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Section 25: Audit of accounts of Central Board

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 24 All 163 Sections of Code on Social Security, 2020 Section 26

Legal Commentary & Landmark Judgments: Section 25

Section 25 of the Code on Social Security, 2020 establishes the Employees' State Insurance Fund as a dedicated statutory social security repository, vesting its custodianship in the Corporation and protecting its assets as a public trust dedicated exclusively to worker healthcare and cash benefits.

  • Statutory Constitution of the ESI Fund: Section 25(1) creates the Employees' State Insurance Fund, into which shall be paid all contributions collected from employers and employees, government grants, subsidies, donations, interest earnings, and fees under Chapter IV.
  • Fiduciary Custodianship & Public Trust Character: All monies in the Fund are held and administered by the Corporation for the statutory purposes of the Code; the Fund is completely insulated from the Consolidated Fund of India and general state revenues.
  • Investment Regulations & CAG Audit Mandate: Section 25(2) and Section 25(3) dictate that surplus funds must be invested strictly in accordance with Central Government guidelines, with the annual accounts subjected to mandatory statutory audit by the Comptroller and Auditor General of India (CAG).
Key Landmark Precedents:
  • Royal Western India Turf Club v. E.S.I.C. (2016) 4 SCC 521: The Supreme Court emphasized that the ESI Fund is a social insurance repository created to protect industrial workers against contingencies like sickness, disablement, and maternity; its funds cannot be withheld by employers.
  • Transport Corporation of India v. ESI Corp. (2000) 1 SCC 332: The Supreme Court held that payments made into the ESI Fund constitute statutory social insurance premiums that create collective rights for insured employees nationwide.
  • Regional Provident Fund Commissioner v. Hooghly Mills Co. Ltd. (2012) 2 SCC 489: Reaffirmed the principle that statutory social welfare funds possess a fiduciary character, requiring the highest standard of custodial accountability.
Courtroom Practice & Strategic Litigation Guidance:

Employers cannot plead that because their workforce did not utilize ESI dispensaries or hospitals, the employer is entitled to a refund or set-off of ESI contributions remitted to the Fund. The ESI Fund operates on the actuarial principle of social insurance pooling; contributions paid become the statutory property of the Fund and are non-refundable.

Section 24 All 163 Sections of Code on Social Security, 2020 Section 26