Employees’ Compensation Act, 1923 (EC Act) – Section 3 – Employees’ State Insurance Act, 1948 (ESI Act) – Sections 2(8), 46(1)(d), 51E, 53
(2025) 7 SCD 86 : 2025 INSC 904
CIVIL APPEAL NO. 6986 OF 2015 (@ SPECIAL LEAVE PETITION (C) NO. 16573 OF 2012)
Coram: MANOJ MISRA, J. & K. V. VISWANATHAN, J.
Facts: The case concerned a claim for compensation under the Employees’ Compensation Act, 1923 (EC Act) by the family of Shahu Sampatrao Jadhavar, a watchman. On April 22, 2003, while commuting on his motorcycle to his duty, which began at 3 AM, Shahu Sampatrao Jadhavar was involved in a fatal accident approximately 5 kms from his workplace. The employer and insurance company argued that the accident did not arise “out of or in the course of his employment” as it occurred outside the factory precincts.
Procedural History:
- Commissioner for Workmen’s Compensation and Civil Judge, Senior Division, Osmanabad: Awarded compensation of Rs 3,26,140/- with 12% interest to the family, directing the insurance company to pay the amount and the employer to pay a 50% penalty.
- High Court of Judicature of Bombay, Bench at Aurangabad: Reversed the Commissioner’s decision, relying on Regional Director, E.S.I. Corporation & Another vs. Francis De Costa and Another, (1996) 6 SCC 1 (Francis De Costa), holding that an accident occurring while commuting to employment cannot be said to have its origin in employment.
- Supreme Court of India: The aggrieved family members appealed the High Court’s decision.
Issues for Consideration:
- Whether an accident causing death while commuting to work can be said to have arisen “out of and in the course of employment” under the EC Act.
- Whether Section 51E of the ESI Act, introduced on June 1, 2010, which deems commuting accidents to be in the course of employment if a nexus is established, has retrospective application.
- Whether the interpretation derived from Section 51E of the ESI Act can be applied to claims arising under the EC Act.
- Whether the facts of the instant case fulfill the requirements for deeming the accident to have arisen “out of and in the course of employment”.
Holding & Reasoning:
1. Clarificatory and Retrospective Nature of Section 51E, ESI Act: The Supreme Court held that Section 51E of the ESI Act, which provides that an accident occurring while commuting to or from work “shall be deemed to have arisen out of and in the course of employment” if a nexus is established between the circumstances, time, place, and employment, was enacted to neutralize the previous restrictive interpretation given in Francis De Costa. The Court affirmed that Section 51E is clarificatory and declaratory in nature, intended to remove the long-standing doubts and ambiguities surrounding the phrase “accident arising out of and in the course of employment” in cases of commuting accidents. As a clarificatory provision, it has retrospective effect and therefore applies to accidents that occurred prior to its enactment, such as the one in 2003. The use of “deemed” in Section 51E serves to put beyond doubt a particular construction that was previously uncertain.
2. EC Act and ESI Act as Statutes in Pari Materia: The Court emphasized that both the EC Act and the ESI Act are beneficial legislations and social security measures aimed at the welfare of employees. Despite applying to different classes of employers (ESI Act to factories and notified establishments; EC Act to other employers), they share the same operative phrase “arising out of and in the course of employment”. Given their common object and identical phraseology, the Court concluded that they are statutes in pari materia. Therefore, the clarified interpretation of the phrase “accident arising out of and in the course of employment” derived from Section 51E of the ESI Act can and should be applied to the EC Act for consistency and to further the legislative intent of social security.
3. Application to the Instant Case: The Court found that there was a clear nexus between the circumstances, time, and place of the accident and the deceased’s employment as a watchman. The deceased was dutifully proceeding to his workplace for his shift when the accident occurred. This established nexus means the accident arose out of and in the course of employment.
Conclusion: The Supreme Court allowed the appeal, setting aside the High Court’s judgment and restoring the Commissioner’s order awarding compensation to the family under the EC Act.
