Back
Supreme Court Orders Rs 1 Lakh To Daily-Wage Workers In Long-Running Bihar-Jharkhand Dues Case
Introduction
Bringing a painful chapter to a close, the on Monday directed the states of Bihar and Jharkhand to pay a of Rs 1,00,000 to each daily-wage employee who worked for five defunct state-owned corporations. The two-judge bench of Justice Vikram Nath and Justice Sandeep Mehta also mandated 12% on delayed provident fund contributions and 6% on salary arrears, marking the final resolution of a dispute that has lingered for over 25 years.
The order was passed in a filed by the , representing workers from corporations that became defunct after the carve-out of Jharkhand in . The case is the culmination of a long legal battle that began with the judgment and continued through a committee headed by former Supreme Court judge Justice Dinesh Maheshwari.
Case Background: A Legacy of Reorganisation
The dispute traces its roots to the , which created Jharkhand from parts of Bihar. Five state-owned inter-state corporations—, , , , and —were caught in limbo. Their employees, both regular and daily-wage, were left unpaid for decades as the two states squabbled over apportionment of liabilities.
A prior Supreme Court order in had accepted the committee’s recommendations, leading to partial compliance. The states reported that out of 2,274 verified employees, dues of 2,074 had been disbursed. However, three issues remained open: tracing untraceable employees, entitlement of daily-wage workers to compensation, and interest on delayed payments.
Arguments Presented
Petitioners’ Contentions: Senior Advocate argued that untraceable workers should have their dues earmarked in a separate corpus, and that daily-wage workers were entitled to compensation beyond a meagre flat rate of Rs 42.50 per day. She insisted that interest on delayed provident fund and salary payments should run from the date the dues became payable, relying on the mandatory statutory interest under .
Respondents’ Stand: The states—represented by Senior Advocates (Bihar) and (Jharkhand)—resisted the compensation claim, arguing that the corporations were separate and that the states had no legal obligation to pay interest. They contended that the daily wage rate of Rs 42.50 was justified and that the workers rendered no services during the non-functioning period, invoking the “” principle.
Legal Analysis
Daily-Wage Compensation: A Principle of Fairness
The Supreme Court rejected the states’ computation of dues based on a fixed daily wage of Rs 42.50 from onwards. The Court observed that such an approach “disregards the passage of time and the wages applicable during the respective periods of their engagement.” While acknowledging the distinct nature of daily-wage employment, the bench held that a “fixed and unvarying monetary value” cannot be ascribed to labour spanning decades.
Rather than remitting the matter for fresh computation—which would cause further delay—the Court balanced the equities by ordering a of Rs 1,00,000 per daily-wage worker. This amount is in addition to the principal already disbursed and applies to all such workers engaged during the relevant period.
Interest on Delayed Dues: Statutory and Compensatory
For EPF dues, the Court relied on Section 7-Q of the EPF Act, which mandates at 12% per annum on delayed contributions from the date they became due. The Court quoted its earlier decision in Arcot Textile Mills Ltd. v. Regl. Provident Fund Commissioner (2013) to underscore that such interest is a “” and not discretionary.
For salary and other monetary entitlements, the Court drew from the principle stated in Central Bank of India v. Ravindra (2002), noting that interest represents “.” Rejecting the states’ argument that the shielded them, the bench held that welfare states cannot allow employees’ rights to be “rendered illusory by the subsequent failure or cessation of functioning of State-owned instrumentalities.” A 6% rate was fixed as reasonable and compensatory.
Identification and Verification of Remaining Workers
The Court closed the general verification exercise, noting that the states had taken “all reasonable steps” including newspaper notices and coordination with district authorities. However, the underlying entitlements of the 200 untraced employees will not be extinguished. They or their legal heirs have a 12-month window from the date of the order to approach the concerned Nodal Officer with documents. The states must also publish updated lists of all employees with details of payment status on their websites within four weeks.
Key Observations
- “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 onwards, cannot, in our view, constitute a fair and reasonable measure of their monetary entitlement.”
- “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.”
- “Interest under Section 7-Q of the Act is not founded upon any discretionary determination of compensation; it is a liability which arises by operation of the statute upon delayed payment of an amount due under the Act.”
Court’s Decision
The Supreme Court issued the following directions:
- States must complete pending implementation of directions.
- The verification exercise for remaining employees is closed, but untraced workers may claim within 12 months.
- States shall publish online details of all employees—paid and unpaid—with contact of Nodal Officers.
- Daily-wage workers: one-time Rs 1,00,000 each.
- EPF dues: 12% from due date till payment.
- Salary and other monetary dues: 6% from due date till payment.
- shall follow the mechanism approved in .
The Court clarified that the reliefs are based on the “” of the case and shall not be treated as a precedent. The was disposed of, with the bench placing on record its appreciation for the efforts of the and the counsel assisting the court.
This judgment brings long-overdue relief to thousands of workers who waited a quarter of a century for their rightful dues.
