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REGISTERED No. D-(D)-72

The Gazette of India

EXTRAORDINARY

PART II—Section 1

PUBLISHED BY AUTHORITY

No. 41] NEW DELHI, SATURDAY, JULY 6, 1974/ASADHA 15, 1896

Separate paging is given to this Part in order that it may be filed

a$ a separate compilation.

MINISTRY OF LAW, JUSTICE AND COMPANY AFFAIRS (Legislative Department)

New Delhi, the 6th July, 1974/Asadha 15, 1896 (Saka)

THE ADDITIONAL EMOLUMENTS (COMPULSORY DEPOSIT) ORDINANCE, 1974

No. 8 OF 1974

Promulgated by the President in the Twenty-fifth Year of the Republic of India. An Ordinance to provide, in the interests of national economic development, for the compulsory deposit of additional emolu- ments and for the framing of a scheme in relation thereto, and for matters connected therewith or incidental thereto.

WHEREAS Parliament is not in session and the President is satisfied that circumstances exist which render it necessary for him to take imme- diate action;

Now, THEREFORE, in exercise of the powers conferred by clause (1) of article 123 of the Constitution, the President is pleased to promulgate the following Ordinance: —

CHAPTER I

PRELIMINARY

1. (1) This Ordinance may be called the Additional Emoluments

(Compulsory Deposit) Ordinance, 1974.

Short title, ex- tent and commence- ment.

(475)

(2) It extends to the whole of India.

(3) It shall come into force at once.

2. In this Ordinance, unless the context otherwise requires,—

Defini- tions.

(o) "appointed day" means the day on which this Ordinance comes into force;

(b) "additional dearness allowance" means such dearness allow- ance as may be sanctioned from time to time, after the appointed day, over and above the amount of dearness allowance payable imme- diately before the date from which such sanction of additional dear- ness allowance is to take effect;

(c) "additional wages" means such wages, over and above the wages payable to an employee immediately before the appointed day, as may become payable to the employee after the appointed day in pursuance of any wage revision, whether by or under an agreement or settlement between the parties or any award, decree or order of any court, tribunal or other authority, but does not include—

(i) any increment due to the employee in accordance with the time scale of pay applicable to the post held by him imme- diately before the appointed day, and any consequent increase in any allowance admissible under any rule or order in force imme- diately before the appointed day;

(ii) any higher wages payable to the employee on his pro- motion or transfer to a post involving higher responsibilities and duties;

(Ui) any honorarium payable for any work done outside office hours;

(iv) any allowance payable for over-time work;

(v) any increase in wages sanctioned in pursuance of the recorrmifirKiations made by the Third Central Pay Commission;

(d) "bank deposit rate" means the maximum rate at which inte- rest may be paid by a banking company on deposits (other than those maintained in saving accounts) in accordance with the directions made by the Reserve Bank of India in exercise of the powers con- ferrred on it by section 21 or section 35A, or both, of the Banking Regulation Act, 1949;

10 of 1949.

(e) "Deposit Account" means the account opened and maintain- ed under section 5;

(f) "emoluments" includes wages and dearness allowance;

(g) "employer" means,—

(i) in relation to an establishment which is a factory the owner or occupier of the factory, including the agent of such owner or occupier, and where a person is named as manager of the factory under clause (f) of sub-section (1) of section T of the Factories Act, 1948, the person so named- 63 Of 1948.

(ii) in relation to an establishment 'belonging to or under the control of the CJentral Government or a State Government, the person or authority appointed by the appropriate Govern- ment for the supervision and control of the employees, or where no person has been so appointed, the head of the Department concerned;

but does not include—

(2) any contribution paid by the employer to any pension or provident fund, and the interest which may have accrued thereon;

(2) any travelling allowance or the value of any travelling concession;

(3) any sum, not exceeding rupees two hundred and fifty per annum, paid to the employed person to defray special ex- penses entailed on him by the nature of his employment;

(4) any gratuity payable on the termination of employment

in cases other than those specified in sub-clause (iv);

(5) any dearness allowance.

&. This Ordinance shall apply to an employee of—

(a) the Central or State Government;

(b) a local authority;

Persona to whom this Or- dinance applies.

1 of 1958, (c) a company as defined in section 3 of the Companies Act, 1956, including a foreign company within the meaning of section 591 of the Companies Act, 1956, and a Government company as defined in section 617 of that Act;

(d) any other corporation, including a society established by or

under a Central, Provincial or State Act;

43 of 1961.

(c) any individual, association or body of individuals or Hindu undivided family liable to payment of tax under the Income-tax Act, 1961, and entitled to deduct from the wages paid to the employees for the purpose of determination of income-tax under that Act;

(f) any establishment, not being an establishment owned by Government, local authority or person specified, respectively, in clauses (a) to (e) (both inclusive), to which the provisions of any law relating to provident funds (other than those established under the Public Provident Fund Act, 1968) apply;

23 of 1968.

(gf) any other establishment, not being an establishment to which any of the foregoing clauses apply, established at the instance or in pursuance of a resolution, of the Central Government or wholly or substantially financed by that Government.

