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Section 47: Presumption about correctness of statement of employment

The Code on Wages, 2019 (Act No. 29 of 2019) • Official Statutory Text & Plain English Practice Guide

Statutory Mandate
Chapter VI: Payment of Dues, Claims and Audit
Competent Labour Forum
Act No. 29 of 2019
Section 46 All 67 Sections of Code on Wages, 2019 Section 48

Legal Commentary & Landmark Judgments: Section 47

Section 47 of the Code on Wages, 2019 establishes a powerful statutory presumption of accuracy in favor of audited balance sheets and profit and loss accounts of corporate employers produced during wage and bonus proceedings, restricting fishing inquiries while granting trade unions and authorities the qualified right to seek clarifications on specific accounting items.

  • Statutory Evidentiary Presumption: Where an audited balance sheet and profit and loss account of a company or corporation (audited by qualified statutory auditors under Section 141 of the Companies Act, 2013) is placed before the Section 45 Authority, Tribunal, or Arbitrator, the forum is legally bound to presume its contents and particulars to be accurate without requiring the corporate employer to prove each entry through oral evidence.
  • Qualified Right to Information & Clarifications: Under the proviso, if a trade union, employee, or the adjudicating authority is dissatisfied with the clarity of any entry, the Authority may direct the employer to furnish necessary clarifications, explanations, or supporting certificates from its statutory auditors.
  • Prohibition Against Roving and Fishing Inquiries: The section strictly curtails roving expeditions into the employer's internal ledgers, confidential trade secrets, and minute general accounts. Unless prima facie fraud, blatant falsification, or patent mathematical inconsistency is demonstrated, the audited financial statements are conclusive for computing gross profit and allocable surplus.
Key Landmark Precedents:
  • Associated Cement Companies Ltd. v. Their Workmen AIR 1959 SC 967: Landmark Constitution Bench decision formulating the Full Bench Formula for bonus; held that audited balance sheets must be taken as prima facie correct unless challenged by specific, substantiated evidence of manipulation.
  • Aluminium Corporation of India Ltd. v. Their Workmen (1963) 2 LLJ 629 (SC): The Supreme Court held that the presumption of accuracy under bonus legislation protects employers from frivolous cross-examination on every ledger entry, though patent irregularities must be explained.
  • Workmen of National and Grindlays Bank Ltd. v. The National and Grindlays Bank Ltd. (1976) 1 SCC 925: The Supreme Court affirmed that industrial tribunals cannot reject audited balance sheets arbitrarily; unions must point to specific discrepancies to justify directions for supplementary disclosures.
Courtroom Practice & Strategic Litigation Guidance:

Corporate employers facing bonus litigation must file certified copies of their audited balance sheet and P&L account accompanied by an affidavit of the Statutory Auditor. If the union files an application seeking general discovery or inspection of internal journals and vouchers, counsel for the employer must invoke Section 47 to resist the roving application, restricting any inquiry strictly to specific clarifications permitted under the proviso.

Section 46 All 67 Sections of Code on Wages, 2019 Section 48