2026 INSC 1061 1

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL ORIGINAL JURISDICTION

WRIT PETITION (CIVIL) NO(S). 932 OF 2022

BIHAR STATE ARDH

SARKARI ARAJPATI

KARAMCHARI MAHA SANGH

AND OTHERS ….PETITIONER(S)

VERSUS

STATE OF BIHAR

AND OTHERS ….RESPONDENT(S)

J U D G M E N T

Mehta, J.

For ease of reference, this judgment is divided into

the following sections:

INDEX

A. BACKGROUND ............................................................................. 2

6.1. THE APPORTIONMENT AND FIXATION OF THE INTER -SE LIABILITY OF THE

RESPECTIVE STATES ............................................................................. 5

6.2. PAY REVISION COMMISSION ............................................................ 7

6.3. THE DETERMINATION , COMPUTATION AND DISBURSAL OF DUES PAYABLE

TOWARDS EMPLOYEES’ PROVIDENT FUND CONTRIBUTIONS ......................... 8

B. SUBMISSIONS ON BEHALF OF THE PETITIONERS ..................... 12

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WRIT PETITION (CIVIL) NO(S). 932 /2022

I. THE IDENTIFICATION AND VERIFICATION OF THE REMAINING

EMPLOYEES/WORKMEN ....................................................................... 12

II. DAILY-WAGERS’ ENTITLEMENT AND WELFARE/DEATH COMPENSATION .. 14

III. ENTITLEMENT TO AND RATE OF INTEREST ON DELAYED PAYMENTS ........ 16

C. SUBMISSIONS ON BEHALF OF THE RESPONDENT -STATES ....... 17

I. THE IDENTIFICATION AND VERIFICATION OF THE REMAINING

EMPLOYEES/WORKMEN ....................................................................... 17

II. DAILY-WAGERS’ ENTITLEMENT AND WELFARE/DEATH COMPENSATION .. 19

III. ENTITLEMENT TO AND RATE OF INTEREST ON DELAYED PAYMENTS ........ 22

D. ANALYSIS AND DISCUSSION ...................................................... 24

I. THE IDENTIFICATION AND VERIFICATION OF THE REMAINING

EMPLOYEES/WORKMEN ....................................................................... 24

II. DAILY-WAGERS’ ENTITLEMENT AND WELFARE/DEATH COMPENSATION .. 26

III. ENTITLEMENT TO AND RATE OF INTEREST ON DELAYED PAYMENTS ........ 30

a. Interest on delayed payment of EPF dues ............................... 30

b. Interest on delayed payment of salary/wages ........................ 34

E. CONCLUSION AND DIRECTIONS ................................................ 41

1. Heard.

A. BACKGROUND

2. The present proceedings have their genesis in

the reorganisation of the erstwhile State of Bihar

pursuant to the Bihar Reorganisation Act, 2000. The

reorganisation of the erstwhile State of Bihar,

pursuant to which the State of Jharkhand came to be

constituted, gave rise, inter alia, to questions

concerning the apportionment and discharge of

liabilities, dues and service-related claims of the

employees/workmen of five State-owned inter-State

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WRIT PETITION (CIVIL) NO(S). 932 /2022

corporations, namely, Bihar State Construction

Corporation Ltd.

1; Bihar State Industrial

Development Corporation Ltd.

2; Bihar State

Electronic Development Corporation Ltd.

3; Bihar

State Forest Development Corporation Ltd.

4; and

Bihar State Panchayati Raj Financial Corporation

Ltd.

5. The controversy, which has its roots in the

statutory reorganisation, has since traversed a long

and chequered course, necessitating successive

rounds of judicial intervention and administrative

consideration.

3. The history of the litigation, including the

proceedings in Kapila Hingorani v. State of

Bihar

6, the subsequent adjudication in relation to

the inter-State liabilities, and the constitution and

functioning of the Committee under the

Chairmanship of Hon’ble Mr. Justice Dinesh

Maheshwari, Judge (Retd.), Supreme Court of India,

7

has been noticed and dealt with in extenso by this

Court in its order dated 29

th May, 2026. In view of the

1

For Short, “BSCCL”.

2

For Short, “BSIDC”.

3

For Short, “BSEDC”.

4

For Short, “BSFDC”.

5

For Short, “BPRFC”.

6

(2003) 6 SCC 1.

7

Hereinafter, referred to as “the Committee”.

4

WRIT PETITION (CIVIL) NO(S). 932 /2022

detailed consideration already undertaken therein,

we do not deem it necessary to once again

recapitulate the entire course of the litigation. The

said order constitutes the backdrop against which

the issues presently arising for consideration are

required to be examined.

4. By the order dated 29

th May, 2026, this Court

considered the Final Report dated 30

th April, 2026

submitted by the Committee, and accepted its

recommendations to the extent indicated in

paragraph 37 of the said order. The effect of the said

order was to bring finality to the matters in respect of

which the recommendations of the Committee were

accepted, leaving no room for those issues to be

reopened in future.

5. Pursuant to the order dated 29

th May, 2026, the

States of Bihar and Jharkhand have filed their

respective compliance affidavits in August, 2026,

reporting compliance with the directions issued by

this Court and the disbursement of the principal

dues to the identified and verified

employees/workmen of the five Corporations. The

affidavits set out the corporation-wise position of

payments made by the respective States, while also

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WRIT PETITION (CIVIL) NO(S). 932 /2022

identifying the cases which remain pending on

account of the claimants being untraceable, absence

of requisite documentation or other verification

formalities.

