Ensuring Legal Services

  About Us >>  
  Areas of Practice >>  
  Legal Updates >>  
  Judgments >>  
  Bare Acts >>  
  Court Websites >>  
  Cause Lists >>  
  Formats >>  
  Contact us >>  
  Blog >>  
  Disclaimer >>  
National Insurance Co. Ltd vs. Hamida Khatoon and Ors. dated 2009-05-06





CIVIL APPEAL NO. 3324 of 2009  

(Arising out of SLP(C) No. 5989 of 2003)  


National Insurance Co. Ltd. ....Appellant    


Hamida Khatoon and Ors. ....Respondents      




1. Leave granted.  


2. Challenge in this appeal is to the judgment of the Division Bench of  the Allahabad High Court dismissing the appeal filed by the present  appellant (hereinafter referred to as the `insurer').  


3. Factual position which is almost undisputed is essentially as follows:   An appeal was filed questioning the correctness of the Award made  by the Motor Accident Claims Tribunal, Saharanpur (hereinafter referred to  as the `MACT') wherein a sum of Rs.1,20,000/- was awarded as  compensation.    The claim petition was filed on the basis that on 1.5.1991 while Abdul  Hamid (hereinafter referred to as the `deceased') was traveling by Matador  No. URF-9761 from Saharanpur to Sarsawa, a truck bearing registration  No.PIJ-5166 belonging to Border Security Force (in short the `BSF') dashed  against the said vehicle resulting in serious injuries on the body of the  deceased. He succumbed to the injuries at the SDB Hospital Saharanpur.  The appellant-insurer contested the claim petition inter alia taking the stand  that the compensation as claimed was high and exorbitant. The MACT held  that the accident occurred due to rash and negligent driving of the driver of  the truck and awarded Rs.1,20,000/- as compensation.    In appeal the stand of the appellant was that the application filed by  the claimant- respondent under Section 173 of the Motor Vehicles Act, 1988  (in short the `Act') was not maintainable in view of Section 53 of the  Employees State Insurance Act, 1948 (in short the `ESI Act'). The High  Court did not accept the stand primarily on the ground that no such plea was     taken specifically in the written statement. It was also held that as regards  applicability of Section 53 of the Act certain factual aspects were to be  considered. The appeal was accordingly dismissed.  


4. Learned counsel for the appellant submitted that true scope and ambit  of Section 53 of the ESI Act has not been kept in view.  


5. Learned counsel for the respondent on the other hand supported the  judgment.  


6. It is to be noticed that in Regional Director, ESI Corporation & Anr.  v. Francis De Costa and Anr. [1993 Suppl.(4) SCC 100] at para 44 it was  observed as follows:      44. The next contention that the Motor Vehicles Act  provides the remedy for damages for an accident resulting in  death of an injured person and that, therefore, the remedy under  the Act cannot be availed of lacks force or substance. The  general law of tort or special law in Motor Vehicles Act or  Workmen's Compensation Act may provide a remedy for  damages. The coverage of insurance under the Act in an insured  employment is in addition to but not in substitution of the above  remedies and cannot on that account be denied to the employee.  In K. Bharathi Dev v. G.I.C.I [AIR 1988 AP 361] the  contention that the deceased contracted life insurance and due  to death in air accident the appellant received compensation and  the same would be set off and no double advantage of damages  under carriage by Air Act be given was negatived.    


