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Section 48: Power of Central Government to appoint Authority

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 47 All 67 Sections of Code on Wages, 2019 Section 49

Legal Commentary & Landmark Judgments: Section 48

Section 48 of the Code on Wages, 2019 addresses non-corporate employers (sole proprietorships, partnerships, HUFs, and unregistered associations), empowering the adjudicating authority or tribunal to order an independent audit of their books of account by a qualified Chartered Accountant when accounts are unaudited, improperly kept, or challenged for unreliability.

  • Statutory Coverage of Non-Corporate Establishments: Unlike corporate employers governed by Section 47 where statutory audit is mandatory under the Companies Act, 2013, non-corporate employers are frequently subject to informal accounting practices. Section 48 bridges this compliance gap in wage, bonus, and deduction disputes.
  • Discretionary Power to Direct Independent Professional Audit: Where the Section 45 Authority, Tribunal, or Arbitrator is satisfied that the employer's accounts have not been audited by a qualified auditor or where grounds exist to question their integrity, it possesses express statutory authority to direct the employer to submit books to a Chartered Accountant selected by the authority, or direct a fresh audit at the employer's expense.
  • Evidentiary Weight of Independent Audit Reports: Once audited pursuant to directions under Section 48, the resulting balance sheet, trading account, and profit and loss statement acquire statutory evidentiary weight, enabling the forum to determine available surplus, gross business revenues, and bonus liabilities on an objective footing.
Key Landmark Precedents:
  • Bareilly Electricity Supply Co. Ltd. v. The Workmen (1971) 2 SCC 617: The Supreme Court held that while strict rules of the Evidence Act do not apply to industrial tribunals, principles of natural justice and basic evidentiary reliability require that unverified financial statements cannot be acted upon without authentic audit and opportunity for rebuttal.
  • Khandesh Spinning & Weaving Mills Co. Ltd. v. Rashtriya Girni Kamgar Sangh AIR 1960 SC 571: The Supreme Court held that balance sheets produced by private employers cannot be accepted blindly where their accuracy is disputed on reasonable grounds; verification through proper audit is essential.
  • State of Mysore v. Shivabasappa Shivappa Makapur AIR 1963 SC 375: The Supreme Court affirmed that domestic and industrial tribunals must rely on credible, verified evidentiary material, ensuring both parties have access to authenticated records.
Courtroom Practice & Strategic Litigation Guidance:

Non-corporate employers (e.g., MSME partnerships, sole proprietorships) should proactively engage a Chartered Accountant to audit annual accounts if bonus or wage disputes are brewing. Presenting uncertified balance sheets before the Section 45 Authority invites an adverse order under Section 48, compelling an expensive, intrusive third-party audit and potential exposure to adverse inferences.

Section 47 All 67 Sections of Code on Wages, 2019 Section 49