Jharkhand HC says PSUs not bound to back schools

The Jharkhand High Court has ruled that government-owned companies like Bharat Coking Coal Ltd (BCCL) could not be forced to perform 'sovereign' functions like imparting education.

The ruling has major implications for all public sector companies running schools, where the staff demanded salaries on par with workers at the company's plants.

A division bench comprising Chief Justice P K Balasubramanyan and Justice Tapen Sen observed that public sector companies were mere commercial ventures of the government and their activities cannot be equated with the conduct or business of the government of a state.

The division bench delivered the judgement in response to appeals filed both by BCCL and teachers of many schools run by BCCL in Jharkhand.

The court ruling would provide a major relief to public sector companies, particularly sick PSUs. It would enable them to reduce their financial support to schools sponsored by them.

The teachers moved the court seeking fixation of pay at par with the scales of secondary teachers of schools run by the government education department or with Grade I and II clerks of BCCL. Alternatively, they demanded they be absorbed in state government-run schools.

Earlier, a single bench of the high court had directed BCCL to "implement the constitutional mandate as guaranteed by Article 39 (d) of the Constitution, even if the management of the school committees is not itself BCCL."

The single bench ruled, "BCCL is bound to implement the constitutional mandate since through these schools public interest of the state is served".

BCCL challenged the single court's judgement. Setting aside single bench order, the division bench said the single judge perhaps could not draw the subtle line of distinction between the meaning of the word 'state' when referred to in this context of an "instrumentality", and in the context where it exercises sovereign and governmental functions.

The division bench observed the predominant object of BCCL was to raise and sell coal. Imparting education is not its predominant object. Demands of staff at schools sponsored by BCCL were not acceptable.