The Supreme Court on September 28, 2026, directed the States of Bihar and Jharkhand to make further payments to employees and workmen of five erstwhile State-owned corporations whose salary, provident fund and other monetary dues remained unresolved for several decades.
A Bench of Justice Vikram Nath and Justice Sandeep Mehta passed the directions while deciding the remaining issues in Bihar State Ardh Sarkari Arajpati Karamchari Maha Sangh and Others v. State of Bihar and Others. The Court examined compliance with its earlier order dated May 29, 2026, and dealt specifically with untraced employees, daily-wage workers and interest on delayed payments.
The proceedings arose from the reorganisation of the erstwhile State of Bihar under the Bihar Reorganisation Act, 2000, following the creation of Jharkhand. The dispute concerned the apportionment and payment of liabilities and service-related dues of employees and workmen associated with five State-owned corporations — Bihar State Construction Corporation Ltd., Bihar State Industrial Development Corporation Ltd., Bihar State Electronic Development Corporation Ltd., Bihar State Forest Development Corporation Ltd. and Bihar State Panchayati Raj Financial Corporation Ltd.
The dispute had a long history, including the proceedings in Kapila Hingorani v. State of Bihar and the work of a Committee headed by former Supreme Court Judge Justice Dinesh Maheshwari. On May 29, 2026, the Court considered the Committee’s Final Report and accepted its recommendations to the extent specified.
Following that order, Bihar and Jharkhand filed compliance affidavits in August 2026. The affidavits showed that out of 2,274 verified employees and workmen, dues had been fully disbursed to 2,074, while around 200 cases remained pending because some claimants could not be traced or had not completed the required documentation and verification. The present proceedings were confined to these remaining claims, the entitlements of daily-wage workers, and interest on delayed salary, provident fund and other monetary dues.
The Court found that the States had made reasonable efforts to trace the remaining employees and legal heirs. While closing the identification exercise, it gave untraced claimants 12 months to approach the concerned Nodal Officer with the required documents, after which their claims would be verified and payable amounts released according to law.
The Court held that the uniform rate of ₹42.50 per day used for calculating daily-wage dues over the years could not reasonably reflect changes in the value of labour and wage structures. To avoid further delay from fresh individual calculations, it directed Bihar and Jharkhand to pay a one-time sum of ₹1 lakh to each concerned daily-wage employee/workman.
For delayed EPF dues under Section 7-Q of the EPF Act, the Court directed 12% simple interest per annum from the date the amount became due until actual payment.
For delayed salary, wages and other monetary dues excluding EPF, the Court held that reasonable interest was warranted because employees had been deprived of money lawfully payable to them for exceptionally long periods.
The Court observed:
“Interest, in its ordinary legal sense, represents compensation for the deprivation of the use of money to which a person is otherwise lawfully entitled.”
Considering the circumstances, the Bench fixed 6% simple interest per annum on salary/wage arrears and other monetary dues, from the date they became payable until actual payment. The States were directed to calculate and disburse this interest along with the principal dues within three months.
The liability of each State is to be determined in accordance with the mechanism for apportionment already approved by the Supreme Court in its May 29, 2026 order.
The Supreme Court directed Bihar and Jharkhand to complete the pending implementation of its earlier directions, publish updated details concerning employees and their claims, and provide information regarding pending cases and the concerned Nodal Officers.
The States were further directed to pay ₹1 lakh to each eligible daily-wage employee/workman, 12% annual interest on applicable delayed EPF dues, and 6% annual interest on delayed salary, wages and other monetary entitlements. The writ petition was accordingly disposed of.
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
