Competent Authority — Powers, Notice, Claim and Deposit — Labour Law II Notes

Competent Authority — Powers, Notice, Claim and Deposit

An employee dies in a factory accident. The kind-hearted employer hands the widow ₹1 lakh in cash and thinks the matter is closed. It is not — and the reason protects the very widow he tried to help.

The authority that decides claims, and the rule that money goes through it

Disputes about compensation are decided not by an ordinary civil court but by a competent authority (the old “Commissioner”), appointed under Section 91 of the Code, whose powers and procedure are in Sections 90–99.

Powers and functions (Section 95) — the competent authority has the powers of a civil court (summoning witnesses, taking evidence on oath, compelling production of documents). It settles disputes on liability and amount, apportions a lump sum among dependants, decides who is a dependant, and registers agreements.
Notice and claim (Section 82) — notice of the accident should be given as soon as practicable, and a claim must be made within the limitation period (generally two years of the accident or death), though the authority may admit a late claim for sufficient cause.
Deposit and distribution of compensation (Section 81(1)) — this is the exam favourite. Where an employee dies, the compensation must be deposited with the competent authority, which then distributes it among the dependants. A payment made directly to a dependant is not a valid payment of compensation. (Separately, Section 77 requires the compensation to be paid as soon as it falls due, with damages/interest for default.) The rule exists to stop widows and minors from being short-changed or pressured into accepting too little.

Section 81(1), Code on Social Security 2020: “No payment of compensation in respect of an employee whose injury has resulted in death … shall be made otherwise than by deposit with the competent authority, and no such payment made directly by an employer shall be deemed to be a payment of compensation.”

In Simple Terms: Think of the competent authority as the safe box. On a death, the employer must put the money in the box; the authority decides how much and splits it fairly among the dependants. Cash slipped to the widow at the gate does not count.

🧩 WORKED EXAMPLE — ₹1 lakh handed to the widow

Facts. After a fatal factory accident, the employer pays the widow ₹1 lakh directly.

Rule. On death, compensation must be deposited with the competent authority (s.81(1)); a direct payment is not a valid payment of compensation (and the amount must also match the s.76 formula).

Apply. The employer bypassed the authority and fixed the sum himself, so the payment does not discharge his statutory liability, and the widow is not bound by it.

Conclusion. The direct payment is invalid. The employer must deposit the correctly-calculated compensation with the competent authority for distribution.

flowchart TD
    ROOT["Death compensation — the safe-box rule"]:::root
    ROOT --> DEP["Employer DEPOSITS with competent authority (s.81(1))"]:::leaf
    DEP --> APP["Authority distributes among dependants (s.81)"]:::leaf
    ROOT --> BAD["Direct cash to widow = NOT a valid payment"]:::no
    classDef root fill:#FFF8DC,stroke:#000,stroke-width:1px,color:#000;
    classDef leaf fill:#E6F3FF,stroke:#1E3A8A,color:#000;
    classDef no fill:#FBE3E3,stroke:#a11,color:#000;
    linkStyle default stroke:#888,stroke-width:1px;

Case Laws

Pratap Narain Singh Deo v Srinivas Sabata (1976) — the employer must pay/deposit compensation as soon as it falls due; he cannot wait to be forced, and interest/penalty runs on default.
A civil court has no jurisdiction to settle a question required to be decided by the competent authority (Code on Social Security 2020, Section 90(2)), and a claimant who has sued for damages in a civil court cannot also claim compensation (Section 74(7)).

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