CASE LAW FOR CLASS DISCUSSION

The case law provided in the study material is the edited version of the judgments. Students are
advised to read the full text from the reports. Other cases also will be discussed apart from the
study material. Neither the list of the legislation nor the case law provided in the study material is
exhaustive. Students are expected to have the Bare Acts of the requisite enactments.

The Employees Compensation Act, 1923.

Introduction:

The Workmen’s Compensation Act, 1923( amended as the Employees Compensation Act in
2009) was the first step towards social security in India. During nineteenth century the payment
of compensation to the workers was constantly attracted the international attention due to
increase in the number of industrial accidents through out the world. Initially the law regarding
payment of compensation was governed by the common law of torts under the doctrine of
‘common employment’ where the employer was held not liable as the contract of employment is
not an agreement of indemnity for loss caused by the fellow worker. There was an implied
consent on the part of the injured workmen to undertake risks of employment. Unless there was
employer’s negligence or fault he was not held liable for the industrial accidents. The change in
the perception of the workers rights provided a little relief under the Fatal Accidents Acts,1855
was not considered enough to protect the rights of workers in case of industrial accidents which
caused physical disablement or death of a workman. The problem of extending legislative
protection to the workers working in factories and other establishments was solved with the
enactment of the Workmen’s Compensation Act, 1923. The Act amplifies that in a civilized
society the state cannot remain a mute spectator to the sufferings of the workers, particularly
when the loss of life or disablement takes place due to an accident out of and the course of
employment. Provisions were made for suitable compensation not only in the case of accidents
but also in case workers are effected by any occupational diseases of the work. For quick
disposal of cases the powers are vested with the Commissioners appointed by the appropriate
government to decide the quantum of compensation without any formal procedures under law.
The Commissioner is also empowered to impose fine on the employer in the case of delay in
making the payment of compensation. The civil courts are barred under the Act and an appeal
from the Commissioners ‘Award’ will lie only in the High Court.

Case.1. ------Daya Kishan Joshi and another v Dynemech Systems Private Limited, 2017 Indlaw
SC 1040 Supreme Court of India 9 August 2017 Civil Appeal No. of 2017

The Judgment was delivered by Mohan M. Shantanagoudar, J.

1. Leave granted.

2. The judgment dated 23rd April 2014 passed by the High Court of Delhi is called in question in
this appeal. The High Court has confirmed the award passed by the Commissioner under the
Employees' Compensation Act, 1923 dismissing the claimants' petition on the ground that the
accident cannot be said to have arisen out of and in the course of employment.

3. Records reveal that the deceased workman Shri Ravi Shekhar Joshi, son of the appellant, was
employed with respondent (Dynemech Systems Pvt. Ltd.) as an engineer. He was entrusted with
the duty to be in the field for promoting the sales/installation of the products of the respondent.

4.On the unfortunate day of the accident, i.e., 08.09.2007, the deceased and his co-worker Shri
Vikas (who was also employed as an engineer/sales executive) were deputed to test a filter which
was installed on 07.09.2007 at Hero Honda Factory, Dharu Heda, Haryana. Accordingly, both of
them went from Delhi and checked the filter installed at Hero Honda Factory, Dharu Heda,
Haryana in the afternoon and thereafter started the return journey to Delhi at 4:30 PM

5. Both the workers including the deceased met with road accident while they were little away
from Hero Honda Factory and sustained injuries. Both were taken to the hospital wherein the
deceased was declared "brought dead" while his co-worker was discharged after being given
first-aid.

The appellants filed an application for compensation under Section 22 of the Act before the
Learned Commissioner. Based on the pleadings, the Learned Commissioner framed the
following issues.
1. Whether the accident of the deceased occurred during the course of and out of employment?

2. Whether the deceased falls under the definition of workman under Employees’ Compensation
Act, 1923?

3. If so, whether the claimant is entitled for compensation as per claim application?

4. Relief, if any?

After the full-fledged trial, written arguments were submitted on 30th January, 2010. The
Commissioner, after a wait of about 14 months dismissed the claim application of the appellants
by deciding issue no. 1 only, on the ground that the accident cannot be said to have arisen out of
and in the course of employment. The said award of dismissal of the claim petition was
confirmed by the High Court as mentioned supra.

4. The only question to be decided by this Court in this appeal is as to whether the Learned
Commissioner, as well as the High Court is justified in deciding that the accident in question
cannot be said to have arisen out of and in the course of employment.

5. Undisputedly the employer's liability for compensation to the employee arises only if the
employee has suffered in the accident which arose out of and in the course of employment.

Section 3(1) of the Act deals with the employer's liability for compensation to the employee in
case of accident arising out of and in the course of employment.

Section 3(1) reads thus:

"If personal injury is caused to an employee 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
of this chapter:"

The amount of compensation where the death resulted from the injury shall be quantified in
accordance with Section 4 of the the Act. Section 4(1)(a) reads thus:

"Subject to the provisions of this Act, the amount of compensation shall be as follows, namely:-
(a) where death results from the injury : An amount equal to fifty per cent. of the monthly wages
of the deceased

*[employee] multiplied by the relevant factor;

or

an amount of *[one lakh and twenty thousand rupees], whichever is more;"

6. The words 'arising out of' and 'in the course of employment' are in fact two different phrases
and have been understood as such. If the accident had occurred on account of a risk which is an
incident of employment, the claim shall succeed unless, of course, the workman had exposed
himself to an added peril by his own imprudent act. The phrase 'in the course of employment'
suggests that the injury must be caused during the currency of employment, whereas the
expression 'out of employment' conveys the idea that there must be a causal connection between
the employment and the injury caused to the workman as a result of the accident.

7. When a workman is on the public road or public place or on public transport he is there as any
other member of the public and is not there in the course of his employment unless the very
nature of his employment makes it necessary for him to be there. In other words, there must be a
causal relationship between the accident and the employment.

8. There is a notional extension at both entry and exit by time and space. There may be some
reasonable extension in both time and space and a workman may be regarded as in the course of
his employment even though he has not reached or has left employer's premises.

9. The High Court relied upon the judgment of this Court in the case of Saurashtra Salt
Manufacturing Co. v. Bai Valu Raja (AIR 1958 SC 881). But the facts of this case were different
from the facts of this case.

10. Buckley, LJ., in Pierce v. Provident Clothing and Supply Co. Ltd. [(1911) 1 KB 997], made
the following observations:
"The words 'out of' necessarily involve the idea that the accident arises out of a risk incidental to
the employment. An accident arises out of the employment where it results from a risk incidental
to the employment, as distinguished from a risk common to all mankind, although the risk
incidental to the employment may include a risk common to all mankind."

12. Lord Buckmaster, in the case of John Stewart and Son Ltd. v. Longhurst [(1917) AC 249],
observed that whether a situation arises 'out of or in the course of employment' can only be
determined on a case-to-case basis:

"Some of the reported cases, which have been fully referred to by the Lord Chancellor, appear
to me to have made the same mistake and to have attempted to define a fixed boundary dividing
the cases that are within the statute from those that are without. This it is almost impossible to
achieve. No authority can with certainty do more than decide whether a particular case upon
particular facts is or is not within the meaning of the phrase."

The facts of each case must be examined separately. One case cannot be relied upon to
conclusively decide the outcome of the other. Hence, the facts of this case must be examined in
light of the context that they are situated in.

13. The case of Andrew v. Failsworth Industrial Society [(1904) 2 K. B. 32], lays down that the
accident need not be connected to the work, as long as the employee was in a position that arose
out of the employment. Collins, M. R. observed as follows:

"Though [the accident] may not be connected with, or have any relation to, the work the man
was doing, yet, if in point of fact the position in which the man was doing the work, and the
place he must necessarily occupy whilst doing the work are a position and a place of danger
which caused the accident, it may fairly be said that it arose out of the employment, not because
of the work, but because of the position"

14. English courts have also held that injuries to employees on their way back home fall within
those 'arising out of employment.' In Lawrence v. George Matthews Ltd. [(1929) 1 KB 1], the
deceased was employed as a commercial traveller by coal merchants, who paid him a
commission for all orders obtained for them. While on his way home on his motorcycle after
completing a trip, he was struck fatally by a falling tree which was blown down by a gale. In
proceedings for compensation, the Court of Appeal held by a majority that the accident arose out
of the employment of the deceased on the ground that the deceased's employment brought him to
a spot which, owing to the existence of the tree, had a quality that resulted in danger. The fact
that the tree fell due to forces of nature was immaterial, as the immediate cause of the accident
was the falling of the tree.

