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CS Executive · Setting Up of Business, Industrial and Labour Laws · The Code on Social Security, 2020

A Social Security Organisation (other than the Corporation) wishes to raise a loan and also to write off Rs 4 lakh of contribution it considers irrecoverable from a defunct employer. Which statement is correct under the Code on Social Security, 2020?

The loan needs the appropriate Government's previous sanction under section 120(3), but the organisation itself may sanction the write-off under section 121 when it considers the amount irrecoverable, subject to the prescribed conditions and manner. The other combinations misstate these provisions.

  1. ABoth the loan and the write-off need prior sanction of the appropriate Government
  2. BThe loan needs the previous sanction of the appropriate Government, while the write-off is sanctioned by the organisation itself on being of the opinion that the amount is irrecoverable, subject to prescribed conditionsCorrect
  3. CThe loan needs no sanction, while the write-off needs Central Government approval
  4. DNeither is permitted for a Social Security Organisation

Explanation

Section 120(3) requires the previous sanction of the appropriate Government for raising loans. Section 121 lets the organisation itself sanction the write-off when it forms the opinion that the amount is irrecoverable, subject to conditions and manner prescribed by the appropriate Government. So the option saying both need prior sanction is wrong.

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