Corporate Employees Entitled to Interest on Delayed Dues but Excluded from Unadopted Pay Revisions

Following the bifurcation of Bihar under the Bihar Reorganisation Act, 2000, assets and liabilities of five State-owned Corporations were to be apportioned between Bihar and Jharkhand

For nearly 25 years, thousands of employees remained unpaid, leading to destitution and reported suicides

Earlier interventions in Kapila Hingorani v. State of Bihar (2003) provided only partial relief

In 2022, the petitioners sought a mandamus for the release of outstanding salaries and retiral dues

The Supreme Court constituted a Committee headed by Justice (Retd.) Dinesh Maheshwari to investigate the financial liabilities and identify eligible employees

The Committee submitted its final report on April 30, 2026, after achieving substantial progress in identifying 2,274 employees and facilitating payments to 2,017 of them

1. Whether the States are liable for pay revisions and minimum wage increments not formally adopted by the Corporations before they became defunct?

2. Whether the non-payment of statutory dues like the Employees Provident Fund (EPF) can be excused due to administrative or financial incapacity?

3. Whether the delay in payment of lawful dues warrants the award of interest and compensation to the affected employees or their legal heirs?

The Court primarily relied on Article 21 of the Constitution of India, emphasizing the right to livelihood and dignity

It applied the statutory scheme of the Bihar Reorganisation Act, 2000 regarding the apportionment of liabilities between successor States

Regarding retiral benefits, the Court invoked the principle that Provident Fund (PF) is a vested statutory right under the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952, which cannot be defeated by the functional collapse of an entity

It further applied the principle of restitution and fair recompense to justify the award of interest on delayed payments

The Court analyzed the Justice Maheshwari Committee’s findings to resolve the stalemate. Regarding pay scales (Issue 3A), the Court agreed that since the defunct Corporations never formally adopted subsequent Pay Revision Commissions (PRCs), employees had no vested legal right to those higher scales

For daily wagers (Issue 3B), the Court held that while the principle of "no work, no pay" applies, the States’ humanitarian gesture of paying 1992-level minimum wages until retirement was an equitable arrangement that did not require further enhancement

However, the Court distinguished statutory dues like EPF (Issue 3C) from discretionary wages, ruling that the State must directly satisfy both employer and employee contributions plus statutory interest where accounts are untraceable

The Court linked the prolonged delay to a violation of Article 21, thereby validating the Committee's recommendation for interest at 7.5% on salary arrears and 12% on PF dues as restitution for the "extravagant" delay

The Court awarded an additional honorarium of Rs. 35 lakhs to the Committee Chair. Residual issues regarding lump-sum compensation for deaths, verification of "untraceable" employees, and final interest calculations were reserved for further adjudication on September 1, 2026