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Section 96: Registration of agreements

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

Statutory Mandate
Chapter VII: Employee's Compensation
Competent Labour Forum
Act No. 36 of 2020
Section 95 All 163 Sections of Code on Social Security, 2020 Section 97

Legal Commentary & Landmark Judgments: Section 96

Section 96 of the Code on Social Security, 2020 establishes a rigorous statutory regime for the registration of private compensation agreements between employers and injured employees, ensuring that informal settlements and lump-sum redemptions are scrutinized by the Competent Authority to prevent unconscionable exploitation.

  • Mandatory Submission of Memorandum of Agreement: Mandates that where the amount of any lump-sum payable as compensation has been settled by agreement, or where any compensation payable to a woman or a person under a legal disability has been settled, a memorandum thereof shall be sent by the employer to the Competent Authority for registration.
  • Inquisitorial Scrutiny into Adequacy and Fairness: Vests the Competent Authority with an affirmative statutory duty to examine the memorandum; the authority must not register the agreement unless satisfied that the agreed sum is adequate according to the statutory calculation formulas under Section 76 and was not obtained by fraud, undue influence, or coercion.
  • Statutory Notice and Inquiry Procedure: Prior to recording the agreement in the official register, the Competent Authority must issue notice to the affected employee and dependents, affording them an opportunity to state whether the settlement was voluntary and whether the full compensation sum was actually received.
  • Power to Refuse Registration and Order Independent Rectification: If the Competent Authority finds that the compensation is inadequate or that the agreement was procured through undue pressure, the authority is empowered to refuse registration and direct the employer to pay the full statutory amount or initiate formal adjudication under Section 88.
Key Landmark Precedents:
  • Central Inland Water Transport Corp. Ltd. v. Brojo Nath Ganguly (1986) 3 SCC 156: The Supreme Court ruled that contracts entered into between parties of unequal bargaining power that are unconscionable or exploitative are contrary to public policy under Section 23 of the Contract Act and legally void.
  • Workmen of Dimakuchi Tea Estate v. Dimakuchi Tea Estate 1958 SCR 1156: The Supreme Court held that the settlement of labour claims must strictly conform to statutory standards, and private agreements cannot derogate from minimum statutory entitlements.
  • National Insurance Co. Ltd. v. Mastan (2006) 2 SCC 641: Reiterated that statutory compensation schemes do not permit an employer to contract out of statutory liabilities by compelling the worker to accept a lesser amount through private compromise.
Courtroom Practice & Strategic Litigation Guidance:

Corporate HR and insurance claims managers must never rely on informal handwritten vouchers or private out-of-court receipts to settle permanent disability or death claims. Always execute a formal Memorandum of Agreement in the prescribed statutory form, accurately stating the gross monthly wage, Schedule IV multiplying factor, and physician's certified disability rating. Submit the memorandum to the Competent Authority within 14 days of execution, accompanied by proof of bank transfer, to obtain a formal certificate of registration under Section 96.

Section 95 All 163 Sections of Code on Social Security, 2020 Section 97