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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