Sections 119 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 119 requires funds to be valued by a valuer or actuary at set intervals. Section 120 lets Social Security Organisations hold property, invest surplus money, raise loans and create staff funds. Section 121 lets them write off dues that cannot be recovered.
Each fund of a Social Security Organisation or an establishment must have its assets and liabilities valued by a valuer or actuary approved by the appropriate Government: annually for the Central Board, once every three years for the Corporation, and as the Government specifies for others (s.119). Organisations may hold and transfer property and invest surplus money on prescribed conditions (s.120). Contribution, cess, interest and damages found irrecoverable may be written off on prescribed conditions (s.121).
Why it matters
Section 121 is the provision that can end a long-running arrear, so employers, liquidators and lenders should know its limits. Sections 119 and 120 show how the funds holding contributions are valued and invested. If you face a defunct establishment, a liquidation or an old arrear, our legal consultation team can help you check which provisions apply. This article continues from sections 117 and 118 in Chapter X.
Section 119: valuation of assets and liabilities
Each fund maintained by a Social Security Organisation or by an establishment under the Code must have a valuation of its assets and liabilities by a valuer or actuary, as the case may be, appointed with the prior approval of the appropriate Government by the organisation or establishment.
| Fund holder | Frequency |
|---|---|
| Central Board | Annually |
| Corporation | Once in every three years |
| Any other Social Security Organisation or establishment | As the appropriate Government specifies by order |
The Government may, if it considers necessary, direct valuation at other intervals. The reference to funds maintained by an "establishment" covers, for example, exempted establishments' trusts; see sections 20 to 23.
Section 120: holding property, investing and raising loans
| Sub-section | Power |
|---|---|
| (1) | A Social Security Organisation (except the Corporation) may, on conditions the appropriate Government prescribes, acquire and hold movable and immovable property and sell or transfer property vested in or acquired by it |
| (2) | It may invest moneys not immediately required for expenses and re-invest or realise investments, on prescribed conditions; for Provident, Pension or Insurance Fund, investment must be as specified in the relevant Scheme |
| (3) | Organisations (except the Corporation) may, with the Government's previous sanction and on prescribed terms, raise loans and take steps to discharge them |
| (4) | With previous sanction, they may constitute provident or other benefit funds for their officers and staff; for Central Board staff, terms are specified in the Provident Fund Scheme |
The Corporation's own powers to hold property and invest are dealt with in section 27 and in Chapter IV; see sections 25 to 27. Rule 50 of the Code on Social Security (Central) Rules, 2026 says the conditions and terms under s.120 are, for Provident, Pension and Insurance Funds, those specified in the respective Schemes, and for the Corporation those in Chapter IV and Chapter IX of the Rules.
Section 121: writing off losses
The power
Subject to conditions the appropriate Government prescribes, where a Social Security Organisation is of the opinion that contribution, cess, interest and damages due to it under the Code are irrecoverable, it may sanction the writing off of that amount in the manner the Government prescribes. For the Provident Fund, Pension Fund or Insurance Fund, the writing off must be specified in the relevant Scheme.
Rule 51 conditions
Where the Central Government is the appropriate Government, rule 51 of the Central Rules lets the Corporation or the National Social Security Board (or an officer authorised by it) sanction a write-off where:
- the establishment has been closed for more than five years and the employer's whereabouts cannot be ascertained despite all possible efforts;
- a decree obtained could not be executed for want of sufficient assets of the defaulting employer; or
- the claim is not fully met by the official liquidator (factory or establishment in liquidation) or the Commissioner of payments (unit nationalised or taken over by the Government).
For the three Funds, rule 51(2) repeats that the write-off must be as specified in the respective Scheme. State-level organisations follow the conditions their appropriate Government prescribes.
What a write-off is and is not
A write-off is an internal accounting decision by the organisation that the money is irrecoverable. The Code does not say that it cancels the employer's liability or bars other consequences, and this article does not claim that it does. The text says only that the organisation "may sanction the writing off". Read it with the recovery provisions in sections 129 to 132, and do not treat a write-off as a clearance.
A worked example
A factory closed seven years ago and its proprietor cannot be traced despite notices to every known address, leaving ESI contribution and damages unpaid. The Corporation, satisfied that the conditions in rule 51(1)(i) are met, may sanction the write-off of the irrecoverable amount. In another case the decree against a defaulter cannot be executed because it has no assets, which is ground (ii). (Illustrative.)
Need help with old arrears or a closed establishment?
Whether a dues position is truly closed needs a check of the records and the recovery history. Our legal consultation team can help you review the position and the options before you rely on a write-off or act on an old demand.
Key takeaways
- Every fund must be valued by an approved valuer or actuary: Central Board annually, Corporation every three years.
- Organisations may hold property and invest on prescribed conditions; PF, Pension and Insurance Fund investment follows the Scheme.
- Irrecoverable contribution, cess, interest and damages may be written off on prescribed conditions.
- Rule 51: five years closed, unexecutable decree, or liquidation shortfall.
- A write-off is the organisation's decision, not a statement that the liability has ended.
Read next
- Sections 117 and 118: Budget and annual report
- Section 129: Recovery of amounts due
- Sections 25 to 27: ESI fund, expenditure and holding of property
- Attachment and recovery of EPF dues: Section 8B
Disclaimer: Based on the Code on Social Security, 2020 (as enacted) and, where noted, the Code on Social Security (Central) Rules, 2026 (G.S.R. 344(E), 8 May 2026), as on 30 September 2026. The Code is in force from 21 November 2025; some provisions may be notified later, and State Governments make their own rules for establishments where the State is the appropriate Government. Verify the current position before acting.