 4. Similarly the Superintendent, District Jail, Giridih also placed order no. 552 dated 11.05.1996 and order no. 1209 dated 24.08.1997 before M/s Rajasthan Drugs and Pharmaceuticals Limited, Jaipur for supply of medicines required and as per the direction of the said firm, the said orders were forwarded to the petitioner for arranging supply of medicines to the Superintendent, District Jail, Giridih (respondent no.4), whereafter the petitioner supplied the required medicines as per the above orders and sent bills for a total amount of Rs.21,292.22, but although the payment should have been released immediately by respondent no.4, the same has not been paid till date. 5. It was also averred by learned counsel for the petitioner 3 that the medicines supplied by the petitioner had been received and consumed by respondents no. 4 and 5, but they did not make payments as per the bills although the petitioner had been reminding them throughout and also sent legal notices to the respondents as in the meantime the erstwhile State of Bihar was bifurcated but liability for payment of price of medicines supplied to the erstwhile Jails of the State of Bihar including respondents no. 4 and 5 still remained with the Inspector General (Prison), Bihar (respondent no.2), who did not pay the said amount and hence the authorities have made themselves liable to pay the said amount with penal interest at the rate of 18% per annum as well as cost of litigation to the petitioner. 6. Mr. Dhrub Mukherjee, learned counsel for the State of Jharkhand and its authorities (respondents no. 3 to 5) did not deny the claim of the petitioner, rather he impliedly admitted the facts stated in the writ petition. He averred that the transaction in question was of the years 1994, 1996 and 1997 and the consumption of medicines was also effected during the same period while the erstwhile State of Bihar had not been bifurcated. He further stated that the erstwhile State of Bihar was bifurcated only in the year 2000 when the State of Jharkhand including the districts of Hazaribagh and Giridih was created out of the southern part of the erstwhile State of Bihar and hence the liability of the newly created State of Jharkhand was only with respect to the transactions and consumptions made by it after the said bifurcation i.e. 2000. 7. Learned counsel for the State of Jharkhand relied upon section 54 of the Bihar Reorganization Act, 2000 ( hereinafter referred 4 to as `the Act’ for the sake of brevity ), which provided that where, before the appointed day (15.11.2000), the existing State of Bihar had made any contract in the exercise of its executive power for any purposes of the State, that contract shall be deemed to have been made in the exercise of the executive powers of the State of Bihar and all rights and liabilities, which had accrued, or may accrue under any such contract, shall be of the State of Bihar. He also referred to section 58 of the Act, which provided that the benefit or burden of any asset or liability of the existing State of Bihar not dealt with in any provisions of the Act shall pass to the State of Bihar in the first instance. 8. Learned counsel for the State of Jharkhand further relied upon sections 51 and 53 of the Act, which provided that the liability of the existing State of Bihar in respect of any civil deposit or loan, charitable or other endowment, pensions and other retirement benefits shall be the liability of the State of Bihar. He also relied upon Clause 2 of the Eighth Schedule of the Act and claimed that the liability in respect of pension and other retirement benefits of officers of the existing State of Bihar, who retired or proceeded on leave before the appointed day, but whose claims for pensions and other retirement benefits were outstanding immediately before that day, shall be liability of the State of Bihar. Hence he claimed that as per the provisions of law, it is the duty of the State of Bihar to pay the said bills to the petitioner. 9. Mr. Shivam Singh, learned Assistant Counsel to A.A.G. 1, appearing for the State of Bihar and its authorities submitted that the transactions and consumptions of the medicines supplied by the 5 petitioner to respondents no.4 and 5 as per their orders were made in toto in 1994, 1996 and 1997 in the areas, which are now in the State of Jharkhand, much before bifurcation of the State of Bihar in 2000, hence he claimed that the truncated State of Bihar is not at all liable for payment of the bills of the petitioner as neither the transaction nor the consumption of the medicines supplied by the petitioner or any part thereof had been made in any portion now existing in the State of Bihar. He also averred that the petitioner himself realized that the liability of payment of the said bills was of the State of Jharkhand, the jails of which had derived benefit and in that view of the matter he sent legal notices to the Secretary, Department of Health, Government of Jharkhand, Inspector General (Prison), Government of Jharkhand and the Superintendents of Jails in question on 21.01.2004 (Annexures 2 series), whereas, no such notice was ever sent to the authorities of the State of Bihar as no copy of such notice has been annexed to the writ petition. 