Transfer, Good Faith, Misuse and Transitional Provisions

The proviso. The liability of the transferee is limited to the value of the assets obtained by him by the transfer.

Four things to hold, and each can be the point of a problem.

The modes are exhaustive in width, not in list. Sale, gift, lease, licence or in any other manner whatsoever, so the form of the transaction cannot be used to escape.

A partial transfer counts. "In whole or in part."

The liability is for the past only, up to the date of transfer. Liabilities after it are the transferee's own.

The transferee's exposure is capped at the value of the assets he obtained. He cannot be made to pay more than he received, which is what makes the section fair to a buyer who did not create the arrears.

Section 146: public servants

Every member of a Social Security Organisation, its officers and staff, any Inspector-cum-Facilitator, competent authority, Authorised Officer, Recovery Officer, and any other person discharging any function under this Code, shall be deemed to be a public servant within the meaning of section 21 of the Indian Penal Code 1860.

The consequence runs both ways and a good answer says so. It brings these people within the criminal law governing public servants, including the offences of taking gratification; and it protects them, because offences against public servants in the discharge of their duty apply too.

Section 147: protection of action taken in good faith

No suit, prosecution or other legal proceeding shall lie against:

1. the Central Government;
2. a State Government;
3. a Social Security Organisation;
4. a competent authority;
5. any officer or staff of a Social Security Organisation; or
6. any other person or authority,

discharging functions or exercising powers under the Code, for anything which is in good faith done or intended to be done in pursuance of the Code or of any rules, regulations or schemes made under it.

Note the two limits, because they are what an answer needs. The protection covers what is done in good faith, so a dishonest or mala fide act is outside it. And it covers what is done or intended to be done in pursuance of the Code, so an act wholly outside the Code is unprotected.

Section 148: misuse of benefits

If the appropriate Government is satisfied in the manner prescribed by it that any establishment or any other person has misused any benefit provided under the Code or a scheme, it may by notification deprive that establishment or person of the benefit for such time as the notification specifies.

Two provisos. No such order shall be passed unless an opportunity of being heard is given. And the manner of ascertaining misuse relating to Chapter III shall be specified in the Provident Fund Scheme, Pension Scheme or Insurance Scheme.

Note that section 148 reaches an establishment as well as a person, and that the deprivation is for a specified time, not permanent.

Section 149: Central directions

The Central Government may give directions to:

• (i) any State Government or a State Board constituted under section 12, to execute in that State any of the provisions of the Code; or
• (ii) any of the Social Security Organisations, on matters relating to the implementation of the Code.

Section 150: power to frame schemes

The appropriate Government may, subject to the condition of previous publication, frame schemes not inconsistent with this Code for giving effect to its provisions.

Distinguish this from section 15, which frames the three named provident fund schemes, and from sections 109 and 114, which frame the unorganised and gig worker schemes. Section 150 is the general power.

Section 151: protection against attachment

This is the most useful section in the run and it has three sub-sections.

Section 151(1), the worker's balance is untouchable. Notwithstanding any other law, the amount standing to the credit of an employee under Chapters III, IV, V, VI or VII, of any member of any fund under the Code, or of any exempted employee in a provident fund maintained by his employer:

• shall not in any way be capable of being assigned or charged; and
• shall not be liable to attachment under any decree or order of any Court in respect of any debt or liability incurred by that employee, member or exempted employee.

So a worker's provident fund, insurance, gratuity, maternity benefit and compensation entitlements cannot be pledged, cannot be charged, and cannot be attached by his own creditors. Compulsory saving would be pointless if a moneylender could take it.

Section 151(2), on death. Any amount standing to the credit of a member, or of an exempted employee in his employer's provident fund, at the time of his death, and payable to his nominee or, failing nomination, to his family under the scheme or the rules of the fund, shall, subject to any deduction the scheme or rules authorise:

• vest in the nominee or that family;
• be free from any debt or other liability incurred by the deceased or by the nominee before his death; and
• not be liable to attachment under any decree or order of any court.

Note how far this goes. The money is free not only of the deceased's debts but of debts the nominee incurred before the death.

