REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 3324 of 2009

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

National Insurance Co. Ltd. ....Appellant

Versus

Hamida Khatoon and Ors. ....Respondents

J U D G M E N T

Dr. ARIJTI PASAYAT, J.

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

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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.

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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

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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

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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

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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

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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

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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) * * *

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(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.

..............................................J.

(Dr. ARIJIT PASAYAT)

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...............................................J.

(ASOK KUMAR GANGULY)

New Delhi,

May 06, 2009

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