Ordinance to have overrid- ing effect.

4. The provisions of this Ordinance shall have errect notwithstanding anything inconsistent therewith contained in any enactment other than this Ordinance or in any instrument having effect by virtue of any en- actment other than this Ordinance.

CHAPTER II

COMPULSORY DEPOSIT OF ADDITIONAL EMOLUMENTS

5. (1) There shall be opened by such authorities as may be specified in the scheme (hereinafter referred to as the specified authority) two separate accounts, to be known, respectively, as the Additional Wages Deposit Account and, the Additional Dearness Allowance Deposit Ac- count, and different authorities may be specified for different categories of establishments.

Additional WageB De- posit Ac- count and the Addi- tional Dearness Allowance Deposit Account.

(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. (1) For the purposes of this Ordinance, the deductions speciflsd in sab-section (2) shall be made,—

(a) in the case of additional wages, for a period of one year from the appointed day, and

(fa) in the case of additional dearness allowance, for a period of two years from the appointed day.

(2) On the commencement of this Ordinance,—

Duty of employer or other person to make deduc- tions of additional wages and additional dearnesa allowance from wages (a) every employer, who draws or disburses, after the appointed day, wages of an employee to whom this Ordinance applies, shall, as and when wages are disbursed by him for any period, deduct from the wages so disbursed, the whole of the additional wages and one-half of the additional dearness allowance and credit the amount so deducted, in accordance with the scheme, to the Additional Wages Deposit Account and the Additional Dearness Allowance De- posit Account, respectively;

(b) any gazetted or other officer to whom this Ordinance applies, who draws, after the appointed day, his own wages, shall make de- ductions in each wage bill in respect of the whole of the additional wages and one-half of the additional dearness allowance, and the authority which maintains the accounts of the wages drawn by such gazetted or other officer shall credit the amount so deducted, in accordance with the scheme, to the Additional Wagea Deposit Ac- count and the Additional Dearness Allowance Deposit Account, respectively;

(c) every other employer, who disburses, after the appointed day, wages to any employee to whom this Ordinance applies, shall, as and when wages are disbursed by him for any period, deduct from the wages so disbursed, the whole of the additional wages and one-half of the additional dearness allowance, and shall remit, in accordance with the scheme, the amount so deducted to such autho- rity as may be nominated by the Central Government in this be- half, and on receipt of such amount the nominated authority shall Credit the amount so received to the account of the concerned em- ployee in the Additional Wages Deposit Account and the Additional Dearness Allowance Deposit Account, respectively.

(3) The specified authority shall, as soon as may be practicable after the end of each year, prepare separately, in relation to the amounts cre- dited to the respective Deposit Accounts to the credit of each employee, and furnish to the employee a copy of the said accounts showing therein separately the amounts credited thereto in relation to the employee and the interest due thereon.

7. (1) Every amount credited under section 6, in relation to an em- ployee 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.

Deposits to carry- simple interest.

(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 enure to the benefit of the employee in relation to whom such amounts have been credited.

43 of 19flL

10 of 1949.

(4) For the purpose of the deduction under section 80L of the Income-tax Act, 1961, interest received on a deposit under this Ordi- nance shall be deemed to be interest reeeived on a deposit with a banking company to which the Banking Regulation Act, 1949, applies.

AsseSS- Ment for the pUrjJofle of income tax.

8. (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 the amount as is repaid to him shall be liable to be included in hia total income of the previous year in which it is repaid.

43 of 1961.

(2) For the purposes of computing, under the Income-tax Act, 1961, the total income of an employee, the amount repaid to him under this Ordinance shall be deemed to be salary paid to him in arrears and the provisions of sub-section (]) of section 89 of that Act shall apply ac- cordingly.

43 Of 1901.

Explanation.—In this section, "previous year" and "total income" have the meanings respectively assigned to them in the Income-tax Act, 1961.

Repayment of depositB,

9. (1) Subject to thejpravisions of sub-section (2), every amount credited to the Deposit Accounts shall be repayable with interest due thereon,—

(a) in the case of an amount credited to the Additional Wages Deposit Account, at any time after the expiry of one year from the appointed day; and

(b) in the case of an amount credited to the Additional Dear- ness Allowance Deposit Account at any time after the expiry of two years from the appointed day:

Provided that nothing in this section shall prevent earlier repayment of any amount credited to either of the Deppsit Accounts with interest due thereon in any case in which the authority empowered to make such repayment is satisfied that extreme hardship will be caused unless such repayment is made:

Provided further that an employee may, at his option, retain the whole or any part of the amount credited in relation to him in the Addi- tional Wages Deposit Account or the Additional Dearness Allowance Deposit Account, or bo

Provided also that the whole of the amount standing to the credit of an employee in either or both of the Deposit Accounts shall be repaid to him on his superannuation or resignation from office or if he ceases to be in the service of the employer by whom the amount was credited to the Deposit Account.