10. Learned counsel for the State of Bihar claimed that the State of Bihar is suffering not only due to loss of territory but also due to loss of finances because of the bifurcation of the State in the year 2000 and the said loss would be enhanced many fold if such claims are allowed, which also cannot be verified from the authorities of the State of Bihar and it can only be verified and reported by the authorities of Giridih and Hazaribagh within the State of Jharkhand, where the supplies of medicines had been made in the years 1994, 1996 and 1997. 11. Learned counsel for the State of Bihar laid stress upon 6 the legislative intent regarding section 54 of the Act with respect to contracts and the territorial jurisdiction with respect thereto, which is quite apparent from a bare perusal of section 54(1) of the Act, according to which the right and liabilities of the erstwhile State of Bihar were to be bifurcated after the appointed date and would be the rights and liabilities of the State of Jharkhand or the State of Bihar as the case may be and there was no question of any apportionment of the assets and the liabilities under the provision of Part-IV of the Act. 12. In addition to the aforesaid submissions and arguments, Mr. Shivam Singh, learned counsel for the State of Bihar very beautifully, succinctly and with concinnity placed several provisions of the Act in support of his claim that the instant transactions were covered by the various provisions of the Act, according to which if the transaction is for a particular area, the bifurcated State, in which the said area had fallen, had the financial obligation and responsibility to pay the said liability. 13. From the aforesaid arguments raised by learned counsel for the parties and the materials on record, it is quite apparent that they had not disputed the facts that the orders for supply of medicines were passed by the respondents-authorities of Giridih and Hazaribagh in the years 1994, 1996 and 1997, materials were supplied by the petitioner and were consumed by respondents no.4 and 5 and bills were placed by the petitioner before respondents no. 3 to 5 all in the years 1994, 1996 and 1997 within the areas of Hazaribagh and Giridih, which are now in the State of Jharkhand after bifurcation in the year 2000. Thus, it is quite apparent that it was a single purpose 7 transaction exclusively for Hazaribagh and Giridih and no multiplicity is involved therein. 14. From the documents supplied by the petitioner, it is also apparent that it was of the view that the payment had to be made by the authorities of the State of Jharkhand even after the bifurcation of the existing State of Bihar as notices dated 21.01.2004 (Annexure 2) were issued to the Secretary, Department of Health, Government of Jharkhand, Inspector General (Prison), Government of Jharkhand and the Superintendent of Jail, Giridih and letter dated 13.08.2002 (Annexure 1) was sent to the Superintendent of Jail, Hazaribagh for payment of the aforesaid bills, whereas, no document or notice has been produced by the petitioner to show that any demand was ever made by the petitioner from any authority of the present State of Bihar with respect to payment of the aforesaid bills. 15. Section 2(a) of the Act defines appointed day as the day, which the Central Government may, by notification in the Official Gazette appoint with respect to the bifurcation of the State of Bihar existing on the date of bifurcation. Although the Act received assent of the President of India on 25.08.2000 and was published in Gazette of India Extraordinary, Part II, Section 1, No. 38 dated 25.08.2000, but it became effective from 15.11.2000 vide Official Gazette notification, S.O. 829(E), dated 14.09.2000. Hence the appointed day for the purposes of the Act and bifurcation is 15.11.2000. 16. Section 2(e) of the Act defines existing State of Bihar as the State of Bihar as existing immediately before the appointed 8 day, which would now mean the erstwhile State of Bihar before 15.11.2000. Section 2(j) of the Act defines successor State as the bifurcated State of Bihar or the State of Jharkhand after the aforesaid appointed day in relation to the parent State of Bihar . 17. All the three parties of this case have relied upon section 54 of the Act giving their own interpretation of the said provision, which reads as follows :- “54. Contracts.- (1) Where, before the appointed day, the existing State of Bihar has made any contract in the exercise of its executive power for any purposes of the State, that contract shall be deemed to have been made in the exercise of the executive power- (a) if the purposes of the contract are, on and from the appointed day, exclusive purposes of either of the successor States of Bihar and Jharkhand; and (b) any other case, of the State of Bihar; and all rights and liabilities which have accrued, or may accrue under any such contract shall, to the extent to which they would have been rights or liabilities of the existing State of Bihar, be rights or liabilities of the State of Jharkhand or the State of Bihar, as the case may be : Provided that, in any such case as is referred to in clause (b), the initial allocation of rights and liabilities made by this sub-section shall be subject to such financial adjustment as may be agreed upon between the successor States of Bihar and Jharkhand or in default of such agreement, as the Central Government may, by order, direct. (2) For the purposes of this Section, there shall be deemed to be included in the liabilities which have accrued or may accrue under any contract- (a) any liability to satisfy an order or award made by 9 any Court or other tribunal in proceedings relating to the contract; and (b) any liability in respect of expenses incurred in or in connection with any such proceedings. (3) This Section shall have effect subject to the other provisions of this Part relating to the apportionment of liabilities in respect of loans, guarantees and other financial obligations and bank balance and securities shall, notwithstanding that they partake of the nature of contractual rights, be dealt with under those provisions. 