15. Indian Courts have also expounded upon the phrase 'arising out of and in the course of
employment' in great detail.

In the case of B.E.S.T. Undertaking vs Agnes(AIR 1964 SC 193 1963 Indlaw SC 296 1963
Indlaw SC 296), this Court laid down as under:

"Under Section 3(1) of the Act the injury must be caused to the workman by an accident arising
out of and in the course of his employment. The question, when does an employment begin and
when does it cease, depends upon the facts of each case. But the Courts have agreed that the
employment does not necessarily end when the "down tool" signal is given or when the workman
leaves the actual workshop where he is working. There is a notional extension as both the entry
and exit by time and space. The scope of such extension "must necessarily depend on the
circumstances of a given case. An employment may end or may begin not only when the
employee begins to work or leaves this tools but also when he used the means of access and
egress to and from the place of employment. A contractual duty or obligation on the part of an
employer to use only a particular means of transport extends the area, of the field of employment
to the course of the said transport. Though at the beginning the word "duty" has been strictly
construed, the later decisions have liberalized this concept. A theoretical option to take an
alternative route may not detract from such a duty if the accepted one is of proved necessity or
of practical compulsion. But none of the decisions cited at the Bar deals with a transport service
operating over a large area like Bombay. They are, therefore, of little assistance, except insofar
as they laid down the principles of general application. Indeed, some of the law Lords expressly
excluded from the scope of their discussion cases where the exigencies of work compel an
employee to traverse public streets and other public places. The problem that now arises before
us is a novel one and is not covered by authority."
16. The case of Mackinnon Machenzie & Co. (P) Ltd. v. Ibrahim Mahmmed Issak [(1969)2 SCC
607 is also relevant to understand the meaning of 'arising out of employment'. Justice
Ramaswami, delivering the judgment for a three Judge Bench of this Court, held:

"...The words 'arising out of employment' are understood to mean that 'during the course of the
employment, injury has resulted from some risk incidental to the duties of the service, which,
unless engaged in the duty owing to the master, it is reasonable to believe the workman would
not otherwise have suffered'. In other words, there must be a causal relationship between the
accident and the employment. The expression 'arising out of employment' is again not confined
to the mere nature of the employment. The expression applies to employment as such to its
nature, its conditions, its obligations and its incidents. If by reason of any of those factors the
workman is brought within the zone of special danger the injury would be one which arises 'out
of employment'. To put it differently if the accident had occurred on account of a risk which is an
incident of the employment, the claim for compensation, must succeed, unless of course the
workman has exposed himself to an added peril by his own imprudent act..."

17. Again, in the case of Union of India v. Surendra Pandey [(2015) 13 SCC 625] this Court has
explained the principle of notional extension of employment giving examples as under:

"It was also pointed out by Lord Denning in the aforesaid case of R. v. National Insurance
Commr., ex p Michael that the extension of the meaning of the phrase "in the course of his
employment" has taken place in some cases but in all those cases, the workman was at the
premises where he or she worked and was injured while on a visit to the canteen or some other
place for a break. The test of what was "reasonably incidental" to employment, may be extended
even to cases while an employee is sent on an errand by the employer outside the factory
premises. But in such cases, it must be shown that he was doing something incidental to his
employment. There may also be cases where an employee has to go out of his work place in the
usual course of his employment. Latham, C.J. in South Maitland Railways Pty. Ltd. v. James
observed that when the workmen on a hot day in course of their employment had to go for short
time to get some cool water to drink so as to enable them to continue to work without which they
could not have otherwise continued, they were in such cases doing something in the course of
their employment when they went out for water."
20. From the aforementioned, it is clear that the presence of the deceased on the road in question
was incidental to his employment as a sales engineer. As he had to go to the Hero Honda Factory
to conduct a filter test, he was merely doing what was required of him as an employee. Thus, his
accidental death on the way back after completing his work falls squarely within Section 3(1) of
the Act.

21. Having regard to the facts and circumstances of the case on hand, it needs to be concluded
that the accident arose out of employment inasmuch as the very nature of the employment of the
deceased made it necessary for him to be there.

By recording the aforementioned finding on the first issue, the matter is returned to the
Commissioner under the Act for deciding the remaining issues framed by him.

22. The appeal is disposed of.

Case No.2----

SAURASHTRA SALT MANUFACTURING COMPANY V BAI VALU RAJA AND

OTHERS, AIR 1958 SC 881

Supreme Court of India

28 April 1958

C.A. No. 368 of 1956,

The Judgment was delivered by: IMAM, J.

1. Special leave to appeal was granted in this case upon the appellant giving an undertaking not
to claim any refund of the compensation moneys already paid in pursuance of the order dated
January 31, 1953 passed by the Commissioner for Workmen's Compensation at Junagadh and to
pay in any event the respondents their costs of the appeal.
2. Facts : (a) The appellant is the Saurashtra Salt Manufacturing Company.

(b) It employs workmen both temporary and permanent.

(c) The salt works of the appellant is situated near a creek opposite to the town of
Porbandar.

(a) There are at least two ways to go to the salt works from the said town, one an
overland route nearly 6 to 7 mile long and the other via the creek which has to
be crossed by a boat.
(b) At the Porbandar end of the creek is the Asmavati Ghat and the creek can be
crossed from there at point A to the other side at point B which is on a sandy
piece of land. Those crossing the creek from point A alight from the boat at
point B. From point B, after traversing the sandy area, one can reach the salt
jetty of the salt works and the salt works itself.
(c) On the sandy area near point B there is also a public footpath which goes to
the salt works at point D, the distance being 1 1/2 miles. It is unnecessary to
refer, for the purpose of this case, to the overland route although this route is
clearly indicated in the map, Ex. 35, which was prepared by H. V. Vaishnav
who was appointed a Commissioner to prepare the map in this case.

3. FINDINGS: When the appeal had been heard for some time it was thought necessary by this
Court to have findings recorded on two questions:

(a) Whether there was any arrangement between the appellant and the ferrywalas or kharvas for
its workmen to be ferried to and from the salt works and, if so, what were the terms thereof; and

(b) whether the arrangement, if any, applied also to the casual workmen of the type in question in
these proceedings, whether they were proceeding to the salt works or returning there from.

4. This Court also ordered that a map or plan was to be prepared showing the site of the creek,
the sandy patch and the salt works together with the area and surroundings of the town of
Porbandar with reference thereto. The above mentioned map, Ex. 35, was prepared accordingly.
5. In the evening of 12 June 1952, a boat carrying certain workmen who had been employed that
day by the appellant while crossing the creek from point B to point A capsized due to bad
weather and overloading. The accident took place when the boat had practically reached point A
of the map, Ex. 35. As the result of the accident some of the workmen were drowned resulting in
seven cases for compensation being filed under the Workmen's Compensation Act. Of these, one
was dismissed and compensation was awarded to the dependents of the drowned workmen in the
other cases.

6. The Commissioner for Workmen's Compensation found that the accident arose out of and in
the course of the employment of the workmen. Accordingly, he awarded compensation. The
appellant appealed to the High Court of Saurashtra (now the High Court of Bombay). The High
Court, after an elaborate discussion of the law, came to the same conclusion and dismissed the
appeal with costs. In the appeal before us it was urged on behalf of the appellant that although
the compensation had been paid to the dependants of the drowned workmen and the appellant
did not seek a refund of the same and the appellant must pay the costs of the respondents even in
the event of success, it was essential for the appellant to have a decision whether in the
circumstances disclosed in this case, in law, the appellant was liable to pay any compensation.
Although from the town of Porbandar there are two ways of going to and returning from the salt
works of the appellant, it was not disputed in the High Court that the usual and the ordinary way
to go to and return from the salt works was via the creek to be crossed at points A and B. The
deceased workmen were not regular workmen employed by the appellant for whom quarters are
provided near the salt works. In determining the question whether the accident resulting in the
drowning of the workmen, arose out of and in the course of their employment, for the purposes
of this appeal, it is unnecessary to consider which route a workman ought to take to go to and
return from the salt works, in order to determine whether the appellant was liable to pay
compensation to the dependents of the drowned workmen. It is also unnecessary to consider
whether the workmen were on temporary employment as they were workmen within definition
of "workmen" in the Workmen's Compensation Act.