(2) The aggregate amount credited to any Deposit Account by or in relation to an employee shall be repaid to the employee in five equal annual instalments commencing from the expiry of one year or two years, aa the case may be, from the appointed day, together with interest due on unpaid instalment or instalments.

10. (2) The Central Government shall, by notification, frame one or more schemes, to be called the "Additional Emoluments Compulsory Deposit Scheme", in relation to the amounts credited to the Deposit Accounts under this Ordinance,

Additional Emolu- ments Compul- sory Deposit Scheme.

(2) A scheme framed under sub-section (i) may provide for—

(a) the authorities by which the Additional Wages Deposit Account and Additional Dearness Allowance Deposit Account shall be opened and maintained;

(b) the manner in which amounts deducted from additional wages or additional dearness allowance shall be 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;

Of) 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 undter this section may provide that all or any of its provisions shall take effect, either prospectively or retrospectively, on such date 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 Ordinance) for the time being in force or in any instrument having effect by virtue of any en- actment other than this Ordinance.

(4) The Central Government may make a scheme to add to, amend or vary any scheme made under sub-section (1).

Rounding off.

11. Where the amount of any credit to be made in any Deposit Ac- count 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.

CHAPTER III

MISCELLANEOUS

12. (I) Whoever, with a view to—Penalties.

(a) avoiding making any deductions of additional wages and additional dearness allowance and crediting the same to the Addi- tional 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 months, or with fine which may extend to one thousand rupees, or with both.

, w'

(2) Any employer who omits or fails, without any reasonable excuse, to comply with the provisions of this Ordinance or of any scheme or order made under the scheme, shall be punishable with imprisonment for a term which may extend to one year, or with fine which may ex- tend to one thousand rupees, or with both.

Offenoes by companies

13. (1) Where an offence under this Ordinance 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 any offence under this Ordinance, 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 purpose 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.

Power to exempt.

14. Where the Central Government is of the opinion that it is neces- sary 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 work- ing in any establishment from the operation of all or any of the pro- visions of this Ordinance;

(b) exempt, in the case of extreme hardship to any employee, from crediting any amount in relation to such employee to the Addi- tional 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 Ordinance.

Power to delegate.

15. The Central Government may, by notification, direct that any power which may be exercised by it under this Ordinance or any scheme framed under this Ordinance shall, subject to such restrictions and con- ditions, if any, as it may specify in the notification, be exercised also by—

(a) such officer or authority subordinate to Central Govern-

ment; or

(b) such State Government or such officer or authority sub-

ordinate to a State Government; or

(c) such other authority as may be specified .11 the notification.

16. (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.

Protec- tion against attach- ment.

(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.

17. (2) The specified authority may call for such returns as may be prescribed from any employer to whom this Ordinance applies.

Power to call for re- turns and inspect ac- counts.

(2) The books of account and other books and papers of any em- ployer to whom this Ordinance applies shall be open to Inspection by the specified authority or any officer of Government authorised by the Central Government in this behalf during the business hours:

Provided that such inspection may be made without giving any pre-

viou? notice to the employer or any officer of the employer.

(3) The specified 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 there- on in token of the inspection having been made.

(4) It shall be the duty of every employer to whom this Ordinance applies, to produce such books of account and other books and papers as the specified authority or the officer making the inspection may re- quire.

Protec- tion of action taken In good faith.

18. 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 Ordi- nance, 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^ursuance of this Ordinance.

Becovery of arrears

19. Any amount which ought to have been credited under this Ordi- nance to a Deposit Account but has not been so credited, shall be recover- able as an arrear of land revenue.

20. (1) The Central Government may, by notification, make rules to carry out the provisions of this Ordinance.

Power to make rules.

(2) In particular, and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters, namely: —

(a) the conditions under which any category of employees may be exempted from the provisions of this Ordinance;

(b) the manner in which interest is to be computed on the amounts deposited in the Additional Wages Deposit Account and the Additional Dearness Allowance Deposit Account;

(c) the manner in which withdrawals from the Additional Wages Deposit Account or Additional Dearness Allowance Deposit Account may be made;

(d) any other matter in relation to which such rule is required to be, or may be, made.

(3) Every rule and every scheme made by the Central Government under this Ordinance shall be laid, as soon as may be after it is made, before each House of Parliament, while it is in session for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the rule or the scheme, as the case may be, or both Houses agree that the rule or scheme, as the case may be, should not be made, the rule or scheme shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without pre- judice to the validity of anything previously done under that rule or scheme.

21. If any difficulty arises in giving effect to the provisions of this Ordinance, the Central Government may, by order, not inconsistent with the provisions of this Ordinance, remove the difficulty:

Power to re- move diffi- culties.

Provided that no such order shall be made after the expiry of a period of two years from the appointed day.

V. V. GIRI,

President.

S. K. MAITRA,

Joint Secy, to the Government of India.

PRINTED BY THE MANAGER, GOVERNMENT OF INDIA. PRESS, MINTO ROAD, NEW

DELHI AND PUBLISHED BY THE CONTROLLER OF PUBLICATIONS, DELHI, 1 9 74