6. The respective compliance affidavits filed by the

States of Bihar and Jharkhand disclose the following

position with regard to the implementation of the

directions issued by this Court in paragraph 37 of the

order dated 29

th May, 2026:-

6.1. The apportionment and fixation of the inter-

se liability of the respective States

6.1.1. Bihar State Construction Corporation

Ltd.: Against the assessed liability of Rs.97.50 crore

in respect of all 1,256 employees/workmen, the State

of Bihar has disbursed Rs.84.10 crore to 1,054

employees/workmen, comprising 587 regular and

467 daily-wage employees/workmen. The State of

Jharkhand has transferred Rs.36.01 crore out of its

allotted liability of Rs.38.41 crore to the State of Bihar

for disbursement to the verified employees/workmen.

6.1.2. Bihar State Industrial Development

Corporation Ltd.: The State of Bihar has paid

Rs.25.67 crore towards the principal dues of 403

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WRIT PETITION (CIVIL) NO(S). 932 /2022

employees/workmen of Bihar Spun Silk Mill,

Bhagalpur and Bihar Scooters Ltd., Fatuha. The

State of Jharkhand has disbursed Rs.5.30 crore in

respect of 163 allotted employees/workmen of its

units, of whom 136 have been paid, while 25 were

found to have no outstanding dues.

6.1.3. Bihar State Electronic Development

Corporation Ltd.: The State of Bihar has disbursed

the salary arrears payable to 67 employees/workmen

out of the total 70 employees/workmen of Beltron

Video Systems Ltd.

8, Hajipur. The State of Jharkhand

has transferred Rs.7.22 crore to BSEDC towards its

liability in respect of 61 out of 63

employees/workmen allotted to it from BVSL, Ranchi

and Beltron Mining Systems Ltd., Dhanbad.

6.1.4. Bihar State Forest Development

Corporation Ltd.: The State of Bihar has paid the

outstanding dues of 201 out of 203

employees/workmen. The State of Jharkhand has

discharged its liability towards 36 allotted

employees/workmen of the subsidiary units of Bihar

8

For Short, “BVSL”.

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WRIT PETITION (CIVIL) NO(S). 932 /2022

Solvents Chemicals Ltd. and Bihar State Tanin

Extract Ltd.

6.1.5. Bihar State Panchayati Raj Financial

Corporation Ltd.: The State of Bihar has paid the

principal dues of 90 out of 103 employees/workmen.

The State of Jharkhand has disbursed Rs.3.65 crore

in respect of 21 out of 26 allotted

employees/workmen, while three

employees/workmen have been absorbed into

regular pensionable service.

6.2. Pay Revision Commission

6.2.1. The respective compliance affidavits

further disclose that the outstanding dues of the

employees/workmen were computed and disbursed

with reference to the pay scales in force and adopted

by the respective Corporations prior to their closure.

While the dues pertaining to BSCCL, BSIDC, BSEDC

and BPRFC were computed on the basis of the 4

th Pay

Revision Commission, those pertaining to BSFDC

were computed in accordance with the 5

th Pay

Revision Commission. However, insofar as the

defunct subsidiary units of BSFDC, namely, Bihar

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WRIT PETITION (CIVIL) NO(S). 932 /2022

Solvent and Chemicals Limited

9 and Bihar State

Tannin Extract Limited

10, are concerned, the dues

were computed on the basis of the 4

th Pay Revision

Commission, as these units had not adopted the 5

th

Pay Revision Commission prior to becoming non-

functional.

6.3. The determination, computation and

disbursal of dues payable towards Employees’

Provident Fund contributions

6.3.1. Bihar State Construction Corporation

Ltd.: Out of 1,054 identified employees, comprising

587 regular employees and 467 daily-wage workmen,

the Employees’ Provident Fund

11 contributions

representing both the employer’s and employees’

shares have been directly disbursed to 1,035

employees/legal heirs. Disbursement in respect of

the remaining 19 employees/legal heirs remains

pending on account of deficiencies such as non -

production of death/succession certificates or

discrepancies in bank account particulars.

9

For Short, “BSCL”.

10

For Short, “BSTEL”.

11

For Short, “EPF”.

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WRIT PETITION (CIVIL) NO(S). 932 /2022

6.3.2. Bihar State Industrial Development

Corporation Ltd.: In respect of Bihar Spun Silk Mill,

Bhagalpur, an exempted establishment, the EPF

amounts deducted from the employees’ dues have

been directly disbursed along with the salary arrears

to 341 out of 351 employees, while the accumulated

pension corpus of Rs.1,14,77,756/- was deposited

with the EPF Office, Bhagalpur, in 2025. In respect

of Bihar Scooters Ltd., Fatuha, the EPF and pension

corpus of Rs.89,46,858/ -, pertaining to 62

employees, had been deposited with the EPF Office,

Patna. Pursuant to the order dated 29

th May, 2026,

BSIDC has sought refund of the said amount, vide

letter dated 20

th August, 2026, to enable its direct

disbursement to the concerned employees/legal

heirs.

6.3.3. Bihar State Electronics Development

Corporation Ltd.: In respect of Beltron Video

Systems Ltd., Hajipur, the EPF contributions,

comprising both the employer’s and employees’

shares, have been directly disbursed to the

employees whose salary dues have been cleared. In

respect of Beltron Video Systems Ltd., Ranchi and

Beltron Mining Systems Ltd., Dhanbad, falling to the

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WRIT PETITION (CIVIL) NO(S). 932 /2022

share of Jharkhand, the requisite employer’s and

employees’ contributions have been directly

disbursed, with compliance completed in respect of

61 out of 63 employees. The amounts pertaining to

the two untraced employees, Late Bindu Urraon and

Late Sheila Rani Ghatak, have been retained in

earmarked treasury accounts.

