Authority: Supreme Court of India, Civil Original Jurisdiction

Order Date: 28 September 2026

Case Overview

  • Parties: Petitioners – Bihar State Ardh Sarkari Arajpati Karamchari Maha Sangh and others; Respondents – State of Bihar and State of Jharkhand.
  • Background: The dispute stems from the Bihar Reorganisation Act, 2000, which created the State of Jharkhand and raised questions on apportionment and discharge of liabilities of employees of five erstwhile State‑owned inter‑State corporations (BSCCL, BSIDC, BSEDC, BSFDC, BPRFC). Earlier litigation, including Kapila Hingorani v. State of Bihar and a Committee chaired by Justice Dinesh Maheshwari, was addressed in the Court’s order dated 29 May 2026, which accepted many of the Committee’s recommendations and directed the States to implement them.
  • Subsequent Compliance: In August 2026, Bihar and Jharkhand filed compliance affidavits showing substantial disbursement of principal dues but noting residual cases where employees were untraceable or documentation was lacking.
  • Issues Left Open (Paragraph 38 of 29 May 2026 Order): 1) Identification and verification of remaining employees/workmen; 2) Entitlement of daily‑wage workmen to lump‑sum compensation, welfare or death benefits; 3) Determination of appropriate interest on delayed salary/wage and EPF payments.
  • Submissions: Petitioners, through senior counsel Ms. Priya Hingorani, argued that untraceable employees retain entitlement and that daily‑wage workers should receive compensation beyond the flat Rs 42.50 per day rate. They also sought statutory interest of 7.5% on salary arrears and 12% on EPF. Respondent‑States, represented by Shri Ranjit Kumar and Shri Arunabh Chowdhury, contended that most employees had been paid, that daily‑wage workers’ entitlement is limited to the Rs 42.50 rate, and that the Committee’s interest rates would impose an undue burden.

Analysis and Discussion

  • The Court reiterated that its remit is limited to the three issues left open.
  • Identification & Verification: Out of 2,274 verified employees/workmen, 2,074 have been fully paid; about 200 remain unresolved due to being untraceable or lacking documents. The Court acknowledged the extensive tracing efforts by the States and deemed them reasonable. It therefore closed the identification process, but allowed any untraceable employee or legal heir to approach the designated Nodal Officer within 12 months with requisite documents for claim processing.
  • Daily‑Wage Workers’ Entitlement: The Court recognized the dignity of daily‑wage work and rejected the notion that a static Rs 42.50 per day rate is fair over a multi‑decadal period. Rather than ordering a fresh wage‑rate recomputation, it directed a one‑time lump‑sum payment of Rs 1,00,000 to each daily‑wage employee/workman who was engaged during the relevant period (total of 598 workers, 467 already paid principal dues).
  • Interest on Delayed EPF Dues: Citing Section 7‑Q of the Employees Provident Funds and Miscellaneous Provisions Act, 1952, the Court affirmed that statutory simple interest of 12% per annum applies from the date the amount became due until actual payment. It directed both States to pay this interest on all EPF amounts covered by the statute.
  • Interest on Salary/Wage and Other Dues: While no specific statutory rate exists for salary arrears, the Court considered the prolonged deprivation and deemed a reasonable, compensatory rate of 6% per annum appropriate (lower than the Committee’s 7.5% recommendation). This rate applies to salary, retirement benefits and other monetary dues, calculated from the date each amount became due until payment.

Final Outcome

  • The identification exercise is deemed closed; untraceable claimants may apply within 12 months.
  • Each daily‑wage employee/workman is to receive a one‑time payment of Rs 1 lakh.
  • Simple interest of 12% per annum is to be paid on delayed EPF dues; simple interest of 6% per annum on delayed salary/wage and other monetary dues.
  • The States must publish, within four weeks, a comprehensive list of all employees/workmen (paid, discharged, or pending) on the official websites of the Information and Public Relations Departments and the respective parent administrative departments, updating it periodically.
  • All pending amounts, including computed interest, must be settled and disbursed to employees or legal heirs within three months of the order.

Topics: Employee Compensation, Interest on Delayed Payments, Daily‑Wage Worker Rights