2026 Supreme(SC) 1191

SUPREME COURT OF INDIA
VIKRAM NATH, SANDEEP MEHTA, JJ.
Bihar State Ardh Sarkari Arajpati Karamchari Maha Sangh And Others - Petitioners
Versus
State Of Bihar And Others – Respondents
Writ Petition (Civil) No(s). 932 of 2022
Decided On : 28-09-2026

Statutory interest under Section 7-Q of the EPF Act is mandatory. Furthermore, prolonged deprivation of lawful salary dues warrants compensatory interest regardless of the employer's corporate personality, and static historical wage rates for daily-wagers over decades may be balanced by one-time monetary compensation.

Headnote:(A) Employees Provident Funds and Miscellaneous Provisions Act, 1952 - Section 7-Q - Statutory interest on delayed provident fund dues - Simple interest at 12% per annum is a mandatory statutory consequence of delay in discharge of obligations, intended to provide financial security as a measure of social security and serves a beneficial social-welfare purpose (Paras 44, 46, 48).

(B) Interest on delayed payment of salary/wages - Compensation for deprivation of use of money - Interest represents recompense for the loss occasioned by being kept out of the use of money lawfully due. Where delay is extraordinary and extends over decades, reasonable compensatory interest is warranted to ensure legitimate entitlements do not become illusory, regardless of the separate juristic personality of the defunct corporate body from the State (Paras 50-53).

(C) Daily-wage employees - Fairness in monetary entitlement - Applying a static historical wage rate over several decades, irrespective of cost of living or statutory wage revisions, is not a fair or reasonable measure of monetary entitlement. To balance equities and avoid further prolonged litigation, a one-time lump sum may be awarded as compensation for such deprivation (Paras 39-42).

Facts of the case:
Following the reorganization of a State and the creation of a new State, liabilities and service-related claims of employees of five defunct State-owned corporations remained unresolved. While substantial principal dues were disbursed to verified employees, issues remained regarding the identification of untraceable employees, the adequacy of the flat daily-wage rate used for computations for daily-wagers, and the entitlement to and rate of interest on delayed payments of salaries and provident fund contributions.

Findings of Court:
(i) The exercise for identification of remaining employees stands closed, but claimants have 12 months to approach nodal officers for verification and disbursement. (ii) Daily-wage employees are entitled to a one-time sum of Rs. 1,00,000/- in addition to disbursed dues to compensate for the static wage rate used. (iii) Statutory simple interest at 12% per annum is payable on EPF dues under Section 7-Q of the Act from the date the amount became due. (iv) Simple interest at 6% per annum is payable on salary/wages and other monetary dues from the date they became due until actual payment.

Issues: (i) Whether the claims of untraceable employees are extinguished; (ii) whether a flat historical wage rate for daily-wagers is fair and if one-time compensation is warranted; (iii) whether interest is payable on delayed salary and EPF dues and at what rate.

Ratio Decidendi: Statutory interest under Section 7-Q of the EPF Act is a mandatory liability arising by operation of law. For non-statutory dues, interest serves as an equitable recompense for the deprivation of the use of money. The state's obligation as a welfare provider outweighs the corporate veil of defunct state-owned entities when employees are deprived of lawful dues for decades.

Result: Writ petition disposed of with directions for payment of interest and one-time compensation.