7. As a rule, the employment of a workman does not commence until he has reached the place of
employment and does not continue when he has left the place of employment, the journey to and
from the place of employment being excluded. It is now well-settled, however, that this is subject
to the theory of notional extension of the employer's premises so as to include an area which the
workman passes and repasses in going to and in leaving the actual place of work. There may be
some reasonable extension in both time and place and a workman may be regarded as the course
of his employment even though he had not reached or had left his employer's premises. The facts
and circumstances of each case will have to be examined very carefully in order to determine
whether the accident arose out of and in the course of the employment of a workman, keeping in
view at all times this theory of notional extension.It is unnecessary for the purposes of this
appeal to refer to the various decisions in England and in India explaining the aforesaid theory
because even if on such a basis a workman may be regarded as being in the course of his
employment at point B either while on his way to the salt works or returning from it, the question
for our decision is whether he has still in the course of his employment when he was on his
journey between points A and B of the map, Ex. 35. While the case was in the High Court,
attention of the learned Judges was drawn to the failure of the Commissioner for Workmen's
Compensation to examine witnesses to prove an alleged arrangement between the appellant and
the kharvas (ferrywalas) for the carrying of the workmen of the appellant by boat across the
creek to enable them to be ferried to and from the salt works.

8. The learned Judges of the High Court at first were inclined to order a remand for the recording
of this evidence, but having regard to the view which they took of the recent decisions of the
House of Lords in England, they thought it unnecessary to have such evidence recorded. In their
opinion, on the material as already on the record, it must be held that the accident arose out of
and in the course of the employment of the deceased workmen. In this Court, as already stated,
we considered it necessary to have evidence taken in this connexion and findings recorded
thereon. The finding, on the evidence so recorded, is quite clear that there was no arrangement
between the appellant and the kharvas to ferry to and from the salt works, across the creek, any
workman of the appellant. According to the evidence, workmen of the salt works are charged by
the kharvas when they cross the creek in their boats. The only concession made by them on their
own account is not to make such a charge in the case of any person who is kharva-a fellow
casteman.

9. It is also clear from the evidence on the record, both before and after remand, that the boats
ferried across the creek are used by the public, every one of whom has to pay the charge for
being ferried across the creek with the exception of a person of the kharva caste. To reach point
A on the map a workman has to proceed in the town of Porbandar via a public road. A workman
then uses at point A a boat, which is also used by the public, for which he has to pay the
boatman's dues, to go to point B. From point B to the salt works there is an open sandy area 450
to 500 feet long and 200 to 250 feet wide. This sandy area is also open to the public. From this
sandy area there is a footpath going to the salt jetty, point C, and a foot-track going to the salt
works, point D. There is no question that the foot-track going to the salt works is a public way.
The footpath from the sandy area to the salt jetty, point C, may or may not be used by the public.
For the purpose of this case it may be assumed that a workman must necessarily use that footpath
if he has to go to the salt jetty and from there to the various salt pans and salt reservoirs within
the area of the salt works. It is well settled that when a workman is on a public road or a public
place or on a public transport he is there as any other member of the public and is not there in the
course of his employment unless the very nature of his employment makes it necessary for him
to be there. A workman is not in the course of his employment from the moment he leaves his
home and is on his way to his work. He certainly is in the course of his employment if he reaches
the place of work or a point or an area which comes within the theory of notional extension,
outside of which the employer is not liable to pay compensation for any accident happening to
him. In the present case, even if it be assumed that the theory of notional extension extends upto
point D, the theory cannot be extended beyond it. The moment a workman left point B, in a boat
or left point A but not yet reached point B, he could not be said to be in the course of his
employment and any accident happening to him on the journey between these two points could
not be said to have arisen out of and in the course of his employment. Both the Commissioner for
Workmen's Compensation and the High Court were in error in supposing that the deceased
workmen in this case were still in the course of their employment when they were crossing the
creek between points A and B. The accident which took place when the boat was almost at point
A resulting in the death of so many workmen was unfortunate, but for that accident the appellant
cannot be made liable.

10. The appeal is accordingly allowed and the order of the Commissioner for Workmen's
compensation directing the appellants to pay compensation is set aside. The appellant, however,
will pay the costs of the respondents of this appeal and will not be entitled to recover the
compensation money already paid. Each party will bear and pay its own costs on the proceedings
on remand as ordered by this Court on 9 October, 1957.

Appeal allowed.

Case --3. Mackinnon Mackenzie and Co. (P) Ltd.Vs.Ibrahim Mahmmed Issak

(AIR1970SC1906, (1969)2SCC607,)

V. Ramaswami, J.

Facts :

1. Shaikh Hassan Ibrahim (hereinafter referred to as the missing seaman) was employed
as a deck hand, a seaman of category II on the ship S.S. "Dwarka "which is owned by
the British India Steam Navigation Company, Ltd., of which the appellant is the
agent.
2. The medical log-book of the ship shows that on 13 December 1961 the missing
seaman complained of pain in the chest and was, therefore, examined, but nothing
abnormal was detected clinically.
3. The medical officer on board the ship prescribed some tablets for the missing seaman
and he reported fit for work on the next day.
4. On 15 December 1981, however, he complained of insomnia and pain in the chest for
which the medical officer prescribed sedative tablets.
5. The official log-book of the ship shows that on 16 December 1961 when the ship was
in the Persian Gulf the missing seaman was seen near the bridge of the ship at about
2-30 a.m.
6. He was sent back but at 3 a.m. he was seen on the Tween Deek when he told a
seaman on duty that he was going to bed. At 6-15 a.m. he was found missing and a
search was undertaken. At 7-35 a.m. a radio message was sent by the master of the
ship saying:
7. One seaman missing between Khorem-(sic) and Ashar Stop May be in river Stop All
ships please keep look-out.
 8. The ship arrived alongside Ashar Jetty at 8 a.m. when a representative of Gray,
Mackenzie & Co., Ltd., who are the agents for the British India Steam Navigation
Company, Ltd., in the Persian Gulf was informed that the said seaman was missing.
9. The representatives in turn passed on the Information to the local police and the port
authorities. The last entry in that log-book shows that at 4 p.m. an enquiry was held
on board the ship by the local police and the British counsel General.
10. On a suggestion made by the latter, the personal effects of the missing seaman were
checked and sealed by the Consulate authorities for being deposited with the Shipping
Master, Bombay.
11. On 20 February, 1962, the respondent filed an application under Section 3 of the
Workmen's Compensation Act (Central Act 8 of 1923) (hereinafter referred to as the
Act) claiming compensation of Rs. 4.000 for the death of his son, the missing seaman,
which, according to him, occurred on account of a personal injury caused by an
accident arising out of and in the course of his employment.
12. The appellant, put in a written statement on 23 April 1962 and disputed the
respondent's claim on the ground that there was nothing to show that the seaman was
in fact dead, that the death, if any was not caused in the course of the employment,
that in any event the death could not be said to have been caused by an accident
which arose out of employment and that the probabilities were more consistent with a
suicidal death than with an accidental death.
13. But the appellant did not lead oral evidence at the trial of the claim. The Additional
Commissioner, however, inspected the ship on 23 January 1963. By his judgment
dated 6 February 1963, he held that there was no evidence to show that the seaman
was dead and there was in any event no evidence to justify the inference that the
death of the missing seaman was caused by an accident which arose out of
employment.

