THE ADDITIONAL EMOLUMENTS (COMPULSORY DEPOSIT) ACT, 1974
ACT NO. 37 OF 1974
[1st September, 1974]
An Act to provide, in the interests of national economic development, for the compulsory deposit of additional emoluments and for the framing of a scheme in relation thereto, and for Matters connected therewith or incidental thereto.
BE it enacted by Parliament in the Twenty-fifth Year of the Republic of India as follows:-
1. Short title, extent and commencement.
(1) This Act may be called the Additional Emoluments (Compulsory Deposit) Act, 1974.
(2) It extends to the whole of India.
(3) It shall be deemed to have come into force on the 6th day of July, 1974, except section 14 which shall come into force at once.
4. Act to have overriding effect.
The provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any enactment other than this Act or in any instrument having effect by virtue of any enactment other than this Act.
COMPULSORY DEPOSIT OF ADDITIONAL EMOLUMENTS
5. Additional Wages Deposit Account and Additional Dearness Allowance Deposit Account.
(1) There shall be opened by such authorities as may be specified in the scheme two separate accounts, to be known, respectively, as the Additional Wages Deposit Account and the Additional Dearness Allowance Deposit Account, and different authorities may be specified for different establishments or different categories of employees or establishments.
(2) The specified authority shall, in relation to each Deposit Account, open a separate ledger account in the name of each employee in relation to whom any contribution is made to the said Account, and credit the contributions so made in the said ledger account.
6. Duty of employer or other person to make deductions of additional wages and additional dearness allowance from emoluments
7. Deposit to carry simple interest.
(1) Every amount credited under section 6, in relation to an employee in a Deposit Account, shall carry simple interest at a rate, which shall be two and a half per cent. over and above the bank deposit rate.
(2) The interest due on the amount credited in any Deposit Account shall be calculated in such manner as may be specified in the scheme.
(3) Interest accruing on amounts credited under section 6 to any Deposit Account shall ensure to the benefit of the employees in relation to whom such amounts have been credited.
(4) For the purpose of the deductions under section 80L of the Income-tax Act, 1961, (43 of 1961.) interest received on a deposit under this Act shall be deemed to be interest received on a deposit with a banking company to which the Banking Regulation Act, 1949, (10 of 1949.) applies.
8. Assessment for —— purpose of income tax.
(1) For the purposes of computing, under the Income-tax Act, 1961, the total income of an employee, the amount credited to his ledger account in the Additional Wages Deposit Account or the Additional Dearness Allowance Deposit Account Shall not be included in his total income of the previous year in which it is so credited; but so much of 505 the amount as is repaid to him shall be liable to be included in his total income of the previous year in which it is repaid.
(2) For the purposes of computing, under the Income-tax Act, 1961, (43 of 1961.) the total income of an employee, the amount repaid to him under this Act shall be deemed to be salary paid to him in arrears and the provisions of sub-section (1) of section 89 of that Act shall apply accordingly
Explanation.-In this section, “previous year” and “total income have the meanings respectively assigned to them in the Income-tax Act 1961. (43 of 1961.)
10. Power of Central Government to frame scheme.
(1) The Central Government shall, by notification, frame one or more schemes in relation to the amounts credited to the Deposit Accounts under this Act.
(2) A scheme framed under sub-section (1) may provide for-
(a) the authorities by which the Additional Wages Deposit Account and the Additional Dearness Allowance Deposit Account, shall be opened and maintained;
(b) the time and manner in which amounts deducted from additional wages or additional dearness allowance shall be deducted and credited to the respective Deposit Account;
(c) the documents to be issued to persons in relation to whom amounts have been credited to the Deposit Accounts as evidence of such credit;
(d) authority or authorities by or through which credits to the Deposit Accounts may be made;
(e) the accounts to be maintained with respect to the amounts credited to the Deposit Accounts and the officer by whom such Accounts shall be maintained;
(f) the nomination of persons to receive the amount standing in a Deposit Account to the credit of an employee in the event of his death, and cancellation or change of such nomination;
(g) the issue of duplicate of any document issued as evidence of any credit in the event of loss or destruction of the original and the fee, not exceeding rupees two, on the payment of which such duplicate may be issued;
(h) repayment of amounts credited to the Deposit Accounts with interest due thereon and the conditions, if any, under which such repayment may be made;
(i) any other matter which may be necessary or proper for the effective implementation of the scheme.
(3) A scheme framed under this section may provide that all or any of its provisions shall take effect, either prospectively or retrospectively, on such date, not being a date earlier than the appointed day, as may be specified in this behalf in the scheme and every scheme framed under this section shall have effect notwithstanding anything contained in any law (other than this Act) for the time being in force or in any instrument having effect by virtue of any enactment other than this Act.
(4) The Central Government may make a scheme to add to, amend or vary any scheme framed under sub-section M.
