State Must Be Made Party If Relief Is Sought Against Public Exchequer; Impleading Officer Or Dept Not Enough : Supreme Court

The Supreme Court has observed that a State could not be saddled with financial liability without being formally impleaded as a party.

“The impleadment of an officer or a department, without formally arraying the State as a juristic entity under Article 300 of the Constitution, renders the petition fundamentally defective when substantive relief is sought against the public exchequer.”, observed a bench of Justice Dipankar Datta and Justice Sheel Nagu, while setting aside the Bombay High Court's decision to fasten a liability of an absorption of a lecturer to a 'no grant in aid' college upon the state government without impleading it.

Respondent No.1 was appointed as a Commerce Lecturer at a college run by a society during the 1990–91 academic session. The college operated strictly on a “no grant-in-aid” basis. Following earlier episodes of termination and reinstatement, Respondent No.1 was suspended and subjected to a departmental inquiry. After obtaining the University's permission, the management terminated his services on August 17, 1999. The University also permitted the college to close its Commerce Faculty from the 1999–2000 academic session due to a shortage of students.

Respondent No.1 challenged his termination before the University and College Tribunal, which dismissed his appeal in April 2000. The Bombay High Court subsequently set aside the termination and directed the Joint Director of Higher Education to include him in the list of surplus lecturers and absorb him in another college. It also directed the management to pay him ₹10 lakh as compensation in lieu of arrears.

The Maharashtra Government challenged the absorption direction before the Supreme Court on the ground that the direction for absorption cannot be passed without impleading it as a party to the proceedings.

Finding force in the government's contention, the judgment authored by Justice Datta set aside the direction of an absorption noting that an officer cannot substitute for the State when relief imposes direct financial and administrative liability on the government.

“The belated impleadment of the “Joint Director” does not cure the fundamental defect of non-joinder of the State of Maharashtra. An officer or a department of the State cannot be equated with the State itself for the purposes of fastening sovereign or financial liability. The High Court thus grossly erred in fastening liability for absorption upon the appellant without its formal impleadment as a necessary party.”, the Court held.

Nevertheless, the Court noted that since the Respondent No.1 had remained out of employment since 1999 and attained superannuation on November 30, 2025, during the pendency of the proceedings. Observing that leaving him without further support would result in a “travesty of justice,” it invoked Article 142 to mould the relief.

The State was directed to pay him an additional ₹10 lakh within eight weeks, in full and final settlement of all his claims. The ₹10 lakh already paid by the college management will remain undisturbed.

The Court clarified that this direction was based on the unique facts of the case and would not be treated as a precedent.