OBSERVATIONS OF THE ADDITIONAL COMMISSIONER:

(a) Now In the present case what is the evidence before me?
(b) It is argued on behalf of applicant that I must presume that the man fell down
accidentally. From which place did he fall down ?
(c) How did he fall down? At what time he fell down? Why was he at the time at
the place from which he fell down?
(d) All these questions It is Impossible to answer.
(e) Am I to decide them in favour of the applicant simply because his 'missing'
occurs in the course of his employment ?
(f) In my opinion, there is absolutely no material before me to come to a
conclusion and connect the man's disappearance with an accident.
(g) There are too many missing links. Evidence does not show that it was a
stormy night.
(h) I had visited the ship seen the position of the bridge and dock and there was a
bulwark more than 3 and 1/2 foot. The man was not on duty. Nobody saw him
at the so-called place of accident.
(i) In these circumstances I am unable to draw any presumption or conclusion
that the man is dead or that his death was due to an accident arising out of his
employment, Such a conclusion, presumption or Inference would be only
speculative and unwarranted by any principle of judicial assessment or
evidence of permissible presumptions.
(j) The Additional Commissioner, however, negatived the contention of the
appellant that the death, if any, was caused by the seaman's voluntary act.
(k) The respondent preferred an appeal on 17 April 1983, to the High Court from
the judgment of the Additional Commissioner dated 6 February 1963.
(l) After the hearing of the appeal it was agreed that the appellant would pay to
the respondent a sum of Rs. 2,000 as and by way of compensation in any
event and irrespective of the result of the appeal.
(m)The respondent agreed to accept the sum of Rs. 2,000.
(n) But in view of the serious and important nature of the issues the High Court
proceeded to decide the question of law arising in the appeal.
(o) By his Judgment, dated 5 March 1965, Chandrachud, J., allowed the appeal
and reversed the judgment of the Additional Commissioner and granted the
application for compensation.
(p) The view taken by Chandrachud, J., was that the death of the seaman in this
case must be held to have occurred on account of an accident which arose out
of his employment.
(q) To come within the Act the injury by accident must arise both out of and in
the course of employment.
(r) The words "in the course of the employment" mean "in the course of the work
which the workman is employed to do and which is incidental to it." The
words "arising out of employment" are understood to mean that during the
course of the employment, injury has resulted from some risk incidental to the
duties of the service, when, unless engaged in the duty owing to the master, it
is reasonable to believe the workman would not otherwise have suffered.
(s) In other words, there must be a causal relationship between the accident and
the employment. The expression "arising out of employment" is again not
confined to the mere nature of the employment. The expression applies to
employment as such-- to its nature, its conditions, its obligations and its
incidents. If by reason of any of those factors the workman is brought within
the zone of special danger, the injury would be one which arises "out of
employment."
(t) There is, however, in my opinion, one test which is always at any rate
applicable, because it arises upon the very words of the statute, and it is
generally of some real assistance.
(u) It is this : Was it part of the Injured person's employment to hazard, to suffer,
or to do that which caused his Injury ?
(v) If yes, the accident arose out of his employment.
(w) If say, it did not, because, what it was not part of the employment to hazard, to
suffer, or to do, cannot well be the cause of an accident arising out of the
employment.
(x) To ask if the cause of the accident of the workman was within the sphere of
the employment, or was one of the ordinary risks of the employment, or
reasonably incidental to the employment, or conversely, was an added peril
and outside the sphere of the employment, are all different ways of asking
 whether it was a part of his employment, that the workman should have acted
as he was acting, or should have been in the position in which he was,
whereby in the course of that employment he sustained Injury.
(y) In the case of death caused by accident the burden of proof rests upon the
workman to prove that the accident arose out of employment as well as in the
course of employment.
(z) But this does not mean that a workman who comes to Court for relief must
necessarily prove it by direct evidence.
(aa) Although the onus of proving that the injury by accident arose both out of
and in the course of employment rests upon the applicant these essentials may
be inferred when the facts proved justify the inference.
(bb) On the one hand the Commissioner must not surmise, conjecture or guess;
on the other hand, he may draw an inference from the proved facts so long as
it is a legitimate inference. It is of course Impossible to lay down any rule as
to the degree of proof which is sufficient to justify an Inference being drawn,
but the evidence mast be such as would Induce a reasonable man to draw it.
Lord Birkenhead, L.O., in Lancaster v. Blackwell Colliery Company, Ltd.
1918 W.C. Rep.345 observed:
14. If the facts which are proved give rise to conflicting inferences of equal degrees; of
probability so that the choice between them is a mere matter of conjecture, then of
course, the applicant falls to prove his case, because it is plain that the onus in these
matters is upon the applicant. But where the known facts are not equally consistent,
where there is ground for comparing and balancing probabilities as to their respective
value, and where a reasonable man might hold that the more probable conclusion is
that for which the applicant contends then the arbitrator is justified in drawing an
inference in his favour.
15. In the case of unexplained drowning of seaman, the English Court of Appeal have
drawn some very fine distinctions. In Bender v. Owners of S.S. "Zent" (1909) 2
K.B.41 the chief cook on board a steamship fell overboard and was drowned while
the ship was on the high seas. He was seen at 5-25 a.m. looking over the side; 5-30
a.m. was his usual time for turning out; and he was last seen at 5-35 a.m. going aft.
 The wheather was fine at the time, It was daylight, the ship was steady and there was
no suggestion that the duties of the deceased would lead him into any danger. There
was a 4 feet rail and bulwark all round the ship and there was no evidence to show
how the deceased had fallen overboard. The County Court Judge drew the inference
that his death was caused by an accident arising out of and in the course of his
employment, but the Court of Appeal held that there was no evidence to warrant such
inference, Cozens-Hardy, M.R., pointing out that, although it was conceivable that he
might have been engaged on some ship's work, it was equally conceivable that he had
been larking or had committed suicide. Bender case (1909) 2 K.B.41 (vide supra) was
followed in 'Marshall v. Owners of S.S. "Wild Rose" (1909) 2 K.B. 46 where an
engineer came on board his vessel which was lying in a harbour basin, Shortly after
10 p.m. steam had to be got up by midnight. He went below and took off his clothes,
except his trousers, shirt and socks. It was a very hot night, and he subsequently came
out of his berth, saying that he was going on deck for a breath of fresh air. Next
morning his dead body was found at the side of the vessel, just under the place where
the men usually sat. It was held by the Court of Appeal, reversing the County Court
Judge, that there was no legitimate ground for drawing the Inference that the engineer
died from an accident arising out of his employment. Farwell, L.J., said:
16. If an ordinary sailor is a member of the watch and in on duty during the night and
disappears, the Inference might fairly be drawn that he died from an accident arising
out of his employment. But, if, on the other hand, he was not a member of the watch,
and was down below and came up on deck when he was not required for the purpose
of any duty to be performed on deck, and disappeared without our knowing anything
else, it seems to me that there is absolutely nothing from which any Court could draw
the inference that he died from an accident arising out of his employment.
17. This decision was upheld by the House of Lords by a majority of one (Lord Loreburn,
L.O., and Lord James of Hereford--dissenting), Lord Shaw of Dunfermline Saying:

But In Rice v. Owners of ship "Swansea Vale" 1912 I.O. 238 where the deceased was a
"seaman" in the strict sense of the term that is to say, one whose duty it was to work on deck--
and not a ship's cook, as in Bender Case (1909) 2 KB. 41 (vide supra), nor an engineer, as in
Marshall case (1900) 2 K.B. 46 a different conclusion was arrived at. In that case the chief
officer of a vessel, who was on duty on deck, disappeared from the ship broad daylight. No one
saw him fall overboard, but there was evidence that not long before he had complained of
headache and giddiness. It was held (Buckloy, L.J., dissenting) that there was evidence from
Which the Court might infer that he fell overboard from an accident arising out of and in the
course of his employment. The cause of Bender (1909) 2 K.B.41 (vide supra) and Marshall
(1009) 2 K.B. 40 (vide supra) were distinguished, as in those cases the men's duties were below
deck and at the time they lost their lives they had certainly no duties which called the in on the
deck. In the House of Lords, Lord Loreburn, L.O., having discussed the various things that might
have happened, said:

