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Section 115: Budget of Social Security Organisations

The Code on Social Security, 2020 (Act No. 36 of 2020) • Official Statutory Text & Plain English Practice Guide

Statutory Mandate
Chapter X: Finance and Accounts
Competent Labour Forum
Act No. 36 of 2020
Section 114 All 163 Sections of Code on Social Security, 2020 Section 116

Legal Commentary & Landmark Judgments: Section 115

Section 115 of the Code on Social Security, 2020 establishes the statutory budgetary discipline governing Social Security Organisations (including ESIC, EPFO, and National Social Security Boards), mandating the annual preparation and submission of comprehensive budget estimates for parliamentary and governmental sanction.

  • Statutory Obligation to Frame Annual Budgets: Mandates that each Social Security Organisation shall, in each financial year, prepare in such form and at such time as may be prescribed, a budget in respect of the next financial year, showing the estimated receipts and expenditure of the organisation.
  • Mandatory Submission to Central Government: Directs that the prepared budget shall be forwarded to the Central Government for review, scrutiny, and formal sanction prior to the commencement of the financial year to which the budget relates.
  • Segregation of Administrative Costs and Benefit Outlays: Requires budget estimates to maintain strict internal segregation between operational administrative overheads (salaries, IT systems, estate management) and statutory worker benefit funds, ensuring that worker capital is not eroded by excessive administrative expenditures.
  • Supplementary and Revised Budgetary Mechanisms: Empowers the organisations to prepare and submit supplementary budget estimates during the financial year where unexpected surges in medical claims, pandemic relief, or industrial distress necessitate emergency fund reallocations.
Key Landmark Precedents:
  • Regional Provident Fund Commissioner v. Shiv Kumar Joshi (2000) 1 SCC 98: The Supreme Court held that statutory social security authorities act in a fiduciary capacity, managing public funds entrusted to them for the benefit of workers, and must exercise the highest standards of financial prudence.
  • ESIC v. Harrison Malayalam Ltd. (1993) 4 SCC 361: The Supreme Court emphasized that statutory welfare corporations must ensure continuous, disciplined administration of their resources to guarantee uninterrupted medical and cash benefits to the insured workforce.
  • Centre for Public Interest Litigation v. Union of India (2012) 3 SCC 1: Affirmed that statutory bodies managing public and welfare funds are bound by strict principles of transparent financial administration and executive oversight.
Courtroom Practice & Strategic Litigation Guidance:

Financial directors and budget officers of statutory social security corporations must finalize their annual budget estimates by the third quarter of each financial year, incorporating actuarial projections under Section 118. Ensure that administrative cost allocations comply with statutory percentage caps, and present detailed comparative variances between previous year actuals and upcoming year projections before the Standing Committee and the Central Government.

Section 114 All 163 Sections of Code on Social Security, 2020 Section 116