6.3.4. Bihar State Forest Development

Corporation Ltd.: In respect of the parent

corporation, EPF contributions, including both

shares, have been directly disbursed to all 201

employees. As regards its defunct subsidiary units,

Bihar Solvent and Chemicals Ltd. and Bihar State

Tannin Extract Ltd., the employees’ contributions

were directly paid to the employees, while the

employer’s contribution is stated to be in the process

of being directly disbursed to the concerned

employees.

6.3.5. Bihar State Panchayati Raj Financial

Corporation Ltd.: BPRFC, being exempt from the

Employees’ Provident Funds and Miscellaneous

Provisions Act, 1952

12, historically maintained its

12

Hereinafter, referred to as “the Act”.

11

WRIT PETITION (CIVIL) NO(S). 932 /2022

own Private Provident Fund Trust. Since no employee

contributions were deducted or deposited during the

period of its non-functioning, the State has computed

the employer’s contribution at 12% of basic salary for

the 103 Bihar-allocated employees, amounting to

Rs.15,43,320/-. Of this amount, Rs.13,61,248/- has

been directly disbursed to 90 traced employees and

their successors.

7. We have taken note of the position emerging

from the compliance affidavits filed by the respective

States. It is apparent therefrom that, while

substantial compliance with the directions issued by

this Court has been reported, certain aspects of the

implementation continue to remain pending and are

being attended to by the respective States. We expect

the respective States to take all necessary steps to

complete the implementation of the directions issued

by this Court at the earliest and bring the pending

aspects to their logical conclusion.

8. At the same time, it is necessary to bear in mind

that, by paragraph 38 of its order dated 29

th May,

2026, this Court had identified following three issues

which had not been conclusively resolved and

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WRIT PETITION (CIVIL) NO(S). 932 /2022

accordingly left open for determination by this

Court:-

“i. The identification and verification of the

remaining employees/workmen and/or the legal

heirs of deceased employees/workmen in cases

where claims are yet to attain finality;

ii. The entitlement of the daily-wage workmen, as

also the legal heirs of deceased

employees/workmen, to lump-sum compensation

and/or any other form of monetary, rehabilitative

or welfare support including payment of due wages

and other consequential admissible benefits; and

iii. The entitlement to, and determination of,

appropriate interest on delayed payment of

salaries/wages, retiral dues, provident fund

amounts and other consequential emoluments.”

9. It is against the aforesaid backdrop that the

matter has now fallen for consideration before this

Court in respect of the three issues so left open for

determination.

B. SUBMISSIONS ON BEHALF OF THE

PETITIONERS

i. The identification and verification of the

remaining employees/workmen

10. Ms. Priya Hingorani, learned senior counsel

appearing for the petitioners submitted that the mere

fact that certain employees/workmen are presently

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WRIT PETITION (CIVIL) NO(S). 932 /2022

untraceable, or that their claims remain pending for

want of requisite documents or completion of

formalities, cannot operate to extinguish the

underlying entitlements otherwise found due to

them. It was contended that the Committee itself has

recorded that, in these residual cases, there is no

substantive dispute as to the existence of the

employees’ entitlements, the impediment being

essentially one of identification, verification or

completion of the requisite formalities.

11. Learned senior counsel urged that the amounts

found payable in respect of such untraced

employees/workmen or their legal heirs ought to be

finally ascertained and earmarked separately,

preferably by placing the same in an appropriate

escrow or designated corpus. Such earmarking would

preserve the amounts against the eventual

establishment of the claimant’s entitlement and

enable disbursement to the concerned

employee/workman or his l egal heir(s) upon

completion of the requisite formalities, without

compelling the claimants to re -establish an

entitlement which has already been crystalized.

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WRIT PETITION (CIVIL) NO(S). 932 /2022

ii. Daily-Wagers’ Entitlement and Welfare/Death

Compensation

12. Learned senior counsel contested the

applicability of the doctrine of “no work, no pay” to

the daily-wagers in question. It was submitted that

the Bihar State Construction Corporation Ltd.

continued to treat the concerned daily wagers as its

workmen and that their services were not formally

discontinued during the relevant period. It was only

in October, 2015 that formal orders of termination

came to be issued, in circumstances where BSCCL

had ceased to function and was itself facing severe

financial distress. It was contended that the absence

of work during the intervening period was, therefore,

not occasioned by any refusal, abandonment or

omission on the part of the workmen, but was the

direct consequence of the BSCCL’s non-functioning

and the larger administrative failure surrounding the

affairs of the erstwhile Corporation.

13. It was further submitted that the monetary

entitlement of the daily-wagers cannot be determined

by mechanically applying the historical flat rate of

Rs.42.50 per day, irrespective of the period for which

the entitlement accrued. The computation must

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WRIT PETITION (CIVIL) NO(S). 932 /2022

necessarily take into account the actual period of

service rendered by each workman, the date of his

superannuation or cessation of service, and the

statutory wage rates applicable during the

corresponding periods. The mere cessation of

operations of BSCCL, for reasons wholly

unconnected with the conduct of the workmen

cannot be permitted to operate to their prejudice or

to freeze their entitlements at an arbitrary wage rate

fixed by the authorities.

