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Section 26: Annual report 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 25 All 163 Sections of Code on Social Security, 2020 Section 27

Legal Commentary & Landmark Judgments: Section 26

Section 26 of the Code on Social Security, 2020 strictly enumerates the legitimate statutory purposes for which the Employees' State Insurance Fund may be expended, circumscribing corporate expenditures to worker benefit disbursements, healthcare infrastructure, and administrative overheads.

  • Mandatory Benefit Disbursements to Insured Workers: Section 26 authorizes expenditures for cash benefit disbursements, including sickness, maternity, temporary and permanent disablement, dependants' pensions, and funeral expenses for insured persons and eligible families.
  • Healthcare Infrastructure & Medical Facilities Funding: Permits fund utilization for establishing, maintaining, and staffing ESI hospitals, dispensaries, specialized medical institutions, procurement of drugs, and defraying medical cost-sharing liabilities with State Governments under Section 40.
  • Administrative Expenses & Statutory Welfare Measures: Authorizes payment of salaries, allowances, and pensions of Corporation officers, legal and auditing expenses, and welfare promotion initiatives for rehabilitation and retraining of disabled workers under Section 33.
Key Landmark Precedents:
  • ESIC v. Francis De Costa (1996) 6 SCC 1: The Supreme Court held that expenditure from the ESI Fund is strictly circumscribed by statute to provide scheduled medical and cash benefits for injuries and illnesses arising out of and in the course of employment.
  • Regional Director, ESIC v. Ramanuja Match Industries (1985) 1 SCC 218: The Supreme Court held that social security legislation must be interpreted to ensure that fund resources are directed to the actual welfare and medical security of eligible industrial workers without administrative leakage.
  • National Campaign Committee for Central Legislation on Construction Labour v. Union of India (2018) 5 SCC 607: Reaffirmed that welfare funds created under labor enactments cannot be diverted to general government expenditures or non-statutory commercial ventures.
Courtroom Practice & Strategic Litigation Guidance:

Trade unions and employer associations have legal standing under Article 226 to initiate public interest litigation if the Corporation attempts to divert ESI Fund balances to projects unrelated to worker medical security. Fund audits must be scrutinized annually against the statutory spending categories defined in Section 26.

Section 25 All 163 Sections of Code on Social Security, 2020 Section 27