Section 151(3), the employer's side. Notwithstanding any other law, any amount due under those Chapters shall be a charge on the assets of the establishment and shall be paid in priority in accordance with the Insolvency and Bankruptcy Code 2016.

Sub-section (3) is the same rule as sections 19 and 47, extended across Chapters III to VII. Keep the two halves of section 151 apart: (1) and (2) protect the worker from his creditors; (3) protects the fund from the employer's creditors.

Section 152: amending the Schedules

Section 152(1). If the Central Government is satisfied that it is necessary or expedient, it may by notification amend the First, Fourth, Fifth, Sixth and Seventh Schedules by way of addition or deletion.

Section 152(2). If the appropriate Government is so satisfied, it may by notification amend the Second and Third Schedules by way of addition therein and not otherwise.

The asymmetry is deliberate and is a good short answer. The Second and Third Schedules are the employments and occupational diseases for employees' compensation. They may only be added to, never cut, so the protected list can grow but cannot shrink by executive act. The other five Schedules, which include applicability thresholds and compensation factors, may be added to or deleted from.

Section 153: transitional provisions

Notwithstanding anything in the Code, the following organisations constituted under the repealed Acts continue after commencement to exercise the powers and discharge the functions of the corresponding organisations under this Code:

They continue as if constituted under the corresponding provisions of this Code, until the corresponding organisations are constituted under this Code, or until their respective time period under the repealed enactments expires, whichever is earlier.

Section 153 is the answer to a question a careful student will actually ask: if the Acts were repealed on 21 November 2025, who was running the provident fund on 22 November 2025? The same people, by force of section 153, and it should be read with section 164(2)(a), which saves things done under the repealed Acts.

A worked example

Novena Foods owes 12,00,000 rupees of contributions. It sells its Pune unit to Kestrel Foods for assets worth 8,00,000 rupees.

Who is liable for the arrears? Both. Section 145 makes the transferor and the transferee jointly and severally liable for amounts payable in respect of periods up to the date of transfer, on a transfer by sale, gift, lease or licence or in any other manner whatsoever, in whole or in part.

How much can be recovered from Kestrel? By the proviso, its liability is limited to the value of the assets obtained, that is 8,00,000 rupees. The balance remains recoverable from Novena.

Would a lease rather than a sale have helped? No. The section names lease and licence expressly and adds "in any other manner whatsoever".

A worker at the unit, Shabana, is sued by a moneylender who wants her provident fund balance. He cannot have it. Section 151(1) provides that the amount to her credit shall not be capable of being assigned or charged and shall not be liable to attachment under any decree or order of any Court in respect of any debt or liability incurred by her.

Shabana dies and her nominee is himself in debt. The amount to her credit at death, payable to her nominee, vests in the nominee, is free from any debt or liability incurred by the deceased or by the nominee before her death, and is not liable to attachment: section 151(2).

Novena then goes into liquidation. Amounts due under Chapters III to VII are a charge on the assets of the establishment and are paid in priority in accordance with the Insolvency and Bankruptcy Code 2016: section 151(3).

An officer of the Corporation is sued personally for a decision he made honestly but which turned out to be wrong. No suit, prosecution or other legal proceeding lies against him for anything in good faith done or intended to be done in pursuance of the Code: section 147.

Is he a public servant? Yes. Section 146 deems every officer and member of a Social Security Organisation, and any Inspector-cum-Facilitator, competent authority, Authorised Officer or Recovery Officer, to be a public servant within the meaning of section 21 of the Indian Penal Code 1860.

The Central Government wants to add a new occupational disease to the Third Schedule. It cannot do it under section 152(1), which covers the First, Fourth, Fifth, Sixth and Seventh Schedules. The Second and Third Schedules are amended by the appropriate Government under section 152(2), and by way of addition only, not deletion.

On 22 November 2025, who ran the Employees' State Insurance Corporation? The Corporation established under section 3 of the repealed ESI Act 1948, which by section 153(iii) continues to exercise the powers and discharge the functions of the Corporation under section 5, until the new body is constituted or its own term expires, whichever is earlier.

What this does NOT mean

Section 145 does not make a buyer liable without limit. The proviso caps him at the value of the assets he obtained.

Section 145 does not cover post-transfer liabilities. It reaches amounts payable in respect of periods up to the date of the transfer.