18. The other alternatives were suicide or murder. If you weigh the probabilities one way
or the other, the probabilities are definitely greater that this man perished through an
accident arising out of and in the course of his employment.
19. In Catton v. Limerick Steamship Co. (1910) 2 I.R. 561 a night watchman on board a
vessel, whose hours of duty were from 7 p.m. to 7 a.m. when he awoke the crew, was
last seen on board at 6 a.m. but on that morning he did not awake the crew. His cap
was found on the deck, and his body was found in the harbour some months
afterwards. The County Judge held that It was not proved that the accident arose "out
of" his employment and the Court of Appeal on the ground that this was a finding of
fact with evidence to support it, refused to interfere. Holmes, L.J., however, stated
that the County Court Judge might have arrived at a different conclusion of fact,
whilst Cherry, L.J., said that, If he had been the arbitrator, he would have found that
the deceased had met with his death by accident arising out of and in the course of his
employment. In another similar case, Rourke v. Hold & Co. (1917) 2 IRR 318 a
seaman disappeared daring his spell of duty at the wheel in the wheel house in the
center of the flying deck and was not after wards seen. The night was rough, the sea
choppy but the vessel was steady. The flying deck was protected by a rail. There was
no evidence as to how the man met his death and in spite of the presumption against
suicide the County Court Judge was unable to draw the Inference that the death was
due to accident. It was held by the Court of Appeal that in the circumstances the
conclusion of the County Court Judge was right.
20. THE FACTS FOUND IN THE PRESENT CASE :
 1. Shaikh Hassan Ibrahim was employed as a deck-hand, a seaman of category II on the
ship.
2. The medical log-book of the ship showed that on 13 December 1961 Shaikh Hassan
complained of pain in the chest and was therefore, examined, but nothing abnormal was
detected clinically.
3. The medical officer on board of the ship prescribed some tablets for Shaikh Hassan and
he reported fit for work on the next, day.
4. On the 16th instant however, he complained of insomnia and pain in the chest for which
the medical officer prescribed sedative tablets.
5. The official log-book of the ship shows that on the 16th instant when the ship was in the
Persian Gulf, Shaikh Hassan was seen near the bridge of the ship at about 2-30 a.m. He
was sent back but at 3 a.m. he was seen on the Tween Deck when he told a seaman on
duty that he was going to bed. At 6-15 a.m. he was found missing and a search was
undertaken.
6. The dead body, however, was not found either on that day or later on. The evidence does
not show that it was a stormy night.
7. The Commissioner made a local inspection of the ship and saw the position of the bridge
and deck and found that there was a bulwark more than 3and 1/2 feet.
8. Nobody saw the missing seaman at the so-called place of accident.
9. The Additional Commissioner hold that there was no material for holding that the death
of the seaman took place on account of an accident which arose out of his employment.
10. In our opinion, the Additional Commissioner did not commit any error of law in reaching
his finding and the High Court was not justified in reversing it.
11. For these reasons we hold that this appeal must be allowed and the judgment of the
Bombay High Court dated 5 March 1965 must be set aside.

4. National Iron and Steel Co. Ltd. Vs. Monorama (AIR1953Cal143,)

Harries, C.J.
1. This is an appeal from an order of the learned Commissioner for Workmen's
Compensation awarding the applicant respondent a sum of Rs. 1200/- as compensation
together with certain costs.
2. The applicant was the mother of a boy who, it is said, died as the result of an accident
arising out of and in the course of his employment. The boy admittedly was employed by
the appellants in a canteen or tea shop and it was part of his duty to take tea from the tea
shop which was outside the factory gates to various persons in the factory. On 28-4-1949,
late in the afternoon the boy was returning to the tea shop after having served tea to
certain persons in the factory when he had to pass a mob of workmen who were leaving
the factory. This mob, it transpired, was attacking the police and the police had to fire in
self-defence. Unfortunately a bullet struck this boy and he was severely wounded. He
was taken to hospital, but unfortunately died the following day.
3. These proceedings were brought for compensation and it was alleged that the death was
due to an accident arising out of and in the course of the boy's employment.
4. The employers filed a written statement and the point made by them was that the death
was not due to accident. They also claimed that the wages of the boy were not correctly
stated.
5. The only issue which the learned Commissioner had to try was whether the accident
arose out of and in the course of the employment. He found that the accident did not (sic)
arise and he accordingly awarded the mother of the boy as a dependent of the deceased
workman the compensation which I have already stated.
6. Mr. Sanyal on behalf of the appellants has taken a point that there was no evidence that
this boy was a workman within the meaning of that term as used in the Workmen's
Compensation Act. It is to be observed that this point was never raised before the learned
Commissioner and indeed the point was not taken in the written statement. On the
contrary the written statement proceeds on the basis that the deceased boy was a
workman, but that his monthly wages were not properly stated.
7. There was no issue framed on this and it appears to me that we cannot allow- the
employers at this stage to raise this point for the first time. It was in effect conceded in
the court below that he was a workman and the whole case proceeded upon that basis.
Once there was in fact an admission that the boy was a workman, no further evidence to
 establish that was required. It would indeed be most unjust to allow the point to be taken
for the 1st time at this stage & to hold that the evidence did not establish that the boy was
a workman. It was obviously conceded and, therefore, the point cannot be raised now.

8. Mr. Sanyal then contended that the accident did not arise out of and in the course of the boy's
employment. Clearly the accident arose in the course of the employment because the boy had
been delivering tea to persons in. the factory as it was his duty to do and was returning with a tea
tray and tea-pot thereon to the canteen or tea shop as he was bound to do. Whilst so returning he
received this bullet wound and it is clear that he received it in the course of his employment, that
is, whilst he was actually doing what he was employed to do.

9. Mr. Sanyal is prepared to concede that the accident was in the course of the employment, but
he contends that the accident did not arise out of the employment. His argument is that death was
not due to any special risk of the employment. He has urged that it could not possibly be said that
receiving a bullet fired by the police in self-defence can never (sic) be regarded as a special risk
of employment of anyone in a canteen.

10. I do not think that it was necessary for the respondent to establish that the death resulted
from some special risk to which the boy was exposed. What has to be decided is whether death
was caused as the result of a risk to which the boy's employment in fact exposed him.

11. The phrase "arising out of the employment" occurred in the New Zealand Act as it does in
English Act and the Indian Act, and has the same meaning.

12. The principle which emerges seems to be clear. The accident must be connected with the
employment:, must arise 'out of it. If a workman is injured by some natural force such as
lightning, the heat of the sun, or extreme cold, which in itself has no kind of connection with the
employment, he cannot recover unless he can sufficiently associate such injury with his
employment. This he can do if he can show that the employment exposed him in a special degree
to suffering such an injury. But if he is injured by contact physically with some part of the place
where he works, then, apart from questions of his own misconduct, he at once associates the
accident with his employment and nothing further need be considered. So that if the roof or walls
fall upon him, or he slips upon the premises, there is no need to make further inquiry as to why
the accident happened.
13. This principle appears to be the foundation of the street risk decision, -- 'Dennis v. A. J.
White & Co.' (1917) A C 479, which finally decided that a workman employed to go into the
streets on his master's business who is injured by a risk of the streets establishes an accident
arising 'out of the employment though the risk was shared by all members of the public using the
streets in like circumstances."

Later at page 678 Lord Atkin observed:

"Their Lordships' attention was drawn to the various decisions in cases in which workmen were
injured by bomb and shells from bombardment during the war. They do not refer to them in
detail, for they appear to confirm the conclusions which their Lordships have reached. Neither
bombs nor shells have ordinarily anything to do with a workman's employment. It is, therefore,
necessary to show special exposure to injury by them. They represent exactly for this purpose the
operation of such forces as lightning, heat and cold. It is said, how capricious is the working of
the law. If the bomb injures a workman directly he must show special exposure; if it injures him
indirectly by bringing the roof down on him he can recover unconditionally. It is almost
impossible to give statutory protection in any case in which the line of distinction may not appear
narrow; but the dividing principle adopted is authoritative and appears to their Lordships to be
logical, and they feel bound to adopt it."

14. It appears to me that the boy was specially exposed to the risk in this case. He had been sent
into the factory to deliver tea to certain employees. In the meantime the police had appeared and
had attempted to arrest what they considered to be a notorious absconder. The workmen leaving
the factory had intervened and a mob had collected which had become unruly, if not riotous.
That mob stood between the boy returning from the factory and the gateway and the tea shop and
it was part of his employment to return the tea pot and tray once he had poured out tea to the tea
shop. His way brought him past this unruly mob which was at the moment attacking some police
officers. His employment specially exposed him to the risk which anybody is exposed to who has
to pass an unruly mob with which the police are endeavouring to deal. As this boy was
approaching the mob the police fired. It seems to me that having regard to the circumstances the
boy's employment exposed him to that risk, and that being so his death can be said to arise out of
and in the course of his employment. The bomb and shell cases referred to by Lord Atkin are
cases where persons were injured by shells dropping at or near where these persons were
working. This, however, is a different case. The shots were fired because an unruly mob were
attacking the police. That unruly mob stood between this boy and the canteen to which his
employment demanded that he should return the tea things. His employment required him to pass
this mob which had become dangerous. In short his employment required him to pass a
dangerous spot or place and in passing such a place he received injury. That being so it appears
to me that it can be said in truth and in fact that the accident arose out of his employment. The
view of the learned Commissioner, therefore, was right.

15. The appeal fails and is dismissed with costs, the hearing-fee being assessed at four gold
mohurs .

5. Kamla Bai Vs.Divisional Superintendent, Central Railway, Nagpur, (1971)ILLJ603Bom

Kamlabai, the widow of the deceased Chintaman, a railway engine driver, being
aggrieved by an order passed by the Commissioner, Workmen's Compensation, Wardha,
has come here in appeal.

