Section 42: Corporation’s rights when an employer fails to register, etc.

Finin2min analysis — what the section actually does

Full statutory text — Section 42

42. Corporation’s rights when an employer fails to register, etc.— (1) If any employer,—
      (a) fails or neglects to insure under section 28, an employee at the time of his appointment or within
    such extended period as may be prescribed by the Central Government, as a result of which the
    employee becomes disentitled to any benefit under this Chapter; or
      (b) insures under section 28, an employee on or after the date of accident which resulted in personal
    injury to such employee which has the effect of making such employee disentitled to receive any
    dependants benefit or disablement benefit from the Corporation; or
      (c) fails or neglects to pay any contribution which under this Chapter he is liable to pay in respect of
    any employee and by reason thereof such employee becomes disentitled to any benefit or becomes
    entitled to a benefit on a lower scale,
then, the Corporation may, on being satisfied in the manner prescribed by the Central Government that the
benefit is payable to the employee, pay to the employee benefit at such rate to which he is entitled or would
have been entitled if the failure or neglect would not have occurred, and the Corporation shall be entitled
to recover from the employer, subject to the employer being given an opportunity of being heard, the
capitalised value of the benefit paid to the employee, to be calculated in such manner as may be prescribed
by the Central Government:
    Provided that the capitalised value to be calculated may be adjusted for the payment of any contribution
and interest or damages that the employer is liable to pay for delay in the payment of or non-payment of
such contribution.
    (2) The amount recoverable under this section may be recovered as if it were an arrear of land revenue
or recovered in the manner specified under sections 129 to 132.

How to apply this provision

1. Primary statutory test — (1) If any employer,— (a) fails or neglects to insure under section 28, an employee at the time of his appointment or within such extended period as may be prescribed by the Central Government, as a result of which the employee becomes disentitled to any benefit under this Chapter; or (b) insures under section 28, an employee on or after the date of accident which resulted in personal injury to such employee…
2. Additional operative limb — Provided that the capitalised value to be calculated may be adjusted for the payment of any contribution and interest or damages that the employer is liable to pay for delay in the payment of or non-payment of such contribution.
3. Qualification / exception to test — Provided that the capitalised value to be calculated may be adjusted for the payment of any contribution and interest or damages that the employer is liable to pay for delay in the payment of or non-payment of such contribution.
4. Evidence file — retain facts and records proving the role/status of: Employer, Employee / worker, Central Government, Corporation / EPFO / Board.

Rules, forms and cross-references

A direct concordance is not exhaustive. Central/State jurisdiction, schemes, authority appointments, saved instruments and later notifications may change the practical route without changing the section wording.

Worked example

Q&A — Section 42

Source & verification trail