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Section 97: Effect of failure to register agreement

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 96 All 163 Sections of Code on Social Security, 2020 Section 98

Legal Commentary & Landmark Judgments: Section 97

Section 97 of the Code on Social Security, 2020 prescribes severe statutory consequences for an employer's failure to register a compensation agreement, rendering unregistered compromises wholly void and barring the employer from claiming any set-off or credit for unauthorized sums paid to the employee.

  • Absolute Legal Invalidity of Unregistered Agreements: Enacts that where a memorandum of any agreement, the registration whereof is required under Section 96, is not sent to the Competent Authority, the employer shall remain fully liable to pay the full statutory compensation payable under Chapter VII as if no agreement had ever been executed.
  • Strict Bar on Set-Off or Deduction of Paid Sums: Unless the Competent Authority expressly directs otherwise, the employer is statutorily prohibited from deducting or setting off more than one-half of any amount paid to the employee under an unregistered agreement, imposing a severe financial penalty on clandestine informal settlements.
  • Statutory Protection for Legally Disabled and Vulnerable Persons: The rule operates with uncompromising force in settlements involving female workers, minors, or persons suffering from severe cognitive/physical disabilities resulting from traumatic brain or spinal injuries sustained during employment.
  • Non-Obstante Override of Common Law Contract Principles: Overrides Section 63 of the Indian Contract Act, 1872 regarding accord and satisfaction; an unregistered discharge receipt cannot be pleaded as a defense in bar to statutory compensation proceedings.
Key Landmark Precedents:
  • Pratap Narain Singh Deo v. Srinivas Sabata (1976) 1 SCC 289: The Supreme Court held that statutory compensation obligations are non-negotiable; an employer cannot evade liability through private negotiations that bypass the statutory authority.
  • Radha Krishna Agarwal v. State of Bihar (1977) 3 SCC 457: Affirmed that where an act is required by statute to be done in a particular manner, it must be done in that manner or not at all; failure to register an agreement strictly under statutory procedure strips it of legal effect.
  • Kedar Nath Motani v. Prahlad Rai (1960) 1 SCR 861: The Supreme Court ruled that an agreement entered into in violation of mandatory statutory registration requirements cannot be enforced or set up as a shield against statutory claims.
Courtroom Practice & Strategic Litigation Guidance:

HR departments must eliminate the dangerous practice of executing 'Full and Final Settlement Deeds' or 'No Further Claims' waivers with injured workers or deceased workers' families outside the statutory framework. An unregistered settlement deed is completely worthless before the Competent Authority and will not protect the company from an award for the full statutory amount plus 12% annual interest and a 50% penalty. Ensure all settlements are channeled through Section 96 registration.

Section 96 All 163 Sections of Code on Social Security, 2020 Section 98