The Supreme Court took a significant step toward resolving a decades-old dispute involving unpaid salaries, retirement benefits and other dues of employees of five erstwhile Bihar government-owned corporations. While accepting several recommendations made by a committee headed by former Supreme Court judge Justice Dinesh Maheshwari, the Court held that certain key issues, including compensation to affected families and interest on delayed payments, would require further judicial consideration.
The matter concerns thousands of employees whose dues remained unsettled following the bifurcation of Bihar and the creation of Jharkhand in 2000.
Background of the Case
The dispute arose after assets and liabilities of several state-owned corporations were left unresolved following the enactment of the Bihar Reorganisation Act, 2000. As a result, employees of five corporations allegedly remained without salaries, pensionary benefits and other lawful entitlements for years.
The Court noted that the controversy had evolved beyond a financial dispute between two states and had acquired a humanitarian dimension, with allegations of severe hardship, deprivation and deaths among affected employees and their families.
The petitioners approached the Supreme Court seeking directions to complete the division of liabilities between Bihar and Jharkhand and ensure payment of outstanding dues.
To address the long-standing dispute, the Supreme Court had constituted a committee under Justice Dinesh Maheshwari (Retd.).
The committee found that out of 2,274 verified employees and workers, dues had already been paid to 2,017 individuals. Only a small number of cases remained pending due to document verification or because employees or their legal heirs could not be traced.
The report also examined issues relating to pay revisions, provident fund dues, compensation claims and interest on delayed payments.
Accepting a substantial part of the committee's recommendations, the bench observed that the allocation of liabilities between Bihar and Jharkhand should be governed by the formula already worked out through the process supervised by the Union Government.
The Court also agreed that employees could not claim benefits under later Pay Revision Commissions that were never formally adopted by the concerned corporations before they became defunct.
On provident fund dues, the Court endorsed the committee's recommendation that eligible employees or their legal heirs must receive their lawful entitlements through a structured mechanism.
“The determination, computation and disbursal of dues payable towards Employees’ Provident Fund contributions and allied statutory benefits shall be undertaken in accordance with the structured mechanism recommended by the Committee,” the bench directed.
However, the Court said some important questions still remain unresolved.
These include the identification of certain remaining claimants, entitlement of daily-wage workers and families of deceased employees to compensation or welfare support, and the issue of interest on delayed payment of salaries, retirement benefits and provident fund dues.
The committee had recommended interest at 7.5% per annum on delayed salary payments and 12% per annum on delayed provident fund dues, but the Court has not yet given a final ruling on these claims.
The Supreme Court accepted key recommendations relating to liability sharing, pay revision claims and provident fund payments, and directed Bihar and Jharkhand to comply with those findings.
At the same time, it kept issues relating to compensation, welfare support, unpaid wage claims and interest for further adjudication. The Court directed both states to file compliance affidavits and listed the matter for further hearing on September 1, 2026, as a part-heard case.
Case Details
Case Title: Bihar State Ardh Sarkari Arajpati Karamchari Maha Sangh and Others v. State of Bihar and Others
Case Number: Writ Petition (Civil) No. 932 of 2022
Judges: Justice Vikram Nath and Justice Sandeep Mehta
Decision Date: May 29, 2026