18. The said provision specifically provides that if the existing State of Bihar had made any contract before the bifurcation of the State in exercise of its executive powers all rights and liabilities, which had accrued under such contract, would be the rights and liabilities of the State of Jharkhand or the State of Bihar as the case may be. In the instant case, there being no question of apportionment of any liability and, admittedly, no portion or area of the truncated State of Bihar having been benefited from the said transaction, the entire rights and liabilities for payment of the bills of the petitioner would lie on the authorities of the State of Jharkhand as, admittedly, supply orders were given by the authorities of Hazaribagh and Giridih, medicines were supplied at that places and bills, letters and notices for payment thereof were all sent before the authorities of those areas only. The cause of action is clearly covered by the aforesaid provisions. 19. However, it transpires that the confusion is only because the present State of Bihar has the same name as the erstwhile State of Bihar, which had been defined under section 2(e) of the Act as 10 the existing State of Bihar. For the sake of example, if an existing State of `X’ is bifurcated /reorganized into two States `Y’ & `Z’, one of them, say `Y’, cannot be legally burdened by the liabilities accrued by way of any order, consumption and benefits of the area now covered under the other State, say `Z’, even though it was prior to bifurcation, specially when the beneficiaries of those transactions were the people and authorities of the State, namely, `Z’, which in this case is State of Jharkhand. 20. Sections 55(a) and 56(a) of the Act provide that where, immediately before the appointed day, the existing State of Bihar is subject to any liability or is liable as guarantor in respect of any liability, that liability shall, if the cause of action arose wholly within the territories, which from that day, are the territories of either of the successor State of Bihar and Jharkhand, be a liability of that successor State. Any deviation from the said provision can be made only in case there is an agreement between the two States, but here in the instant case no such agreement has been produced by any of the parties. 21. Section 51 of the Act provides that the liability of existing State of Bihar in respect of any civil deposit or loan fund deposit shall, as from the appointed day, be the liability of the State, in whose area the deposit has been made. Similarly section 50 of the Act provides that the liability of the existing State of Bihar to refund any tax or duty on property including land revenue, collected in excess shall be the liability of the successor State in whose territories the property is situated, and the liability of the existing State of Bihar to refund any other tax or duty collected in excess shall 11 be the liability of the successor State in whose territories the place of assessment of that tax or duty is included. 22. So far reliance of learned counsel for the State of Jharkhand upon Schedule VIII of the Act is concerned, it is quite apparent that the said Schedule is with respect to section 53 of the Act, which deals with the question of pensions of the employees and is not with respect to sections 54, 55, 56 etc., which are with respect to contracts, liability in respect of actionable wrong or liability as guarantor with respect to any such liability and hence the provisions of Schedule VIII or section 53 of the Act cannot be legally of any help to the claim of the petitioner or of the State of Jharkhand. 23. Considering the provisions of the Act in its entirely and the specific purport of section 54 thereof, it becomes quite apparent that if before bifurcation of the existing State of Bihar the orders for any supply had been made by the authorities, the supply had been made by the supplier, the bills had been submitted before the authorities and the consumption had been made entirely within the area now falling under the successor State of Jharkhand, the liability to pay the said bills would be entirely upon the successor State of Jharkhand and not upon the successor State of Bihar or its authorities, which had no concern at all with the aforesaid transactions and consumptions. 24. In the aforesaid facts and circumstances, the claim of the petitioner not being maintainable against the successor State of Bihar or its authorities, no relief can be granted to it and, accordingly, this writ petition is dismissed. However, the petitioner will be at 12 liberty to move the High Court of Jharkhand for any relief against the successor State of Jharkhand and its authorities as provided under section 27 of the Act. AFR/ MPS/ ( S. N. Hussain, J.)