7. In A Trehan v. Associated Electrical Agencies [1996(4) SCC 255] it  was observed as follows:    "The ESI Act was enacted with an object of introducing a  scheme of health insurance for industrial workers. The scheme  envisaged by it is one of compulsory State insurance providing  for certain benefits in the event of sickness, maternity and  employment injury to workmen employed in or in connection  with the work in factories other than seasonal factories. The ESI  Act which has replaced the Workmen's Compensation Act,  1923 in the fields where it is made applicable is far more wider  than the Workmen's Compensation Act and enlarges the scope  of compensation. Section 38 provides that all employees in  factories or establishments to which the ESI Act applies shall  be insured in the manner provided in it. Under Section 39 the  employer is also made liable to pay contribution. Section 42  provides for circumstances under which the employee need not  pay his contribution. Section 46 provides for the benefits which  the insured persons, their dependants and the persons  mentioned therein shall be entitled to get on happening of the  events mentioned therein. Sections 51-A to 51-D create certain  fictions in favour of the employee so as to have wider coverage  for him. In case of an employment injury Section 46 provides  periodical payments to him or to his dependants in case of his  death. Employment injury is defined by Section 2(8) to mean a  personal injury to an employee caused by accident or an  occupational disease arising out of and in the course of his  employment, being an insurable employment, whether the  accident occurs or the occupational disease is contracted within  or outside the territorial limits of India. Section 2(9) defines  employee to mean any person employed for wages in or in  connection with the work of a factory or establishment to which  the ESI Act applies. It includes other persons but it is not  necessary to refer to that part of the definition. Insured person is  defined by Section 2(14) to mean a person who is or was an  employee in respect of whom contributions are or were payable  under the Act and who is by reason thereof, entitled to any of  the benefits provided by the ESI Act. The Second Schedule to  the ESI Act specifies the injuries deemed to result in permanent  total disablement or permanent partial disablement. Rule 54 of  the Employees' State Insurance (Central) Rules, 1950 provides    the daily rate of benefit which the employee would get if an employment injury is suffered by him. Rule 57 provides for disablement benefits. Rule 58 provides for dependant's benefits in case the injured person dies as a result of an employment injury. Rule 60 provides for the medical benefits to an insured person who ceases to be in an insured employment on account of permanent disablement. Other benefits are also conferred by the ESI Act and the Rules but it is not necessary to refer to them for deciding the point which arises in this case. Two other provisions in the ESI Act to which it is necessary to refer are Sections 53 and 61. The present Section 53 was substituted by Act No. 44 of 1966 with effect from 28-1-1968. Section 61 has been there in the Act since it came into force. It provides that when a person is entitled to any of the benefits provided by the ESI Act he shall not be entitled to receive any similar benefits admissible under the provisions of any other enactment. Thus, by enacting Section 61 the legislature has created a bar against receiving similar benefits under other enactments. Section 53 before its amendment read as under:   "53. Disablement and dependant's benefits.--When  an insured person is or his dependants are entitled to  receive or recover, whether from the employer of the  insured person or from any other person, any  compensation or damages under the Workmen's  Compensation Act, 1923, or otherwise, in respect of an  employment injury sustained by the insured person  as an employee under this Act, then the following  provisions shall apply, namely--  (i) The insured person shall, in lieu of such  compensation or damages, receive the disablement  benefit provided by this Act, (but subject otherwise to  the conditions specified in the Workmen's  Compensation Act, 1923) from the Corporation and  not from any employer or other person.  (ii)-(iv) * * *  (v) Save as modified by this Act the obligations  and liabilities imposed on an employer by the  Workmen's Compensation Act, 1923, shall continue  to apply to him." 9. Experience of the administration of the ESI Act had disclosed certain difficulties in its working. It was, therefore, further amended in 1966. Along with other amendments made     in the ESI Act the legislature substituted present Section 53 which read as under:  "53. Bar against receiving or recovery of compensation  or damages under any other law.--An insured person or  his dependants shall not be entitled to receive or recover,  whether from the employer of the insured person or from  any other person, any compensation or damages under  the Workmen's Compensation Act, 1923 (8 of 1923) or  any other law for the time being in force or otherwise, in  respect of an employment injury sustained by the insured  person as an employee under this Act." 10. The Workmen's Compensation Act was enacted by the legislature in 1923 with a view to provide for the payment by certain classes of employers to their workmen compensation for injury by accident. Section 3(1) of the Act provides that if personal injury is caused to a workman by accident arising out of and in the course of his employment, his employer shall be liable to pay compensation in accordance with the provisions contained in that Act. Under Section 2(1)(c) the word compensation is defined to mean compensation as provided for by the Act. The definition of the workman under the Act is as under:  "2. (1)(n) `workman' means any person (other than a  person whose employment is of a casual nature and who  is employed otherwise than for the purposes of the  employer's trade or business) who is--  (i) * * *  (ii) employed in any such capacity as is specified in  Schedule II, whether the contract of employment was made before or after the passing of this Act and whether such contract is expressed or implied, oral or in writing; but does not include any person working in the capacity of a member of the Armed Forces of the Union; and any reference to a workman who has been injured shall, where the workman is dead includes a reference to his dependants or any of them." 11. A comparison of the relevant provisions of the two Acts makes it clear that both the Acts provide for compensation to a workman/employee for personal injury caused to him by accident arising out of and in the course of his employment. The ESI is a later Act and has a wider coverage. It is more comprehensive. It also provides for more compensation than what a workman would get under the Workmen's Compensation Act. The benefits which an employee can get   under the ESI Act are more substantial than the benefits which he can get under the Workmen's Compensation Act. The only disadvantage, if at all it can be called a disadvantage, is that he will get compensation under the ESI Act by way of periodical payments and not in a lump sum as under the Workmen's Compensation Act. If the legislature in its wisdom thought it better to provide for periodical payments rather than lump sum compensation its wisdom cannot be doubted. Even if it is assumed that the workman had a better right under the Workmen's Compensation Act in this behalf it was open to the legislature to take away or modify that right. While enacting the ESI Act the intention of the legislature could not have been to create another remedy and a forum for claiming compensation for an injury received by the employee by accident arising out of and in the course of his employment.  12. In this background and context we have to consider the effect of the bar created by Section 53 of the ESI Act. Bar is against receiving or recovering any compensation or damages under the Workmen's Compensation Act or any other law for the time being in force or otherwise in respect of an employment injury. The bar is absolute as can be seen from the use of the words shall not be entitled to receive or recover, "whether from the employer of the insured person or from any other person", "any compensation or damages" and "under the Workmen's Compensation Act, 1923 (8 of 1923), or any other law for the time being in force or otherwise". The words "employed by the legislature" are clear and unequivocal. When such a bar is created in clear and express terms it would neither be permissible nor proper to infer a different intention by referring to the previous history of the legislation. That would amount to bypassing the bar and defeating the object of the provision. In view of the clear language of the section we find no justification in interpreting or construing it as not taking away the right of the workman who is an insured person and an employee under the ESI Act to claim compensation under the Workmen's Compensation Act. We are of the opinion that the High Court was right in holding that in view of the bar created by Section 53 the application for compensation filed by the appellant under the Workmen's Compensation Act was not maintainable. 13. The observations made in Francis De Costa2 by K. Ramaswamy, J. were made in a different context. In that case the question which had arisen for consideration was whether the injury caused by an accident on a public road while an employee was on his way to join duty can be held as arising out     of or in the course of his employment within the meaning of  Section 2(8) of the ESI Act. Moreover, in that case the Court  was not examining the bar created by Section 53 of the ESI  Act." 


