They were paid at ₹42.50 a day for work done from 1992 onwards, as though wages had stood still for thirty years

Closing a dispute that began with the division of Bihar in 2000, the Supreme Court orders ₹1 lakh to every daily-wage worker, 12% interest on provident fund dues, and the names of everyone paid put online within four weeks.

When a State is divided, its assets and liabilities are apportioned between the successors. The employees of its corporations are on the liabilities side of that ledger, and if the two successor governments cannot agree who owes what, the people waiting to be paid have nobody to ask.

On 28 September 2026 a Bench of Justice Vikram Nath and Justice Sandeep Mehta, in a judgment by Justice Mehta, issued what are intended to be the final directions in a dispute traceable to the Bihar Reorganisation Act, 2000 — and, behind that, to the affairs of five State corporations that stopped paying their staff before the reorganisation happened.

Twenty-six years of proceedings

The corporations are the Bihar State Construction Corporation, the Bihar State Industrial Development Corporation, the Bihar State Electronic Development Corporation, the Bihar State Forest Development Corporation and the Bihar State Panchayati Raj Financial Corporation. The reorganisation that created Jharkhand raised questions about the apportionment and discharge of their liabilities, dues and service-related claims.

The litigation began with Kapila Hingorani v. State of Bihar, (2003) 6 SCC 1 — the case in which the Supreme Court held the State answerable under Article 21 for the destitution and deaths of employees of its own public sector undertakings who had gone unpaid for years. What followed, in the Court’s description, was a long and chequered course requiring successive rounds of judicial intervention and administrative consideration: adjudication of the inter-State liabilities, and then the constitution of a Committee chaired by Justice Dinesh Maheshwari, a retired Judge of the Court, to do the work of identifying and verifying who was owed what.

The Court’s order of 29 May 2026 set out that history and fixed the mechanism for apportioning liability between Bihar and Jharkhand. This judgment deals with what remained: who is still unidentified, what the daily-wage workers should get, and whether interest is payable on money withheld for decades.

Closing the identification exercise

Both States had substantially complied with the earlier directions, though parts of the implementation remained pending and were directed to be carried to a logical conclusion.

The exercise of identifying and verifying the remaining employees was closed. But the Court did not treat that as extinguishing the claims of those never traced. Any untraced or unverified employee, or the legal heirs of one, may on being traced or on otherwise learning of these proceedings approach the Nodal Officer for the relevant corporation within twelve months with the requisite documents, whereupon the claim is to be processed and any amount found payable disbursed.

The more striking direction concerns transparency, and it is aimed at the practical problem of people who do not know a fund exists for them. Within four weeks, Bihar and Jharkhand must compile and publish in the public domain updated particulars of all employees of the defunct corporations — those paid and those still pending.

For everyone whose dues have been paid, the publication must give the name, designation, period of service, amount payable, amount disbursed, date of disbursement and other identifying particulars. For everyone whose claim remains pending because they are untraced or unverified or documents are missing, it must give the present status, the reason for the pendency, the documents or steps required to process it, and the contact details of the Nodal Officer. The information goes on the websites of the States’ Information and Public Relations Departments and of the parent administrative department of each corporation, and must be updated periodically.

That is a disclosure obligation with a purpose. A former workman who cannot be traced by a State committee can very often be found by a relative, a neighbour or a union that knows where to look — provided the list is somewhere they can read it.

₹42.50 a day, from 1992

The passage on daily-wage workers is the heart of the judgment.

Of 598 daily-wage employees, the dues of 467 had been fully disbursed, computed at ₹42.50 per day from 1992 up to each worker’s retirement, death or formal cessation of service. On that basis ₹14.21 crore had been paid out.

The Court examined the basis and rejected it. A fixed daily wage of ₹42.50, adopted as a uniform measure over a period extending from 1992 onwards, cannot constitute a fair and reasonable measure of monetary entitlement, because it proceeds on the premise that the value of labour and the wages payable for it remained static across that entire span.

The Bench was careful about the principle underneath. Daily-wage employment is distinct in legal character from regular employment, and the rights arising from it must be determined by reference to the terms of engagement and the applicable statutory or service framework — so daily-wagers do not acquire the entitlements of regular employees. But the mere description of a person as a daily-wage worker cannot detract from the dignity of the work performed or the services actually rendered, and the nature of the engagement cannot furnish a basis for arbitrary or inequitable treatment.

Applied here: their status may distinguish the nature of their engagement, but it cannot justify treating the services they rendered as having a fixed and unvarying monetary value irrespective of when they were rendered.

Having found the computation wrong, the Court then declined to order it redone — and said why. Refixing the applicable daily wage for each individual workman would entail another round of determination and verification, prolonging a dispute already pending for several decades. To balance the equities and bring finality, it directed Bihar and Jharkhand to pay, in addition to the amounts already determined and disbursed, a one-time sum of ₹1,00,000 to each daily-wage worker engaged during the relevant period.

That is a pragmatic choice rather than a precise one, and the judgment does not pretend otherwise. Against 598 workers, it commits roughly ₹6 crore on top of the ₹14.21 crore already paid — and it lands in their hands this year rather than after a fresh verification exercise none of them would live to see concluded.

Interest, at two rates

On interest the Court distinguished between two kinds of money, and set different rates.

Provident fund dues were treated by reference to the statutory character of provident fund as a measure of social security — the amount standing to an employee’s credit being a protected fund rather than an ordinary debt — and by reference to the statutory interest the Employees’ Provident Funds legislation itself contemplates, with the Court drawing on Arcot Textile Mills Ltd. v. Regional Provident Fund Commissioner. Bihar and Jharkhand were directed to pay simple interest at 12% per annum on delayed EPF dues.

Salary arrears and other monetary entitlements were dealt with on the general principle that interest is recompense for deprivation of the use of money. The employees, the Court held, had been deprived of lawful entitlements for an exceptionally prolonged period extending in several cases over decades; that delay could not be attributed by any figment of imagination to any act or omission on their part; and they had for no fault of their own been kept out of amounts that in the ordinary course would have been available for their use and benefit. The prolonged withholding of such dues constitutes precisely the kind of monetary deprivation for which reasonable interest serves as recompense. The rate fixed was 6% per annum simple interest.

Both run from the date each amount became due and payable until the date of actual payment. Liability between the two States is to be determined by the mechanism already approved on 29 May 2026.

Expressly not a precedent

The Court added an unusually explicit limitation. The directions and reliefs are based on the peculiar facts and circumstances of the case — including the extraordinary period for which the claims remained unresolved and the circumstances in which the liabilities of the defunct corporations came to be addressed pursuant to its own orders. They are intended to bring finality to these claims, and are not to be construed as laying down any general or binding principle on entitlement to, or computation of, similar reliefs in a different factual or legal setting.

So the ₹1 lakh figure and the 6% rate are not portable. What travels is the reasoning: that a single historic wage rate cannot be projected across decades as though money did not change, and that interest follows from deprivation the claimant did nothing to cause.

The order

The writ petition was disposed of in those terms, with pending applications disposed of. Before parting, the Bench recorded its appreciation for the painstaking efforts of the Committee headed by Justice Dinesh Maheshwari, and for the assistance of counsel in facilitating a resolution.

The case is a reminder of what the Court was doing in Kapila Hingorani twenty-three years ago, and of how long the tail of that kind of litigation is. Employees of State corporations went unpaid; a court held the State responsible; two States then spent a quarter of a century apportioning the liability. The people at the end of it were paid at a 1992 rate for work done into the 2000s, and are now to be paid again, with interest, and to have their names published so that those still missing can find their way to the money.