Suicides & Starvation Deaths: Supreme Court Directs Bihar, Jharkhand To Clear Dues Of Defunct Corporation Employees After 25-Year-Delay
The Bench held that Provident Fund are vested statutory rights incapable of defeat by administrative lapses; 2,017 of 2,274 employees paid after two-and-a-half decades.
Justice Vikram Nath, Justice Sandeep Mehta, Supreme Court
The Supreme Court has directed the States of Bihar and Jharkhand to clear outstanding salary arrears, provident fund dues and retiral benefits payable to employees of five defunct State Corporations, a dispute unresolved for nearly twenty-five years following the bifurcation of Bihar under the Bihar Reorganisation Act, 2000. During the period the Court's proceedings disclosed reported instances of suicides and starvation deaths among affected employees and their families.
The Court held that provident fund accumulations are vested statutory rights incapable of defeat by administrative lapses or financial incapacity of defunct corporations. Pertinently, the Court had constituted a committee under the chairmanship of Justice Dinesh Maheshwari, Judge (Retd.), Supreme Court which conducted twenty-five sittings over the course of nearly a year and submitted its final report on April 30, 2026.
The Court directed interest at 7.5% per annum on delayed salary arrears and 12% per annum on delayed provident fund dues, holding that such award constitutes a measure of restitution for the inordinate delay and deprivation suffered by the workforce of five Bihar State Corporations whose dues remained unpaid for a quarter century while their families faced acute financial destitution.
Justice Vikram Nath and Justice Sandeep Mehta observed, “The material placed before this Court revealed that the prolonged non-payment of lawful dues resulted in grave humanitarian consequences affecting a large section of the workforce and their dependants. The proceedings disclosed allegations of severe deprivation, destitution and reported instances of suicides and starvation deaths amongst the affected employees and their family members owing to prolonged denial of salaries and retiral benefits. The dispute, therefore, ceased to remain a mere matter of financial adjustment between two successor States and assumed the character of a significant human rights and constitutional concern directly implicating the right to livelihood and dignity guaranteed under Article 21 of the Constitution of India”.
Senior Advocate Priya Hingorani appeared for the appellant Vikramjit Banerjee, A.S.G., Senior Advocate Arunabh Chowdhury appeared for the respondent.
In the matter, pursuant to the bifurcation of Bihar under the Bihar Reorganisation Act, 2000, assets and liabilities of five State corporations were required to be apportioned between Bihar and Jharkhand.
The process remained unresolved for nearly twenty-five years, leaving thousands of employees in acute financial distress. The Court's proceedings disclosed reported instances of suicides and starvation deaths among affected employees and their families, transforming a financial adjustment dispute into a constitutional concern under Article 21 of the Constitution of India.
The issue first engaged the Supreme Court in Kapila Hingorani v. State of Bihar (2003) 6 SCC 1, where ₹ 125 crores directed as interim relief proved insufficient to clear arrears beyond February 1997. The present writ petition was filed in 2022.
Through an order dated October 9, 2023, the Court directed the three governments to jointly deliberate. Disagreements persisting, the Court constituted a Committee under Justice Dinesh Maheshwari (Retd.), which conducted 25 meetings and submitted its final report on April 30, 2026.
Inter-State liability apportionment was held resolved on the basis of the Union's December 2023 affidavit. On pay revision, no enforceable right was held to accrue under commissions never formally adopted before the corporations became defunct.
On daily wages, payment of ₹ 42.50 per day at 1992 rates was held a reasonable humanitarian arrangement with no further enhancement claimable. On EPF, the obligation to disburse was held to survive dissolution. Three residual issues were reserved for further hearing.
Consequentially, EPF disbursal was directed with States paying employer and employee contributions with interest under Section 7Q of the EPF Act directly to employees or hei₹ Interest at 7.5% per annum on salary arrears and 12% per annum on provident fund dues was directed.
An honorarium of ₹ 35 lakhs was directed to be paid to Justice Dinesh Maheshwari, borne equally by both States within four weeks. Matter listed for September 1, 2026.
Cause Title: Bihar State Ardh Sarkari Araj Karamchari Maha Sangh & O₹ v. State Of Bihar & O₹ (Neutral Citation: 2026 INSC 607)
Appearances:
Appellant: Priya Hingorani, Sr. Adv., Shweta Hingorani, Chandra Bhushan Prasad, AOR, Naseem Ahmed, Aditi Ladda, Advocates.
Respondent: Arunabh Chowdhury, Sr. Adv., Pallavi Langar, AOR, Pragya Baghel, Sujeet Kumar Chaubey, Anushka Raghunath, Vikramjit Banerjee, A.S.G., Piyush Beriwal, Chinmayee Chandra, S.k. Gupta, Rajesh Kumar Singh, B.k. Satija, Arvind Kumar Sharma, AOR, Manish Kumar, AOR, Divyansh Mishra, Kumar Saurav, Pradeep Kumar Yadav, Anjale Kumari, Chhaya, Sanjeev Malhotra, AOR, Advocates.
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