Police said the rescued children, who were between the ages of six and twelve, have been sent to a juvenile home till their parents arrive.
"The children were rescued from a bangle factory in the Bhatta Basti area of the city," police said.
Factory owner Laddu Thakur has been arrested, while Tavrez Khan, who brought the children from Bihar, is absconding, said the SHO of Bhatta Basti police station, Harji Ram.
He said all the rescued children are boys and the factory was raided following a tip-off that its owner had employed the kids for several months.
"We have booked both the accused for trafficking and confinement of children. Further investigation is on," the SHO said.