14. Learned senior counsel further submitted that

the absence of specific statutory service rules

governing the claims in question cannot, by itself,

denude this Court of its jurisdiction to mould an

appropriate public-law remedy where the

circumstances disclose a prolonged and

unconstitutional deprivation of a fundamental right,

i.e., appropriate dignified wages. It was contended

that the extraordinary delay in recognising and

discharging the legitimate monetary entitlements of

the workmen, extending over several decades, must

be viewed in the context of their fundamental right to

life and dignity guaranteed under Article 21 of the

Constitution of India. It was thus urged that this

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WRIT PETITION (CIVIL) NO(S). 932 /2022

Court, in exercise of its constitutional jurisdiction,

may award quantified monetary compensation as a

public-law remedy for the deprivation occasioned by

the State and its instrumentalities.

iii. Entitlement to and rate of interest on delayed

payments

15. Learned senior counsel submitted that the

recommendation of the Committee providing for

interest at the rate of 7.5% per annum on delayed

salaries and 12% per annum on delayed Employees

Provident Fund

13 dues does not, by itself, conclude

the question of the period for which interest is liable

to be paid. It was contended that the accrual of

interest must bear a direct nexus to the period during

which the employees/workmen were deprived of the

monies lawfully due to them and, consequently, must

commence from the date on which the respective

salary, wage, retiral benefit or provident fund dues

became payable, rather than from any subsequent

date adopted for the purposes of computation.

16. Insofar as EPF dues are concerned, it was

further submitted that the statutory interest

13

For short, “EPF”.

17

WRIT PETITION (CIVIL) NO(S). 932 /2022

mandated under Section 7-Q of the Act, is required

to be duly computed for the relevant period and

incorporated in the final amount payable to the

concerned employee/workman or his legal heir(s).

C. SUBMISSIONS ON BEHALF OF THE

RESPONDENT -STATES

17. Per Contra, Shri Ranjit Kumar, learned senior

counsel appearing for the State of Bihar, and Shri

Arunabh Chowdhury, learned senior counsel

representing the State of Jharkhand, vehemently and

fervently opposed the submissions advanced by the

learned counsel appearing for the petitioners.

i. The identification and verification of the

remaining employees/workmen

18. Learned senior counsel for the States of Bihar

and Jharkhand submitted that, out of the total 2,274

verified employees/workmen pertaining to the five

defunct State-owned corporations, approximately

2,074 have been successfully traced, verified and

paid their lawful principal and statutory dues.

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WRIT PETITION (CIVIL) NO(S). 932 /2022

19. It was, however, submitted that around 200

residual cases continue to remain unresolved, either

on account of the concerned employees/workmen

being untraceable or for want of the requisite

documentation necessary for verification and

disbursement of their dues. In order to trace such

employees/workmen and their legal heirs, the State

administrations, in coordination with the respective

managements of the concerned Corporations, have

undertaken extensive and repeated efforts, including

deputing special messengers to the last -known

permanent addresses of the employees/w orkmen,

issuing registered post/speed post communications,

coordinating with the concerned district authorities

and representatives of labour unions, and publishing

repeated public notices in prominent regional and

national newspapers.

20. Learned senior counsel contended that these

residual cases involve no substantive dispute as to

the underlying entitlement, but remain pending for

want of tracing the employees/workmen concerned

or completion of requisite formalities. It was

accordingly submitted that such claims may be

treated as closed for administrative purposes, while

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WRIT PETITION (CIVIL) NO(S). 932 /2022

leaving it open to the concerned claimants to avail

such appropriate remedy as may be available to them

in accordance with law.

ii. Daily-Wagers’ Entitlement and Welfare/Death

Compensation

21. Shri Ranjit Kumar submitted that the

concerned daily-wage employees/workmen were

engaged exclusively by the Bihar State Construction

Corporation Ltd. and that their engagement was

governed by the terms and conditions applicable to

such daily-wage employment. Adverting to, and

endorsing, the findings of the Committee, it was

contended that mere continuation of such

engagement does not confer upon a daily -wage

employee/workman any vested right to claim the

benefit of subsequent revisions in the minimum

wage. The dues of the concerned daily -wage

employees/workmen have rightly been computed

with reference to the daily-wage rate of Rs.42.50 per

day.

22. As regards the quantum of liability, it was

submitted that, upon finalisation of the

computations, an aggregate liability of Rs.17.92 crore

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WRIT PETITION (CIVIL) NO(S). 932 /2022

has been determined in respect of 598 daily-wage

employees/workmen of the Bihar State Construction

Corporation Ltd. The said employees/workmen were

allocated between the two successor States on

location basis, with 270 employees falling to the

share of the State of Bihar and 328 to the State of

Jharkhand. It was further submitted that, pursuant

to the compliance exercise undertaken thereafter, the

principal dues payable to 467 daily -wage

employees/workmen have already been disbursed.

As regards the remainin g daily-wage

employees/workmen, the requisite steps for

disbursement are being undertaken upon the

respective claimants, or their legal heirs, furnishing

the requisite documents and completing the

necessary verification formalities.

23. Shri Arunabh Chowdhury submitted that no

issue arises for consideration in respect of daily-wage

employees/workmen insofar as the units allotted to

the State of Jharkhand are concerned, except as

mentioned above.

24. Learned senior counsel appearing for the State

of Bihar as well as the State of Jharkhand opposed

the claim for payment of lump-sum compensation in

21

WRIT PETITION (CIVIL) NO(S). 932 /2022

the event of death of an employee/workman while in

service.

25. It was submitted that the service rules

governing the concerned Corporations contain no

provision for payment of any such compensation,

either to the family of a regular employee or of a daily-

wage employee/workman. In absence of any

statutory or service-rule provision conferring such an

entitlement, a direction for lump-sum compensation

thereof would lack any legal foundation and would,

in any event, impose an unjustified additional

financial burden upon the public exchequer.