Facts----

1. The appellant filed an application for compensation under S. 3 of the Workmen's

Compensation Act.
2. Her husband was driving a railway engine on duty on 1st of November, 1960. He was
taking the down goods train from Majri to Chanda and other places. At 10 a.m. he took
charge of the goods train.
3. After some shunting, he took the train to Bhandak. There they stopped for unloading and
went to Tadali. There they did some sh0unting and were also detained and then they
reached Chanda at 4 p.m. They had to unload some of the packages there. They
completed the unloading; some oil tanks were attached there. The engine was then going
in reverse. Chintaman was driving it. At that time, the assistant station master on duty
informed the guard that another down goods train was passing through, via the first loop
and, therefore, they had to stop their shunting.
4. The guard, therefore, showed a red flag to the driver and cautioned him to stop.
Chintaman stopped the engine but was anxious to know why he had stopped the work.
5. He told the guard that they should finish the shunting earlier so that they could reach
Ballarshah as early as possible.
6. The guard then explained to him why he had shown him the red flag. While Chintaman
was talking to the guard and the guard was facing the other goods train which was
coming, Chintaman sat down there and then collapsed.
7. He expired before any medical help could be given to him. His body was taken for
postmortem examination and the cause of death was found to be heart failure due to
alveolar incompetence and atheroma of the arteries.
8. The respondent, Central Railway, denied their liability but admitted that Chintaman was
in the railway service working as a railway engine driver. They admitted all the details
mentioned by the appellant but pleaded that deceased Chintaman died a natural death
because of the failure of his heart.
9. According to them, a railway driver was expected to be on duty for twelve hours but
Chintaman had actually completed only seven hours duty, and according to them, there
was no overstrain anywhere to him during the course of his working. They, therefore, say
that there was no causal connection of the employment with the ultimate death.
10. The learned Commissioner framed the necessary issues on the pleadings of the parties
and found that the accident did take place in the course of but not out of the employment
of the deceased. He was not overstrained due to the working on the train and, therefore,
according to him, his heart failure was not on account of overwork. Accordingly,
therefore, he dismissed the application filed by the appellant. The point, therefore, that
arises here for consideration is to see whether any substantial question of law arises in
this appeal.
11. It is common ground that the deceased Chintaman died as a result of heart failure. It is
also common ground that the cause of death was heart failure due to alveolar
incompetence and atheroma of the arteries. It is also common ground that the deceased
was driving the engine of the goods train at Chanda and was on duty. This accident,
therefore, occurred at the time when he was on duty.
12. The contest, however, is on the point whether this accident occurred out of the
employment or not. Now, under S. 3 of the Workmen's Compensation Act, 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. Although the term
"accident" has not been defined in the Act, yet it is now well settled that "accident"
generally means some unexpected event happening without design.
COURT FINDINGS:
13. To decide whether an occurrence is an accident, it must be regarded from naturally the
point of view of the workman who suffered from it and if it is unexpected and without
design on his part, it may be an accident though intentionally caused by the author of it or
may some act committed willfully by him. In this case, it was neither intentional nor
willful but it was certainly an accident. It can also be said to be an accident in the course
of the employment. But the contest is whether it occurred out of his employment?
14. It would be better to know as to what exactly the deceased Chintaman had done that day
before he died of his heart failure. According to the evidence of the guard, the deceased
took charge of the train on 1-11-1960. After going to Majri by a passenger train which
left Wardha at 6-35 a.m. They went to Majri and stopped. The guard says that that upto
Majri they did not do any work. When they reached Majri at 9-15 a.m. They started
taking over the charge of the goods train and they took charge at 10 a.m. At Majri their
goods train was detained for 2 1/2 hours. During this time they spent 50 minutes in
shunting. The rest of the time was without any work. Then they went to Bhandak. There
was no shunting Then they went to Tadali. There they were detained for 2 1/2 hours and
they did shunting for 55 minutes. The period of 2 1/2 hours therefore was without work.
Then they reached Chanda at 4 p.m. The deceased Chintaman did some local work there
for 20 minutes and after that he was taking the engine in reverse for detaching oil tanks.
The oil tanks were detached. They again came to the platform line for attaching the
brake-van to the train. At that time station master informed the guard that one down
goods train was passing through the firsts loop at that station and therefore they had to
stop shunting for sometime At that time the driver wanted to know the reason why the
guard stopped him, therefore he went to him but collapsed while talking to him.
15. Now, therefore, all this history and the nature of the work which the driver did, shows
that there was nothing which could have strained him out of the way. But the learned
advocate for the appellant says that because he had performed his duties for 7 1/2 hours,
therefore, those duties as a driver accelerated his death because he must have been
 already suffering from a heart disease. We will therefore have to examine these
contentions.
16. We have a case of our own High Court in Laxmibai v. Chairman & Trustees, Bombay
Port Trust, MANU/MH/0049/1954: (1954)ILLJ614Bom , where Chief Justice Chagla
had delivered the judgment. He has dealt with S. 3 of the Workmen's Compensation Act
somewhat in detail after referring to several English cases. He was dealing with a case of
a watchman employed by the Port Trust at its pumping station at Carnac Bunder,
Bombay. He was on night duty on the night of August 20, 1951, between 7 p.m. to 7 a.m.
At 1 a.m. on August 21, the deceased complained of pain in his chest and was asked to lie
down. His condition deteriorated and at about 6 a.m. he died. The medical evidence
showed that the deceased was suffering from heart disease and that the death was brought
about by the stain caused by the deceased being on his legs for a certain period of time.
The question whether the watchman died of injury by an accident arising out of and in the
course of his employment was then considered by this Court. While dealing with the
conditions that have got to be satisfied, viz., that the accident arose in the course of the
employment of the workman and that the accidental injury must arises our of the
employment, Mr. Justice Chagla recapitulated this expression which had led to judicial
discussion in England and observed as follows :-

"Whereas in the 'course of employment' emphasises the time when accidental injury was caused,
'out of employment' emphasises that there must be a causal connection between the employment
and the accidental injury ......"

17. The learned Chief Justice recapitulated the medical evidence before him which
established that the deceased died as a result of the strain caused upon his heart by the
particular work that the deceased was doing, viz., having to stand on his legs and having
to move about as a watchman looking after the pumping station belonging to the Port
Trust and, in that view, the learned Chief Justice held that the workman died as a result of
an accident which he did not design or intend. Although it was clear because of the facts
and circumstances of the case that the deceased died in the courses of his employment, it
was disputed that the death did not arise out of the employment of the deceased. The
learned Chief Justice, therefore, considered the question whether there was or there was
 no causal connection between the death of the deceased and his employment. While
discussing this question, the learned Chief Justice observed as follows :-

"...... The authorities again are clear that if the workman died as a natural result of the disease
from which he was suffering, then it could not be said that his death was caused out of his
employment. The authorities also have gone to this length that if a workman is suffering from a
particular diseases and as a result of wear and tear of his employment he dies of that disease, no
liability would be fixed upon the employer. But it is equally clearly established that if the
employment is a contributory cause, or if the employment has accelerated the death, or if it could
beside that the death was due not only to the disease but the disease coupled with the
employment, then the employer would be liable and it could be said that the death arose out of
the employment of the deceased ......"

18. Therefore, it is clear that in all cases where a workman dies in the course of his employment,
he cannot be given compensation. It may be that he died or got injury in the course of his
employment. But in order to see whether he got the accidental injury in the course of his
employment, we have to see whether there is clear and unequivocal evidence that the deceased
died because of a particular strain during the course of his duties. It is not enough if it is shown
that the workman died as a natural result of the disease from which he was suffering. It is not
even enough if it is shown that if a workman was suffering from a particular disease and as a
result of wear and tear of his employment he died of that disease; the appellant will have to show
that the deceased died not only because of the heart disease from which he was suffering but also
because of some contributory cause on account of his employment or his duties which he was
performing at Chanda or between Majri and Chanda. 19. The evidence here.in my view, does not
show any causal connection between the death of the deceased driver and his employment. We
have seen that he took charge of the goods train at about 10 a.m. at Majri. He actually rested
there for about 2 hours. Then he did his normal duties. Then he rested also at other intermediate
stations. After he came to Chanda, he did some work. He merely walked to the guard to find out
why he had shown the red flag to stop his engine. While talking to him he collapsed. All these
circumstances.therefore, clearly show that there was no causal connection between the death of
Chintaman and his employment. The evidence is clear and unequivocal that the deceased died a
natural death and not on account of any particular strain which he had on account of his
employment.
20. It appears to me, therefore, that this is a case in which the appellant has not been able to
establish any causal connection between the accidental injury and the death of the deceased. This
appeal, therefore, will have to fail. I, therefore, dismiss this appeal with costs.