11. Rounding off.
Where the amount of any credit to be made in any Deposit Account contains a part of a rupee, then, such part, if it is fifty paise or more, shall be increased to one complete rupee and if it Is less than fifty paise, it shall be ignored.
12. Amounts due to be first charge in the case of insolvency or liquidation of the employer.
(1) Where any amount required by this Act to be credited to any Deposit Account or remitted to a nominated authority has not been so credited or remitted by any employer, the amount in respect of which such omission or failure was made, together with interest due thereon calculated at the rate specified in sub- section (1) of section 7, shall, in the event of the employer being adjudicated by any court to be insolvent or, being a company is ordered by any court to be wound up, be deemed to be first charge on the assets of the insolvent or of the company, as the case may be, and shall have priority over all other debts, and be paid in full.
(2) The court shall cause the sum which is required, under sub- section (1), to be paid in priority to all other debts to be remitted to the. nominated authority for crediting the same to the appropriate Deposit Account.
13. Transfer of establishments.
Where an employer, in relation to an establishment to which this Act applies, transfers that establishment in whole or in part by sale, gift or otherwise or grants any licence in respect of such establishment the employer and the person to whom the establishment is so transferred or the licence is so given shall be jointly and severally liable to credit to the appropriate Deposit Account or, as the case may be, remit to the nominated authority, the sums which are required by this Act to be so credited or remitted:
Provided that the liability of the transferee or licensee shall be limited to the value of the assets obtained by him on such transfer or licence, as the case may be.
(1) Whoever, with a view to-
(a) avoiding making any deduction of additional wages and additional dearness allowance and crediting the same to the Additional Wages Deposit Account or the Additional Dearness Allowance Deposit Account, as the case may be, or
(b) aiding or abetting any other person to avoid making any such deduction or credit, knowingly makes, or causes to be made, any statement or representation which he knows to be false or does not believe to be true, shall be punishable with imprisonment for a term which may extend to six In months, or with fine which may extend to one thousand rupees, or with both.
(2) Any employer who omits or fails to credit to any Deposit Account or remit any amount to the nominated authority, as and when such credit or remittance becomes due under this Act or any scheme framed thereunder, shall be punished-
(a) with imprisonment for a term which shall not be less than three months but may extend-
(i) in the case of the first offence, to six months, and
(ii) in the case of any second or subsequent offence, to one year:
Provided that the court may, for any adequate and special reasons, to be recorded by it in the judgment, impose a sentence of imprisonment for a term lesser than three months or a fine in lieu of imprisonment; and
(b) also with fine which shall not be less than the amount which has not been credited to a Deposit Account or remitted to the nominated authority as required by this Act, and the interest due there on, calculated at the rate specified in sub-section (1) of section 7, but may extend to twice the said amount and the interest due thereon, and out of the fine, if realised, the court trying the offence shall cause an amount equal to the amount which has not been credited to a Deposit Account or remitted to the nominated authority with interest due thereon, to be remitted to the nominated authority for crediting the same to the appropriate Deposit Account, and on such amount being remitted to the nominated authority, the liability of the employer shall, to the extent of the amount so remitted by the court, stand discharged.
(3) Whoever contravenes any provision of this Act or any scheme or order made thereunder for which no penalty has been separately pro- vided for shall be punished with imprisonment for a term which may extend to six months, or with fine which may extend to one thousand rupees, or with both.
15. Offences by companies.
(1) Where any offence under this Act has been committed by a company, every person who at the time the offence was committed was in charge of, and was responsible to, the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly:
Provided that nothing contained in this sub-section shall render any such person liable to any punishment, if he proves that the offence was committed without his knowledge or that he had exercised all due diligence to prevent the commission of such offence.
(2) Notwithstanding anything contained in sub-section (1), where an offence under this Act, has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.
Explanation.-For the purposes of this section,-
(a) “company” means any body corporate and includes a firm or other association of individuals; and
(b) “director”, in relation to a firm, means a partner in the firm, and, in relation to a Hindu undivided family, means the Karta of such family.
16. Cognizance of offences.
No court shall take cognizance of any offence punishable under this Act except upon a complaint made by the Central Government or any officer or authority authorised in writing by the Central, Government in this behalf.
17. Power to exempt.
Where the Central Government is of the opinion that it is necessary or expedient so to do either in the public interest or having regard to the peculiar circumstances of any case, it may, by notification, and subject to such conditions, if any, as it may specify in the notification,-
(a) exempt any establishment or category of employees, working in any establishment from the operation of all or any of the provisions of this Act;
(b) exempt, in the case of extreme hardship to any employee, from crediting any amount in relation to such employee to the Additional Wages Deposit Account;
(c) empower deductions from additional wages in relation to an employee or class of employees, at a rate lesser than the rate specified in this Act.