26. Shri Ranjit Kumar submitted that any claim for

compensation on the ground that an

employee/workman died of starvation owing to non-

payment of his dues would necessarily require

determination of the cause of death. The question,

therefore, arises as to who would undertake such

determination and ascertain whether the death was,

in fact, attributable to starvation occasioned by non-

payment of the dues, or whether it resulted from

natural causes or any other intervening

circumstances.

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WRIT PETITION (CIVIL) NO(S). 932 /2022

iii. Entitlement to and rate of interest on delayed

payments

27. Learned senior counsel appearing for the

respondent-States strongly assailed the

recommendation of the Committee insofar as it

provides for payment of interest at the rate of 7.5%

per annum on the salary arrears and 12% per annum

on the delayed EPF dues. It was submitted that

fastening liability towards interest at the aforesaid

rates, particularly over the period in question, would

impose a substantial financial burden upon the

respective State exchequers, without due regard to

the circumstances in which the underlying liabilities

arose, the absence of any deliberate withholding of

the amounts by the States, and the complexities

involved in the determination and apportionment of

the inter-State liabilities.

28. Shri Ranjit Kumar submitted that the

Corporations in question are distinct and

independent juristic entities, having a legal

personality separate from that of the State, and that

the liabilities incurred by such Corporations cannot,

in the absence of a specific legal framework, be

23

WRIT PETITION (CIVIL) NO(S). 932 /2022

fastened upon the State merely by reason of its

ownership, control or association with the entities.

29. Learned senior counsel further submitted that

the payments made by the State of Bihar were

undertaken voluntarily and on humanitarian

considerations, and not towards the discharge of any

legally enforceable liability on the State. It was,

therefore, contended that, in absence of any delay or

default attributable to the State of Bihar in relation

to the amounts in question, there can be no

justification for imposing upon the State any

additional liability towards interest.

30. Shri Arunabh Chowdhury submitted that the

claim for interest is wholly untenable in law, having

regard to the fact that the Corporations in question

had ceased to function and remained defunct for

several decades, most of them having become non-

functional even prior to the creation of the State of

Jharkhand in November, 2000. It was contended

that, during the period of such non-functionality, the

concerned employees/workmen neither rendered any

services nor performed any work for the Corporations

and, consequently, no liability towards payment of

salary/wages could have accrued for the said period

24

WRIT PETITION (CIVIL) NO(S). 932 /2022

so as to give rise to any corresponding liability

towards interest. It was further contended that the

workmen would be under the obligation to prove that

they were not gainfully employed during this period.

D. ANALYSIS AND DISCUSSION

31. We have carefully examined the facts and

circumstances borne out from the material on record

and given our thoughtful consideration to the

submissions advanced at the bar.

32. At the cost of repetition, we reiterate that, by

order dated 29

th May, 2026, this Court had left open

for determination only three issues specifically

identified in paragraph 38 thereof. The scope of the

present order is, therefore, confined to adjudication

of the said three issues, and nothing beyond that.

i. The identification and verification of the

remaining employees/workmen

33. As disclosed in the respective compliance

affidavits filed by the States of Bihar and Jharkhand

in August, 2026, out of the total verified baseline

workforce of 2,274 employees/workmen, dues have

been fully disbursed to 2,074 employees/workmen.

25

WRIT PETITION (CIVIL) NO(S). 932 /2022

Around 200 remaining cases comprise

employees/workmen who either remain untraceable

despite the publication of notices in newspapers or

whose claims remain pending for want of the

requisite documentation.

34. We may take note of the fact that the States of

Bihar and Jharkhand have undertaken extensive and

repeated measures to trace the untraceable

employees/workmen and their legal heirs, including

publication of notices in newspapers and other

modes of communication. All these efforts have been

noted and acknowledged by the Committee. Having

regard to the efforts so undertaken, we are satisfied

that the States have taken all reasonable steps that

could be expected of them for tracing the concerned

claimants. Once such efforts have yielded no result

despite repeated attempts and public notices, the

States cannot be required to continue such exercise

indefinitely.

35. In view of the aforesaid circumstances, 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

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WRIT PETITION (CIVIL) NO(S). 932 /2022

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.

ii. Daily-Wagers’ Entitlement and Welfare/Death

Compensation

36. Daily-wage workers constitute a significant

segment of the workforce and, notwithstanding the

nature of their engagement, perform services which

contribute to the functioning of the establishment in

which they are engaged. The mere description of a

person as a daily-wage worker cannot, by itself,

detract from the dignity of the work performed or the

services actually rendered. At the same time, daily-

wage employment is distinct in its legal character

from regular employment, and the rights and

entitlements arising therefrom must necessarily be

27

WRIT PETITION (CIVIL) NO(S). 932 /2022

determined with reference to the terms of

engagement and the applicable statutory or service

framework. The nature of such engagement, however,

cannot furnish a basis for arbitrary or inequitable

treatment, and the claims of such workers must be

considered in accordance with the requirements of

fairness and reasonableness.

37. In the present case, the daily -wage

employees/workmen were engaged by the concerned

Corporation and rendered services in the discharge

of the functions entrusted to them. While their status

as daily-wage workmen cannot, by itself, confer upon

them the same rights and entitlements as regular

employees, but at the same time, such status cannot

be treated as a reason for disregarding the services

rendered by them or denying the entitlements

lawfully accruing from such engagement.

