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The Supreme Court on Monday (September 28) has directed the States of Bihar and Jharkhand to pay a one-time sum of ₹1 lakh to each concerned daily-wage employee/workman of five defunct State-owned corporations, while ordering 12% simple interest per annum on delayed EPF dues and 6% interest on delayed salary/wages and other monetary dues.

“…we deem it appropriate to direct the States of Bihar and Jharkhand to pay, in addition to the amounts already determined and disbursed, a one-time sum of Rs.1,00,000/- to each of the concerned daily-wage employees/workmen employed by the concerned Corporation during the relevant period.”, a bench of Justice Vikram Nath and Justice Sandeep Mehta ordered, while bringing a quietus to the dispute, which traces its origins to the Bihar Reorganisation Act, 2000, and concerns liabilities owed to employees and workmen of five defunct State-owned corporations following the creation of Jharkhand.

The proceedings arose from the reorganisation of the erstwhile State of Bihar under the Bihar Reorganisation Act, 2000, following which Jharkhand was carved out as a separate State. The reorganisation gave rise to disputes concerning the apportionment and discharge of liabilities and service-related claims of employees/workmen of five State-owned inter-State 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 litigation had its genesis in earlier proceedings including Kapila Hingorani v. State of Bihar and subsequent proceedings concerning inter-State liabilities.

The Supreme Court had, by an order dated May 29, 2026, considered the Final Report of a Committee headed by former Supreme Court judge Justice Dinesh Maheshwari and accepted its recommendations to the extent indicated in that order. Pursuant to the directions, Bihar and Jharkhand filed compliance affidavits in August 2026, reporting disbursement of principal dues to identified and verified employees/workmen, while certain claims remained pending because claimants were untraceable or requisite documents and verification formalities were incomplete. The present proceedings concerned three issues left open by the May 29 order: identification and verification of remaining employees/workmen, entitlements of daily-wage workers and legal heirs, and interest on delayed salary, retiral and provident fund dues. Pasted text

The Court has ordered payment of Rs. 1 lakh plus applicable interest to the eligible workmen, while rejecting the State's calculation of the dues based on a flat rate of Rs. 42.50 per day for calculating workmen dues from 1992 onwards. The Court noted that the fact that "the concerned workmen were engaged on a daily-wage basis cannot, by itself, justify a computation which effectively disregards the passage of time and the wages applicable during the respective periods of their engagement."

"Their status as daily-wage workmen may undoubtedly distinguish the nature of their engagement from that of regular employees, however, it cannot furnish a basis for treating the services rendered by them as having a fixed and unvarying monetary value irrespective of the period during which such services were rendered...A fixed daily wage of Rs.42.50, adopted as a uniform basis for computing the dues of workmen over a prolonged period extending from 1992 onwards, cannot, in our view, constitute a fair and reasonable measure of their monetary entitlement", the Court said.

Further, upon being informed that out of 2,274 verified employees/workmen, dues had been fully disbursed to 2,074, leaving approximately 200 cases pending primarily because claimants could not be traced or requisite documentation was unavailable, the Court closed the general identification and verification exercise, but preserved the claims of untraced employees and legal heirs.

Such claimants have been given 12 months from the date of the judgment to approach the concerned Nodal Officer with the requisite documents. Upon verification, their claims are to be processed and amounts found due are to be disbursed.

“…we deem it appropriate, at this stage, to put a quietus to the matter insofar as the claims of the untraceable employees/workmen are concerned. However, such closure shall not operate to extinguish or otherwise prejudice their underlying entitlement. The concerned employees/workmen, or their legal heirs, shall, within a reasonable period of time which is fixed at 12 months from the date of this order, be at liberty to approach the concerned Nodal Officer appointed for the respective Corporation, along with the requisite documents for verification, and upon such verification, their claims shall be processed and the amounts found due shall be disbursed in accordance with law.”, the Court said.