6 K. JanardhanVs. United India Insurance Co. Ltd. and Anr. AIR2008SC2384,

Harjit Singh Bedi, J.

This appeal is directed against the judgment and order dated 6th October, 2001 of the learned
Single Judge of the Karnataka High Court whereby compensation of Rs. 2,49,576/- awarded by
the Commissioner for Workmen's Compensation has been reduced to Rs. 1,62,224.40/-. It arises
from the following facts.

The claimant- appellant a tanker driver, while driving his vehicle from Ayanoor towards
Shimoga met with an accident with a tractor coming from the opposite side. As a result of the
accident, the appellant suffered serious injuries and also an amputation of the right leg up to the
knee joint. He thereupon moved an application before the Commissioner for Workmen's
Compensation praying that as he was 25 years of age and earning Rs. 3,000/- per month and had
suffered 100% disability, he was entitled to a sum of Rs. 5 lac by way of compensation. The
Commissioner in his order dated 18th November, 1999 observed that the claimant was 30 years
of age and the salary as claimed by him was on the higher side and accordingly determined the
same at Rs. 2000/- per month. The Commissioner also found that as the claimant had suffered an
amputation of his right leg up to the knee, he was said to have suffered a loss of 100% of his
earning capacity as a driver and accordingly determined the compensation payable to him at Rs.
2,49,576/- and interest @ 12% p.a. thereon from the date of the accident. An appeal was
thereafter taken to the High Court by the Insurance Company - respondent. The High Court
accepted the plea raised in appeal that as per the Schedule to the Workmen's Compensation Act,
the loss of a leg on amputation amounted to a 60% reduction in the earning capacity and as the
doctor had opined to a 65% disability, this figure was to be accepted and accordingly reduced the
compensation as already mentioned above. It is in this circumstance, that the aggrieved claimant
has come up to this Court.

The learned Counsel for the appellant has raised only one argument during the course of the
hearing. He has submitted that the claimant - appellant being a tanker driver, the loss of his right
leg ipso facto meant a total disablement as understood in terms of Section 2(1)(e) of the
Workmen's Compensation Act and as such the appellant was entitled to have his compensation
computed on that basis. In support of this plea, the learned Counsel has placed reliance on Pratap
Narain Singh Deo v. Srinivas Sabata and another(1976)ILLJ235SC . The cited case pertained to
a carpenter who had suffered an amputation of his left arm from the elbow and this Court held
that this amounted to a total disability as the injury was of such a nature that the claimant had
been disabled from all work which he was capable of performing at the time of the accident. It
was observed as under:

The expression "total disablement" has been defined in Section 2(1)(e) of the Act as follows:

It has not been disputed before us that the injury was of such a nature as to cause permanent
disablement to the respondent, and the question for consideration is whether the disablement
incapacitated the respondent for all work which he was capable of performing at the time of the
accident. The Commissioner has examined the question and recorded his finding as follows:

The injured workman in this case is carpenter by profession.... By loss of the left hand above the
elbow, he has evidently been rendered unfit for the work of carpenter as the work of carpentry
cannot be done by one hand only.

This is obviously a reasonable and correct finding. Counsel for the appellant has not been able to
assail it on any ground and it does not require to be corrected in this appeal. There is also no
justification for the other argument which has been advanced with reference to Item 3 of Part II
of Schedule 1, because it was not the appellant's case before the Commissioner that amputation
of the arm was from 8" from tip of acromion to less than 4 below the tip of olecranon. A new
case cannot therefore be allowed to be set up on facts which have not been admitted or
established.

4. Applying the ratio of the cited judgment to the facts of the present case we are of the opinion
that the appellant herein has also suffered a 100% disability and incapacity in earning his keep as
a tanker driver as his right leg had been amputated from the knee. Additionally, a perusal of
Sections 8 and 9 of the Motor Vehicles Act 1988 would show that the appellant would now be
disqualified from even getting a driving licence.

We therefore allow this appeal, set aside the judgment of the High Court and restore that of the
Commissioner but with no order as to costs.
7. Smt. T.S. ShylajaVs.Oriental Insurance Co. and Anr. (2014 SC)

Hon’ble T.S. Thakur and Vikramajit Sen, JJ.

T.S. Thakur, J.

1. Leave granted.

2. The short question that falls for consideration in this appeal is whether the High Court was
justified in setting aside the order passed by the Commissioner for Workmen's Compensation
holding the Appellant entitled to an amount of Rs. 4,48,000/- towards compensation with interest
@ 12% per annum.

3. The claim before the Commissioner arose out of a motor accident in which the deceased-
Prahlad lost his life while driving a Toyota Qualis vehicle bearing registration No. KA-02/C-423.
The incident in question, it appears, occurred on 3 rd September 2000 near Bidadi Police Station,
on the Bangalore-Mysore highway involving a head on collision with a Tipper Lorry bearing No.
KA-02-B-9135. The deceased was removed to the hospital where he died two days after the
accident. A claim petition was then filed before the Commissioner for Workmen's
Compensation, Bangalore Sub-Division-IV, Bangalore by the Appellant, mother of the deceased
for payment of compensation. The claim petition alleged that the deceased was employed as a
driver on a monthly salary of Rs. 6,000/- by the owner of the vehicle. The vehicle being insured
with the Respondent-company, the claimant sought recovery of the amount from the company in
terms of provisions of the Workmen's Compensation Act, 1923, now re-christened as the
Employee's Compensation Act, 1923. The insurance company contested the claim primarily on
the ground that the jural relationship of employer and employee did not exist between the owner
and the deceased. It was also contended that it was the negligence of the deceased that had
caused the accident thereby disentitling the claimant to any compensation.

4. On the pleadings of the parties, the Commissioner framed six issues for determination and
eventually came to the conclusion that the deceased was indeed working as a paid driver of the
owner of the vehicle, Toyota Qualis and that the claimant, the Appellant herein was entitled to
receive an amount of Rs. 4,48,000/- towards compensation having regard to the fact that the
deceased was just about 20 years of age at the time of accident and was receiving Rs. 4,000/- per
month towards salary. An award for the said amount was accordingly made by the
Commissioner with interest @12% per annum against the Respondent-company who had
admittedly underwritten the risk in terms of a policy issued by it.

5. Aggrieved by the award made by the Commissioner, the Respondent-company preferred an

appeal, M.F.A. No. 738 of 2009 before the High Court of Karnataka at Bangalore which has
been allowed by a Single Judge of that Court in terms of the order impugned order before us.
The High Court was of the view that the relationship between the deceased and his brother the
owner of the vehicle he was driving was not satisfactorily proved to be that of an employee and
an employer and that the only remedy which the Appellant, mother of the deceased had, was by
way of a claim for payment of compensation under the Motor Vehicles Act.

6. Appearing for the Appellant Mr. G.V. Chandrashekar, learned Counsel, strenuously argued
that the High Court was in error in entertaining the appeal and in reversing the view taken by the
Commissioner by re-appraising the evidence on record. He urged that the High Court remained
oblivious of the provisions of Section 30(1) of the Act which clearly stipulate that no appeal shall
lie against any order of the Commissioner unless a substantial question of law fell for
consideration. No such question of law arose for consideration nor was the same framed or
addressed by the High Court in the course of the judgment. The reasoning given by the High
Court was, according to the learned Counsel, vague and based entirely on surmises and
conjectures hence unsustainable in law.