Section 147 does not protect bad faith. It covers what is done or intended to be done in good faith in pursuance of the Code.

Section 151 does not protect the employer. Sub-sections (1) and (2) protect the employee's credit from the employee's creditors; sub-section (3) makes the employer's dues a charge on his assets.

Section 152 does not allow the compensation Schedules to be cut. The Second and Third Schedules may be amended by way of addition therein and not otherwise.

Limits and criticism

Section 145's cap can leave a shortfall. Where the transferee's assets are worth less than the arrears, the balance depends on a transferor who has just sold up.

Section 147 is very wide in its list of protected persons, extending to "any other person or authority", and good faith is not defined in the Code.

Section 148 leaves the manner of ascertaining misuse to be prescribed, and for Chapter III to the schemes, so the standard applied to a deprivation of benefits is not in the Code.

Section 153 has no outer date. The old bodies continue until the new ones are constituted or their own terms expire, and the Code sets no deadline for constituting the new ones.

Quick revision

• Section 145: on transfer in whole or in part by sale, gift, lease, licence or any other manner, transferor and transferee are jointly and severally liable for amounts due up to the date of transfer; the transferee's liability is capped at the value of the assets obtained.
• Section 146: members, officers, staff, Inspector-cum-Facilitators, competent authorities, Authorised Officers, Recovery Officers and any person discharging a function are public servants under section 21 of the Indian Penal Code 1860.
• Section 147: no suit, prosecution or proceeding against the Governments, a Social Security Organisation, a competent authority, its officers or any other person or authority, for anything in good faith done or intended to be done.
• Section 148: the appropriate Government may deprive an establishment or person of a benefit for a specified time for misuse, only after an opportunity of being heard.
• Section 149: Central directions to a State Government, a State Board under section 12, or a Social Security Organisation.
• Section 150: the appropriate Government may frame schemes not inconsistent with the Code, subject to previous publication.
• Section 151(1) and (2): a worker's credit under Chapters III to VII cannot be assigned or charged and is not attachable for his debts; on death it vests in the nominee or family, free of the deceased's or the nominee's prior debts. (3) amounts due are a charge on the establishment's assets, paid in priority under the Insolvency and Bankruptcy Code 2016.
• Section 152: the Central Government may add to or delete from the First, Fourth, Fifth, Sixth and Seventh Schedules; the appropriate Government may only add to the Second and Third.
• Section 153: the existing Central Board, Executive Committee, Corporation, Medical Benefit Council, Standing Committee and Building Workers' Board continue as their Code counterparts until the new bodies are constituted or their own terms expire, whichever is earlier.

Test yourself

1. A business is sold with arrears of contributions outstanding. Who pays, and how much? The transferor and the transferee are jointly and severally liable for amounts due in respect of periods up to the date of transfer: section 145. The transferee's liability is limited by the proviso to the value of the assets he obtained by the transfer.

2. Can a worker's provident fund balance be attached by a decree against him? No. Section 151(1) provides that the amount standing to his credit shall not be capable of being assigned or charged and shall not be liable to attachment under any decree or order of any court in respect of any debt or liability incurred by him.

3. A nominee who is himself in debt receives a deceased member's balance. Can his creditors take it? No. Under section 151(2) the amount vests in the nominee free from any debt or other liability incurred by the deceased or by the nominee before the death, and is not liable to attachment.

4. Which Schedules may only be added to, and why does that matter? The Second and Third Schedules, by the appropriate Government under section 152(2), by way of addition and not otherwise. They are the employments and occupational diseases for employees' compensation, so the protected list can be widened by executive act but never narrowed.

5. Who was administering the Employees' Provident Fund immediately after the repealed Act ceased to have effect? The Central Board constituted under section 5A of the Employees' Provident Funds and Miscellaneous Provisions Act 1952, which by section 153(i) continues to exercise the powers and discharge the functions of the Central Board of Trustees under section 4, until the corresponding body is constituted under the Code or its own term expires, whichever is earlier.

6. What are the limits of the protection in section 147? It covers only what is in good faith done or intended to be done in pursuance of the Code or of rules, regulations or schemes under it. A mala fide act, or an act wholly outside the Code, is not protected.