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Bihar State Ardh Sarkari Arajpati Karamchari Maha Sangh and Ors. v. State of Bihar and Ors.

Writ Petition (Civil) · 2026 INSC 607Decided 29 May 2026
W.P.(C) No.-000932 - 2022
Justice Vikram Nath · Justice Sandeep Mehta

Background

Thousands of employees of five erstwhile Bihar State Corporations (Construction, Industrial Development, Electronic Development, Forest Development, and Panchayati Raj Financial) had gone unpaid for salaries and retiral dues for nearly 25 years, following the 2000 bifurcation of Bihar into Bihar and Jharkhand, because the two states never finished apportioning the corporations' assets and liabilities. The crisis caused severe hardship, including reported instances of destitution, starvation, and suicides among affected employees and their families. An earlier Supreme Court intervention in Kapila Hingorani v. State of Bihar (2003) had provided only partial interim relief. A writ petition was filed in 2022 seeking directions to both states and the Union to complete the bifurcation process and release the outstanding dues.

Decision Breakdown

The Supreme Court had earlier constituted a Committee headed by Justice Dinesh Maheshwari (Retd.) to examine and recommend a resolution. In this order, the Court largely accepted the Committee's Final Report, directing that inter-state liability for salaries and retiral dues be settled per the Committee's computation (based on the Union of India's affidavit), that pay revision benefits be confined to Pay Commissions actually adopted by the corporations before they became defunct, and that Provident Fund dues be disbursed per the Committee's recommended mechanism. The Court also directed a Rs. 35 lakh honorarium be paid to Justice Maheshwari for chairing the Committee, split equally between Bihar and Jharkhand. However, several issues remained unresolved (verification of remaining claimants/legal heirs, compensation for daily-wage workers, and interest on delayed payments) so the matter was kept part-heard and listed for further hearing on 1 September 2026, with both states directed to file compliance affidavits in the meantime.

Lesson Learnt

Even decades-old, seemingly intractable inter-state administrative disputes affecting citizens' basic livelihood can be judicially managed through expert committees, and courts can issue binding interim directions on parts of a dispute while keeping the matter open for the remaining unresolved issues.

Official source (sci.gov.in)View Judgment (PDF)

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