38. As disclosed in the respective compliance

affidavits, out of the 598 daily -wage

employees/workmen, the dues of 467

employees/workmen have been fully disbursed. The

amount payable has been computed at the rate of

Rs.42.50 per day for the period commencing from

1992 and extending up to the respective date of

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WRIT PETITION (CIVIL) NO(S). 932 /2022

retirement, death or formal cessation of service. It is

stated that, on the aforesaid basis, a sum of Rs.14.21

crore has been disbursed to the said 467 daily-wage

employees/workmen.

39. It is in this backdrop that the aforesaid basis of

computation falls for examination. 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. Such an approach

proceeds on the premise that the value of labour and

the wages payable therefor remained static over a

period spanning several decades, notwithstanding

the corresponding changes in the cost of living and

the statutorily prescribed wage structure applicable

from time to time.

40. 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

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WRIT PETITION (CIVIL) NO(S). 932 /2022

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.

41. Nonetheless, having regard to the peculiar facts

and circumstances of the present case, the

protracted period over which the claims of the daily-

wage workmen have remained unresolved, and the

fact that the rate of Rs.42.50 per day cannot

reasonably serve as a uniform basis for computation

over the entire period in question, we do not consider

it appropriate, at this stage, to remit the matter for a

fresh determination or refixation of the daily wage

applicable to each individual workman. Such an

exercise would inevitably entail a further round of

determination and verification, thereby prolonging a

dispute which has already remained pending for

several decades.

42. In order to balance the equities and bring

finality to this aspect of the matter, 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

30

WRIT PETITION (CIVIL) NO(S). 932 /2022

employees/workmen employed by the concerned

Corporation during the relevant period.

iii. Entitlement to and rate of interest on delayed

payments

a. Interest on delayed payment of EPF dues

43. The entitlement to interest on delayed provident

fund dues must be considered having regard to the

statutory character of provident fund as a measure of

social security. The amount standing to the credit of

an employee by way of provident fund constitutes a

statutory benefit accrued during the course of

employment and is intended to provide financial

security to the employee upon cessation of service.

Such amount, therefore, cannot be treated as an

ordinary monetary claim capable of being withheld

without the consequences prescribed by law.

44. Where the provident fund contribution or any

amount otherwise payable under the statutory

scheme is not deposited within the time prescribed,

the liability towards statutory interest arises in

accordance with the applicable provisions. In cases

governed by the Employees Provident Funds and

Miscellaneous Provisions Act, 1952, Section 7 -Q

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WRIT PETITION (CIVIL) NO(S). 932 /2022

mandates payment of simple interest at the rate of

12% per annum, or at such higher rate as may be

specified in the Scheme, on the amount due from the

date on which such amount became due until the

date of its actual payment. The liability towards such

interest is thus a statutory consequence of the delay

in discharge of the provident fund obligation and

does not depend upon any contractual stipulation

between the employer and the employee. Section 7-Q

of the Act is reproduced below for ready reference:-

“7-Q. Interest payable by the employer. —The

employer shall be liable to pay simple interest at

the rate of twelve per cent per annum or at such

higher rate as may be specified in the Scheme on

any amount due from him under this Act from the

date on which the amount has become so due till

the date of its actual payment:

Provided that higher rate of interest specified in the

Scheme shall not exceed the lending rate of interest

charged by any scheduled bank.”

45. This Court, in Arcot Textile Mills Ltd. v. Regl.

Provident Fund Comm issioner & Ors.

14, while

dealing with the nature and object of the liability

contemplated under Section 7 -Q of the Act,

recognised the beneficial and social-welfare purpose

14

(2013) 16 SCC 1.

32

WRIT PETITION (CIVIL) NO(S). 932 /2022

of the provision and, in that context, observed as

follows:-

“27. Presently we shall address to the nature of the

lis that can arise under this provision. There

cannot be any dispute that the Act in question is a

beneficial social legislation to ensure health and

other benefits of the employees and the employer

under the Act is under statutory obligation to make

the deposit that is due from him. In the event of

default committed by the employer Section 14-B

steps in and calls upon the employer to pay the

damages. (See Regl. Provident Fund Commr. v. S.D.

College [(1997) 1 SCC 241 : 1997 SCC (L&S) 449] .)

Section 7-Q which provides for interest for

belated payment is basically a compensation for

payment of interest to the affected employees.

This provision has been made to secure just and

humane conditions of work as has been opined

in Regl. Provident Fund Commr. v. Hooghly

Mills Co. Ltd. [(2012) 2 SCC 489 : (2012) 1 SCC

(L&S) 449] The language employed in Section 7-

Q provides for levy of interest on delayed

payment and the rates have been stipulated .

When a composite order is passed or order

imposing interest becomes a part of the order or

levy in any of the provisions of the Act the authority

grants a reasonable opportunity of hearing to the

employer/affected party.”

(Emphasis supplied)

46. The statutory interest contemplated under

Section 7-Q of the Act is, therefore, distinct from any

claim for additional interest or compensation on

account of prolonged withholding of the employee’s

dues. Interest under Section 7-Q of the Act is not

founded upon any discretionary determination of

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WRIT PETITION (CIVIL) NO(S). 932 /2022

compensation; it is a liability which arises by

operation of the statute upon delayed payment of an

amount due under the Act. Accordingly, such interest

is liable to be computed from the date on which the

amount became due and continues to accrue until

the date of its actual payment.