8. In Bharagath Engg. v. R. Rangamayaki [2003(2) SCC 138] it was  held as follows:    8. Section 2(14) of the Act, which is the pivotal provision, reads  as follows:    "`Insured person' means a person who is or was an  employee in respect of whom contributions are or were  payable under this Act and who is, by reason thereof,  entitled to any of the benefits provided by this Act."    9. It is to be noted that the crucial expression in Section 2(14)  of the Act is "are or were payable". It is the obligation of the  employer to pay the contribution from the date the Act applies  to the factory or the establishment. In ESI Corpn. v. Harrison  Malayalam (P) Ltd. [1993(4) SCC 361] the stand of the  employer that employees are not traceable or that there is  dispute about their whereabouts does not do away with the  employer's obligation to pay the contribution. In ESI Corpn. v.  Hotel Kalpaka International [1993 (2) SCC 9] it was held that  the employer cannot be heard to contend that since he had not  deducted the employee's contribution on the wages of the  employees or that the business had been closed, he could not be  made liable. The said view was reiterated in ESI Corpn. v.  Harrisons Malayalam Ltd [1998(9) SCC 74] That being the  position, the date of payment of contribution is really not very  material. In fact, Section 38 of the Act casts a statutory  obligation on the employer to insure its employees. That being  a statutory obligation, the date of commencement has to be  from the date of employment of the employee concerned.  10. The scheme of the Act, the Rules and the Regulations  clearly spell out that the insurance covered under the Act is    distinct and different from the contract of insurance in general. Under the Act, the contributions go into a fund under Section 26 for disbursal of benefits in case of accident, disablement, sickness, maternity etc. The contribution required to be made is not paid back even if an employee does not avail any benefit. It is to be noted that under Regulation 17-A, if medical care is needed before the issuance of temporary identification certificate, the employer is required to issue a certificate of employment so that the employee can avail the facilities available. "Wage period", "benefit period" and "contribution period" are defined in Section 2(23) of the Act, Rule 2(1-C) and Rule 2(2-A) of the Rules. Rule 58(2)(b) is a very significant provision. For a person who becomes an employee for the first time within the meaning of the Act, the contribution period under Regulation 4 commences from the date of such employment from the contribution period current on that day and the corresponding benefit period shall commence on the expiry of the period of nine months from the date of such employment. In cases where employment injuries result in death before the commencement of the first benefit period, Rule 58(2)(b)(ii) provides the method of computation of dependant's benefits. It provides for computation of dependant's benefits in the case of an employee dying as a result of employment injuries sustained before the first benefit period and before the expiry of the first wage period.   11. Rule 58(2)(b)(ii), insofar as it is relevant, reads as follows:    "58. Dependant's benefits.--   (1) * * *   2(b) Where an employment injury occurs before the  commencement of the first benefit period in respect of a  person, the daily rate of dependant's benefit shall be--     (i) * * *     (ii) where a person sustains employment injury before the  expiry of the first wage period in the contribution period  in which the injury occurs, the rate, forty per cent more  than the standard benefit rate, rounded to the next higher  multiple of five paise corresponding to the group in  which wages actually earned or which would have been  earned had he worked for a full day on the date of  accident fall."  12. When considered in the background of statutory provisions,  noted above, the payment or non-payment of contributions and  action or non-action prior to or subsequent to the date of  accident is really inconsequential. The deceased employee was  clearly an "insured person", as defined in the Act. As the  deceased employee has suffered an employment injury as  defined under Section 2(8) of the Act and there is no dispute  that he was in employment of the employer, by operation of  Section 53 of the Act, proceedings under the Compensation Act  were excluded statutorily. The High Court was not justified in  holding otherwise. We find that the Corporation has filed an  affidavit indicating that the benefits under the Act shall be  extended to the persons entitled under the Act. The benefits  shall be worked out by the Corporation and shall be extended to  the eligible persons."    


9. Above being the position in law, the appeal deserves to be allowed.  The entitlement shall be worked out by the concerned MACT by taking note  of Section 53 of the Act.     






(ASOK KUMAR GANGULY)  New Delhi, May 06, 2009        

© 2008-2014 Legal Approach