Ranchi, Oct. 17: The Supreme Court today issued a notice to the attorney general to defend a contentious provision of the Bihar Reorganisation Act, 2000, that has been challenged by Jharkhand after it was asked to shell out Rs 2,584.09 crore to Bihar in lieu of pension dues.

Senior counsel Ajit Sinha, appearing for Jharkhand, said lawyers appearing on behalf of both the states argued at length but a special bench headed by Chief Justice Altamas Kabir wanted to hear from the Centre before issuing any order since a national law was being challenged.

The case is coming up for hearing tomorrow.

Jharkhand, which dubbed the provision as arbitrary, has claimed it the act violated Article 14 of the Constitution as it called for liabilities concerning pension and other retirement benefits to be divided between the two states on the basis of number of employees and not population.

The population ratio between Bihar and Jharkhand is 3:1 against an employee ratio of 2: 1.

Jharkhand’s petition in the apex court was against a Centre’s directive, issued on September 25, asking it to reimburse Rs 2,584.09 crore to Bihar as adjustment of liabilities of pension and other retirement benefits to government employees up to March 31, 2011 and with respect to the expenditure incurred by the two states on employees retiring before November 15, 2000.

Sinha argued the act was discriminatory as successive state reorganisation acts since 1956, including those enacted to split Madhya Pradesh and Uttar Pradesh, followed the yardstick of population to divide pension liabilities.

“We also pleaded that the court stay the order as execution of the directive will heavily impact the financial health of the state (Jharkhand).”

Bihar on the other hand argued that the Centre’s directive to Jharkhand was on the basis of the act and, therefore, nothing was amiss.

The Jharkhand government had moved the Supreme Court in May after it found that the Centre had virtually made up its mind on asking it pay the pension liabilities of around Rs 2,584 crore. “The Centre had also warned the state that it would deduct the amount from central grants if it refused to pay Bihar,” said a senior government official.

The Centre, he added, had also revoked an earlier order to the Bihar government, asking it to pay Rs 607.19 crore to Jharkhand towards General Provident Fund a week back.