47. In view of the statutory mandate contained in

Section 7-Q of the Act, and having regard to the

prolonged delay in the deposit and disbursement of

the provident fund dues of the concerned employees,

we are of the considered view that, in the present

case, the employees/workmen of the Corporations

cannot be deprived of the statutory interest accruing

on such dues. The liability to pay such interest is a

consequence which follows by operation of law upon

the delayed payment of the amounts due under the

provident fund scheme and cannot be defeated

merely on the ground that the underlying liability was

subsequently discharged.

48. We, accordingly, direct the States of Bihar and

Jharkhand to ensure payment, in respect of the EPF

dues of the employees to which Section 7 -Q is

applicable, of simple interest at the rate prescribed

thereunder, i.e., 12% per annum, for the period

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WRIT PETITION (CIVIL) NO(S). 932 /2022

commencing from the date on which the respective

amounts became due and calculated until the date of

their actual payment. Such interest shall be paid to

the concerned employees or, where applicable, their

legal heirs, and shall form part of the amounts finally

payable towards the provident fund dues.

b. Interest on delayed payment of salary/wages

49. Insofar as the salary arrears and other

monetary dues, excluding provident fund dues, are

concerned, the position stands on a somewhat

different footing. Unlike the interest contemplated

under Section 7-Q of the Act, there is no uniform

statutory provision prescribing a particular rate of

interest in respect of the salary and other dues

involved in the present proceedings. The entitlement

to interest in such cases is, therefore, required to be

examined having regard to the nature of the dues, the

period for which they remained unpaid, the

circumstances occasioning the delay and the extent

of prejudice caused to the employees/workmen by

such withholding.

50. There can, however, be little doubt that salary,

retiral benefits and other emoluments lawfully due to

an employee/workman constitute his rightful

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WRIT PETITION (CIVIL) NO(S). 932 /2022

monetary entitlement. Prolonged withholding of such

amounts deprives the employee/workman of the use

of salary/wages which had become payable to him

and, particularly where the delay extends over

several years, results in a corresponding financial

prejudice. The fact that the underlying liability arose

from the affairs of defunct Corporations cannot by

itself efface the consequence of the prolonged

deprivation of lawful entitlements suffered by the

employees/workmen. The question of interest must,

therefore, be considered not merely from the

standpoint of the identity/status of the entity in

default, but also having regard to the extraordinary

duration of the deprivation and the circumstances in

which the employees/workmen have ultimately been

required to seek enforcement of their lawful dues.

51. Interest, in its ordinary legal sense, represents

compensation for the deprivation of the use of money

to which a person is otherwise lawfully entitled. The

concept of interest is not confined to a return upon

money borrowed or advanced, but extends to

compensation for the unjust deprivation occasioned

by the withholding of money beyond the time when it

becomes due and payable. It is, in substance,

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WRIT PETITION (CIVIL) NO(S). 932 /2022

recompense for the loss occasioned by being kept out

of the use of money which ought to have been

available to the person entitled thereto. A

Constitution Bench of this Court, in Central Bank

of India v. Ravindra & Ors.

15, while examining the

concept and nature of interest, referred to the

meaning attributed to the expression “interest” in

various legal authorities and precedents, and

observed as follows:-

“37.Black’s Law Dictionary (7th Edn.) defines

“interest” inter alia as the compensation fixed

by agreement or allowed by law for the use or

detention of money, or for the loss of money by

one who is entitled to its use; especially, the

amount owed to a lender in return for the use of

the borrowed money. According to Stroud’s

Judicial Dictionary of Words And Phrases (5th

Edn.) interest means, inter alia, compensation paid

by the borrower to the lender for deprivation of the

use of his money. In Secy., Irrigation Deptt.,

Govt. of Orissa v. G.C. Roy [(1992) 1 SCC 508]

the Constitution Bench opined that a person

deprived of the use of money to which he is

legitimately entitled has a right to be

compensated for the deprivation, call it by any

name. It may be called interest, compensation

or damages … this is the principle of Section 34

of the Civil Procedure Code. In Sham Lal Narula

(Dr) v. CIT [AIR 1964 SC 1878 : (1964) 7 SCR

668] this Court held that interest is paid for the

deprivation of the use of the money. The essence

of interest in the opinion of Lord Wright, in Riches

v. Westminster Bank Ltd. [(1947) 1 All ER 469 :

15

(2002) 1 SCC 367.

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WRIT PETITION (CIVIL) NO(S). 932 /2022

1947 AC 390 (HL)] All ER at p. 472 is that it is a

payment which becomes due because the creditor

has not had his money at the due date. It may be

regarded either as representing the profit he might

have made if he had had the use of the money, or,

conversely, the loss he suffered because he had not

that use. The general idea is that he is entitled to

compensation for the deprivation; the money due

to the creditor was not paid, or, in other words, was

withheld from him by the debtor after the time

when payment should have been made, in breach

of his legal rights, and interest was a compensation

whether the compensation was liquidated under an

agreement or statute. A Division Bench of the High

Court of Punjab speaking through Tek Chand, J. in

CIT v. Dr Sham Lal Narula [AIR 1963 Punj 411 :

(1963) 50 ITR 513] thus articulated the concept of

interest: (AIR p. 414, para 8)…”

(Emphasis supplied)

52. The aforesaid exposition underscores that the

rationale underlying the award of interest lies in

compensating for the deprivation of the use of money

lawfully due to a person. Where a monetary

entitlement has crystallized and payment thereof is

delayed beyond the time when it became due and

payable, the person entitled thereto is, for the

intervening period, deprived of the use and benefit of

the amount to which he is lawfully entitled. Interest,

in such circumstances, serves as recompense for

such deprivation and seeks to compensate, to the

extent capable of monetary assessment, for the loss

occasioned by the delay.

