Home  /  Code on Social Security, 2020  /  Section 21

Section 21: Review of orders passed under section 20

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

Statutory Mandate
Chapter III: Employees' Provident Fund
Competent Labour Forum
Act No. 36 of 2020
Section 20 All 163 Sections of Code on Social Security, 2020 Section 22

Legal Commentary & Landmark Judgments: Section 21

Section 21 of the Code on Social Security, 2020 establishes the statutory regulatory regime for exempted provident fund trusts, empowering the Central Board to permit solvent establishments to manage their own PF accounts subject to strict bipartite trust governance, investment compliance, and statutory yield guarantees.

  • Conditions for Granting Trust Autonomy: Section 21(1) permits the Central Board or authorized officer to authorize an employer to maintain a private provident fund account if the establishment maintains a registered Board of Trustees with equal employer-employee representation and provides benefits equal to or superior to statutory schemes.
  • Strict Adherence to Ministry of Finance Investment Mandate: Trust funds must be invested strictly in accordance with the pattern of investment prescribed by the Central Government; any financial loss or yield shortfall compared to the annual EPFO declared interest rate must be made good by the employer from company profits.
  • Revocation of Exemption & Automatic Transfer of Corpus: Under Section 21(3), where an exempted employer commits default in maintaining accounts, auditing, or remitting contributions, the Central Board reserves unconditional statutory authority to cancel the exemption and order the immediate transfer of all trust assets to the statutory Fund.
Key Landmark Precedents:
  • B.P.L. Ltd. v. R.P.F.C. (2002) 10 SCC 408: The Supreme Court held that exempted establishments remain firmly under the regulatory authority of the Central Board; failure to comply with statutory investment patterns or administrative conditions warrants immediate cancellation of exemption.
  • Regional Provident Fund Commissioner v. Hooghly Mills Co. Ltd. (2012) 2 SCC 489: The Supreme Court held that exemption under social security enactments does not confer an unregulated license; trustees of private PF trusts hold employee savings as public fiduciaries and default invites immediate penal recovery.
  • Associated Cement Companies Ltd. v. RPFC (2001) 10 SCC 597: Reaffirmed that exempted trusts are bound by statutory circulars issued by the Central Board regarding rate of interest and subscriber disclosures.
Courtroom Practice & Strategic Litigation Guidance:

Corporates operating private PF trusts must institute quarterly investment audits to ensure compliance with sovereign and corporate bond allocation limits. If the trust's investment portfolio yields less than the EPFO declared rate (e.g., 8.25%), the board of directors must pass an immediate resolution injecting corporate funds to fund the deficit before crediting member accounts, to prevent cancellation notices under Section 21.

Section 20 All 163 Sections of Code on Social Security, 2020 Section 22