Also, the Court clarified that the workmen who have been disbursed with their dues would receive Rs. 1 lakh along with applicable interest in addition to the amount they would have received, provided they were engaged during the relevant period

"In light of the aforesaid discussion, we deem it appropriate to summarise the directions issued hereinabove as follows:-

a. Though the States of Bihar and Jharkhand have substantially complied with the directions issued by this Court in paragraph 37 of the order dated 29th May, 2026, as per their compliance affidavits, certain aspects of such implementation continue to remain pending. The respective States shall, therefore, take all necessary steps to complete the implementation of the aforesaid directions in respect of the cases which remain pending and bring the same to its logical conclusion, in accordance with law.

b. The exercise for identification and verification of the remaining employees/workmen shall stand closed. The untraced/unverified employees/workmen or their legal heirs, as the case may be, upon being traced or upon otherwise gaining knowledge of these proceedings would be at liberty to approach the concerned Nodal Officer appointed for the respective Corporation, within a period of 12 months from the date of this order, with the requisite documents for verification, whereupon their claims shall be duly processed and the amounts found payable shall be disbursed in accordance with law.

c. With a view to ensuring transparency and facilitating verification of the claims of the employees/workmen of the erstwhile defunct Corporations, the States of Bihar and Jharkhand shall:

(i) compile and publish, in the public domain, updated particulars of all employees/workmen, including those whose dues have been paid or whose liability has otherwise been discharged and those whose claims remain pending;

(ii) in respect of employees/workmen whose dues have been paid or liability discharged, publish their name, designation, period of service, amount payable, amount disbursed, date of disbursement and such other particulars as may be relevant for identification and verification of the claim;

(iii) in respect of employees/workmen whose claims remain pending on account of their being untraced, unverified or for want of requisite documents, indicate the present status of the claim, the reason for pendency and the documents or steps required for its processing, together with the contact particulars of the concerned Nodal Officer;

(iv) post the aforesaid information on the official websites of the Information and Public Relations Department of the States, as also on the website of the concerned parent Administrative Department of the erstwhile Corporations; and

(v) complete the aforesaid publication within four weeks from the date of this order and thereafter update the information periodically to reflect any subsequent verification, payment or discharge of liability.

d. The States of Bihar and Jharkhand are directed to pay a one-time sum of Rs.1,00,000/- to each of the concerned daily-wage employees/workmen who were engaged during the relevant period.

e. The States of Bihar and Jharkhand shall ensure payment of simple interest at the rate of 12% per annum on the delayed EPF dues, and at the rate of 6% per annum on the delayed salary, wages and other monetary entitlements, for the period commencing from the date on which the respective amounts became due and payable until the date of their actual payment.

f. The liability of the respective State shall be determined in accordance with the mechanism already approved by this Court vide its order dated 29th May, 2026."

The writ petition was disposed of in the aforesaid terms.

Cause Title: BIHAR STATE ARDH SARKARI ARAJPATI KARAMCHARI MAHA SANGH AND OTHERS VERSUS STATE OF BIHAR AND OTHERS

Citation : 2026 LiveLaw (SC) 995

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Appearance:

For Petitioner(s) : Ms. Priya Hingorani, Sr. Adv. Ms. Shweta Hingorani, Adv. Mr. Naseem Ahmed, Adv. Ms. Aditi Ladda, Adv. Mr. Chandra Bhushan Prasad, AOR Mr. Sudesh Desai, Adv.

For Respondent(s) : Mr. Vikramjit Banerjee, A.S.G. Mr. Ranjit Kumar, Sr. Adv. Mr. Arunabh Chowdhury, Sr. Adv. Mr. Manish Kumar, AOR Mr. Divyansh Mishra, Adv. Mr. Kumar Saurav, Adv. Ms. Pallavi Langar, AOR Ms. Pragya Baghel, Adv. Mr. Sujeet Kumar Chaubey, Adv. Ms. Anushka Raghunath, Adv. Mr. Piyush Beriwal, Adv. Mr. Chinmayee Chandra, Adv. Mr. S.k. Gupta, Adv. Mr. Rajesh Kumar Singh, Adv. Mr. B.k. Satija, Adv. Mr. Arvind Kumar Sharma, AOR Dr. Arun Kumar Yadav, Adv. Mr. Pradeep Kumar Yadav, Adv. Ms. Anjale Kumari, Adv. Ms. Chhaya, Adv. Mr. Sanjeev Malhotra, AOR Mr. Bhaskar Aditya , AOR

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