18. Power to delegate.
The Central Government may, by notification, direct that ally power which may be exercised by it under this Act or any scheme framed under this Act shall, subject to such restrictions and conditions, if any, as it may specify in the notification, be exercised also by-
(a) such officer or authority subordinate to the Central Government; or
(b) such State Government or such officer or authority sub- ordinate to a State Government; or
(c) such other person or authority, as may be specified in the notification:
Provided that the powers conferred by section 10 and section 24 shall not be delegated under this section.
19. Protection against attachment.
(1) The amount standing to the credit of any employee in any Deposit Account shall not be liable to attachment under any decree or order of any court in respect of any debt or liability incurred by the employee.
(2) Any amount standing to the credit of an employee, in any Deposit Account at the time of his death and payable to his, nominee under the scheme shall vest in the nominee and shall be free from any debt or other liability incurred by the deceased or incurred by the nominee before the death of the employee.
20. Power to call for returns and inspect accounts.
(1) The nominated authority or any officer authorised by the nominated authority in this behalf may call for such returns, as may be prescribed, from any employer to whom this Act applies.
(2) The books of account and other books and papers of any em- ployer to whom this Act applies shall be open to inspection by the nominated authority or any person authorised by the Central Government in this behalf during business hours:
Provided that such inspection may be made without giving any previous notice to the employer or any officer of the employer.
(3) The nominated authority or any authorised officer may, during the course of inspection,–
(i) make, or cause to be made, copies of the books of account and other books and papers;
(ii) place, or cause to be placed, any marks of identification thereon in token of the inspection having been made.
(4) If after inspection the nominated authority or the authorised officer finds that any additional wages or additional dearness allowance has not been credited by the employer to the appropriate Deposit Account or, as the case may be, remitted to the nominated authority, it, or he shall determine the amount in respect of which such credit or remittance has not been made: Provided that no such determination shall be made except after giving to the employer a reasonable opportunity of being heard.
(5) It shall be the duty of every employer to whom this Act applies, to furnish to the nominated authority a copy of the award, decree or order of any court, tribunal or other authority or agreement or settlement relating to wage revision or revision of dearness allowance and also to produce such books of account and other books and papers as the nominated authority or the officer making the inspection may require.
(6) Where any revision of wages or dearness allowance is made otherwise than in pursuance of any award, decree or order of any court, tribunal or other authority or agreement or settlement, the employer shall give an intimation to the nominated authority about such revision of wages or dearness allowance and furnish to the nominated authority such books of account and other books and papers as that authority may require.
21. Protection of action taken in good faith.
No suit or other legal proceeding shall lie against the Central Government or any State Government or any officer authorised by the Central or State Government to discharge any functions under this Act, for any loss or damage caused or likely to be caused by anything which Is in good faith done or intended to be done in pursuance of this Act or any scheme framed thereunder.
22. Persons performing functions under this Act to be public servants.
Any person to whom any power of the Central Government is delegated under section 18 or who is authorised to exercise any Power specified in section 20 shall, if he) is not a public servant, be deemed to be a public servant within the meaning of section 21 of the Indian Penal Code. (45 of 1860.)
23. Recovery of arrears.
Without prejudice to the provisions of section 14, any amount which ought to have been credited under this Act to a Deposit Account or remitted to the nominated authority but has not been so, credited or remitted in accordance with the provisions of this Act or scheme or order made thereunder, shall be payable by the employer, together with interest due thereon calculated at twice the rate at which interest is payable under sub-section (1) of section 7, and in default of such payment, such amount, together with interest due thereon at the aforesaid rate, shall be recoverable as an arrear of land revenue:
Provided that where any such amount has been recovered by the court under sub-section (2) of section 14, the said amount shall not be recoverable under this section.
24. Power to make rules.
The Central Government may, by notification, make rules to carry out the provisions of this Act.
26. Power to remove difficulties.
If any difficulty arises in giving effect to the provisions of this Act, the Central Government may, by order, not inconsistent with the provisions of this Act, remove the difficulty:
Provided that no such order shall be made after the expiry of a period of two years from the appointed day.
27. Repeal and saving.
(1) The Additional Emoluments (Compulsory Deposit) Ordinance, 1974 (8 of 1974.) is hereby repealed.
(2) Notwithstanding such repeal, anything done or any action taken under the Ordinance so repealed (including any appointment, exemption, nomination, direction or order made thereunder) shall be deemed to have been done or taken under the corresponding provisions of this Act, and the repeal of the said Ordinance shall not affect any penalty or punishment incurred in respect of any offence committed against the said Ordinance or any investigation or legal proceeding in respect of such penalty or punishment and any such investigation or legal proceeding may be instituted or continued and any such penalty or punishment may be imposed as if section 12 and other provisions of the said Ordinance. necessary for the purposes aforesaid, had been included in this Act.