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WRIT PETITION (CIVIL) NO(S). 932 /2022

53. It is in this context that the submission

advanced on behalf of the States, founded upon the

separate juristic personality of the erstwhile

Corporations, falls for consideration. We are

conscious of the fact that the erstwhile Corporations

were distinct juristic entities, separate from the

respective States, and that their liabilities cannot, as

a matter of course, be fastened upon the States

merely by reason of Government ownership or

control. However, the matter cannot be viewed solely

from the standpoint of liability of defunct corporate

bodies. The States of Bihar and Jharkhand, as

welfare States, under whose exclusive domain the

Corporations existed and functioned, are equally

required to ensure that the legitimate rights and

entitlements of their employees/workmen are not

rendered illusory by the subsequent failure or

cessation of functioning of State -owned

instrumentalities. In the peculiar facts and

circumstances of the present case, the separate

corporate personality of the erstwhile Corporations

cannot be permitted to deprive the

employees/workmen of their lawful dues which have

remained unpaid for decades.

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WRIT PETITION (CIVIL) NO(S). 932 /2022

54. Having said that, the award of interest in

exercise of the Court’s equitable or constitutional

jurisdiction cannot be permitted to assume the

character of a punitive levy upon the public

exchequer. Interest in such circumstances is

intended to compensate, in a reasonable measure, for

the prolonged deprivation of the use of money

lawfully due and not to penalise the State. The rate

of interest must, therefore, bear a reasonable

relationship to the nature of the deprivation, the

period for which the dues remained unpaid and the

prevailing economic conditions.

55. Applying the aforesaid principles to the facts of

the present case, we find that the

employees/workmen have been deprived of their

salary arrears and other lawful monetary

entitlements for an exceptionally prolonged period,

extending, in several cases, over decades. Such delay

cannot be attributed by any figment of imagination to

any act or omission on the part of the individual

employees/workmen. They have, for no fault of their

own, been kept out of amounts which were lawfully

due to them and which, in the ordinary course, would

have been available for their use and benefit. The

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WRIT PETITION (CIVIL) NO(S). 932 /2022

prolonged withholding of such dues, therefore,

constitutes precisely the kind of monetary

deprivation for which reasonable interest serves as

recompense.

56. In light of the aforesaid discussion, and having

regard to the peculiar facts and circumstances borne

out from the record, the nature of the dues involved,

the extraordinary length of the delay and the

resultant financial prejudice suffered by the

employees/workmen and their families, we are of the

view that the award of reasonable interest on the

delayed payment of salary arrears and other non-EPF

dues is warranted. The employees/workmen having

been deprived, for an inordinately long period, of the

use and benefit of amounts lawfully due to them,

payment of interest would constitute a fair and

proportionate recompense for such deprivation. At

the same time, having regard to the concerns noticed

hereinabove and so also the recommendation made

by the Committee for award of interest at the rate of

7.5% per annum on delayed payment, the rate of

such interest must remain reasonable and

compensatory, without assuming a punitive

character.

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WRIT PETITION (CIVIL) NO(S). 932 /2022

57. We accordingly direct the States of Bihar and

Jharkhand to ensure payment of simple interest at

the rate of 6% per annum on the salary/wages

arrears and other monetary dues, excluding the EPF

dues governed by Section 7-Q of the Act, for the

period commencing from the date on which the

respective amounts became due and payable until

the date of actual payment.

58. The aforesaid rate shall apply to the extent of

the liability of the respective State as determined in

terms of the mechanism already approved by this

Court vide order dated 29

th May, 2026. The amount

of interest shall be computed along with the principal

dues and disbursed to the concerned

employees/workmen or, where applicable, their legal

heirs, within a period of three months from today.

E. CONCLUSION AND DIRECTIONS

59. 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

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WRIT PETITION (CIVIL) NO(S). 932 /2022

issued by this Court in paragraph 37 of the

order dated 29

th 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.

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WRIT PETITION (CIVIL) NO(S). 932 /2022

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

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WRIT PETITION (CIVIL) NO(S). 932 /2022

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%

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WRIT PETITION (CIVIL) NO(S). 932 /2022

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 29

th May, 2026.

60. It is clarified that the directions and reliefs

granted herein are based upon the peculiar facts and

circumstances of the present case, including the

extraordinary period for which the claims have

remained unresolved and the circumstances in which

the liabilities of the erstwhile Corporations have come

to be addressed pursuant to the orders passed by this

Court. The reliefs so granted are intended to bring

finality to the claims arising in the present

proceedings and shall not be construed as laying

down any general or binding principle with regard to

the entitlement to, or computation of, similar reliefs

in cases arising in a different factual or legal setting.

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WRIT PETITION (CIVIL) NO(S). 932 /2022

61. Before we part with the matter, we deem it

appropriate to place on record our appreciation for

the painstaking efforts undertaken by the Committee

headed by Hon’ble Mr. Justice Dinesh Maheshwari,

Judge (Retd.), Supreme Court of India, in carrying

out the exercise entrusted to it and in assisting the

Court in bringing the longstanding claims of the

employees/workmen of the erstwhile Corporations

towards resolution. We also place on record our

appreciation for the assistance rendered by the

learned counsel appearing for the respective parties

and for the efforts made by them in facilitating the

resolution of the issues arising in these proceedings.

62. The writ petition is accordingly disposed of in

the above terms.

63. Pending applications, if any, are hereby

disposed of.

….……………………J.

(VIKRAM NATH)

...…………………….J.

(SANDEEP MEHTA)

NEW DELHI;

SEPTEMBER 28, 2026 .