7. Section 30 of the Employees Compensation Act, 1923 no doubt provides for an appeal to the
High Court from the orders passed by the Commissioner and enumerated in Clauses (a) to (e)
Sub-section (1) of Section 30. Proviso to Section 30(1), however, makes it abundantly clear that
no such appeal shall lie unless a substantial question of law is involved in the appeal and in the
case of an order other than an order such as is referred to in Clause (b) unless the amount in
dispute in the appeal is not less than three hundred rupees. Section 30(1) reads as under:

30. Appeals.-
(1) An appeal shall lie to the High Court from the following orders of a Commissioner, namely:

(a) an order as awarding as compensation a lump sum whether by way of redemption of a half-
monthly payment or otherwise or disallowing a claim in full or in part for a lump sum;

1[(aa) an order awarding interest or penalty under Section 4A;]

(b) an order refusing to allow redemption of a half-monthly payment;

(c) an order providing for the distribution of compensation among the dependants of a deceased
workman, or disallowing any claim of a person alleging himself to be such dependant;

(d) an order allowing or disallowing any claim for the amount of an indemnity under the
provisions of Sub-section (2) of Section 12; or

(e) an order refusing to register a memorandum of agreement or registering the same or

providing for the registration of the same subject to conditions:

Provided that no appeal shall lie against any order unless a substantial question of law is
involved in the appeal, and in the case of an order other than an order such as is referred to in
Clause (b), unless the amount in dispute in the appeal is not less than three hundred rupees:

Provided further that no appeal shall lie in any case in which the parties have agreed to abide
by the decision of the Commissioner, or in which the order of the Commissioner gives effect to
an agreement come to by the parties:

Provided further that no appeal by an employer under Clause (a) shall lie unless the
memorandum of appeal is accompanied by a certificate by the Commissioner to the effect that
the Appellant has deposited with him the amount payable under the order appealed against.

8. What is important is that in terms of the 1st proviso, no appeal is maintainable against any
order passed by the Commissioner unless a substantial question of law is involved. This
necessarily implies that the High Court would in the ordinary course formulate such a question
or at least address the same in the judgment especially when the High Court takes a view
contrary to the view taken by the Commissioner.

9. The Commissioner for Workmen's Compensation had, in the case at hand, appraised the
evidence adduced before him and recorded a finding of fact that the deceased was indeed
employed as a driver by the owner of the vehicle no matter the owner happened to be his brother.
That finding could not be lightly interfered with or reversed by the High Court. The High Court
overlooked the fact that the Respondent-owner of the vehicle had appeared as a witness and
clearly stated that the deceased was his younger brother, but was working as a paid driver under
him. The Commissioner had, in this regard, observed:

After examining the judgment of the Andhra Pradesh High Court relied upon by 2 nd opponent it
is seen that the owner of the vehicle being the sole witness has been unsuccessful in establishing
his case but in this proceeding the owner of the vehicle has appeared before this Court even
though he is a relative of the deceased, and has submitted in his objections, even evidence that
even though the deceased was his younger brother he was working as a driver under him, and
has admitted that he was paying salary to him. The applicant in support of his case has
submitted Hon'ble High Court judgment reported in MANU/KA/0543/2005 : ILR 2006 KAR
518. The Divisional Manager, United India Insurance Co. Ltd. v. Yellappa Bheemappa Alagudi
and Ors. which I have examined in depth which holds that there is no law that relatives cannot
be in employer employee relationship. Therefore it is no possible to ignore the oral and
documentary evidence in favour of the applicant and such evidence has to be weighed in favour
of the applicant. For these reasons I hold that the deceased was working as driver under first
opponent and driving Toyota Quails No. KA-02-C-423, that he died in accident on 03.09.2005,
that he is a 'workman' as defined in the Workmen's Compensation Act and it is held that he has
caused accident in the course of employment in a negligent fashion which has resulted in his
death.

10. The only reason which the High Court has given to upset the above finding of the
Commissioner is that the Commissioner could not blindly accept the oral evidence without
analysing the documentary evidence on record. We fail to appreciate as to what was the
documentary evidence which the High Court had failed to appreciate and what was the
contradiction, if any, between such documents and the version given by the witnesses examined
before the Commissioner. The High Court could not have, without adverting to the documents
vaguely referred to by it have upset the finding of fact which the Commissioner was entitled to
record. Suffice it to say that apart from appreciation of evidence adduced before the
Commissioner the High Court has neither referred to nor determined any question of law much
less a substantial question of law existence whereof was a condition precedent for the
maintainability of any appeal under Section 30. Inasmuch as the High court remained oblivious
of the basic requirement of law for the maintainability of an appeal before it and inasmuch as it
treated the appeal to be one on facts it committed an error which needs to be corrected.

11. We accordingly allow this appeal, set aside the order of the High Court and restore that
passed by the Commissioner. We grant three months' time to the Respondent to deposit the
amount of compensation together with interest, if not already paid or deposited failing which the
Appellant shall be free to seek redress before the Commissioner for recovery of the amount
awarded in her favour. No costs.
The Employees State Insurance Act, 1948:

This is the legislation meant for providing social and economis justice to the working class in
India. The Act provides for payment of economic assistance to the insured persons in the form
of sickness benefit, maternity benefit, disablement benefit, dependents benefit etc., to the
workers employed in the notified industrial establishments. The Act provides for the
establishment of Employees State Insurance Corporation, Medical Benefit Council, ESI
Hospitals, and also the ESI Courts. Any employer who does not remit the contribution to the
ESI fund within the stipulated time for the employees working under him, is an offence
punishable under this Act.

8. Basant Kumar Sarkar and Ors.Vs.Eagle Rolling Mills Ltd. and Ors. AIR1964SC1260,

P.B. Gajendragadkar, C.J., J.C. Shah, K.N. Wanchoo, N. Rajgopala Ayyangar and S.M. Sikri, JJ.

Gajendragadkar, C.J.
The short question which arises in these appeals by special leave is whether section 1(3) of the
Employees' State Insurance Act, 1948 (No. 34 of 1948) (hereinafter called the Act) is invalid. By
their writ petitions filed before the Patna High Court, the appellants who are the workmen of the
three respondent concerns, the Eagle Rolling Mills Ltd., the Kumardhubi Engineering Works
Ltd., and Kumardhubi Fire Clay and Silica Works Ltd., respectively, alleged that the impugned
section has contravened Art. 14 of the Constitution, and suffers from the vice of excessive
delegation, and as such is invalid. These employers were impleaded as respondent No. 1
respectively in the three writ petitions. The High Court has rejected the plea and the writ
petitions filed by the appellants have accordingly been dismissed. It is against this decision of the
High Court that the appellants have come to this Court and have impleaded the three employers
respectively. The three appeals proceed on similar facts and raise an identical question of law
and have, therefore, been heard together.

It appears that respondent No. 1 in all the three appeals are under the management of M/s. Bird
& Co. Ltd., through a General Manager, and the appellants are their workmen. As such
workmen, the appellants were getting satisfactory medical benefits of a very high order free of
any charge. Respondent No. 1 in each appeal maintained a well-furnished hospital with provision
for 60 permanent beds for the workmen, their families and their dependants. The main grievance
made by the appellants is that as a result of s. 1(3) of the Act, the appellants have now to be
content with medical benefits of a less satisfactory nature. That is why they challenged the
validity of the impugned section and contest the propriety and legality of the notification issued
under it. To these writ petitions as well as to the appeals, the Employees' State Insurance
Corporation and the Union of India have been impleaded as respondents 2 and 3 respectively.

On the 22nd August, 1960, respondent No. 3 issued a notification under section 1, sub-section
(3) appointing the 28th August, 1960 as the date on which some provisions of the Act should
come into force in certain areas of the State of Bihar. By this notification, the area in which the
appellants are working came within the scope of the Act. In pursuance of the said notification,
the Chief Executive Officer of respondent No. 1 informed the appellants on the 25th August,
1960 that the medical benefits including indoor and outdoor treatment upto the extent admissible
under the Act will cease to be provided to insurable persons from the appointed day. A notice in
that behalf was duly issued and published by the said Officer. Similar notices were issued
indicating to the appellants that medical benefits would thereafter be governed by the relevant
provisions of the Act and not by the arrangements which had been earlier by respondent No. 1 in
that behalf. That, in brief, is the genesis of the present writ petitions and the nature of the dispute
between the parties.

The first point which Mr. Chatterjee has raised before us is that s. 1(3) of the Act suffers from
excessive delegation and is, therefore, invalid. In order to consider the validity of this argument,
it is necessary to read section 1, sub-section (3) :-

"The Act shall come into force on such date or dates as the Central Government may, by
notification in the Official Gazette, appoint, and different dates may be appointed for different
provisions of this Act and for different States or for different parts thereof".

The argument is that the power given to the Central Government to apply the provisions of the
Act by notification, confers on the Central Government absolute discretion, the exercise of which
is not guided by any legislative provision and is, therefore, invalid. The Act does not prescribe
any considerations in the light of which the Central Government can proceed to act under s. 1(3)
and such uncanalised power conferred on the Central Government must be treated as invalid. We
are not impressed with this argument. Section 1(3) is really not an illustration of delegated
legislation at all; it is what can be properly described as conditional legislation. The Act has
prescribed a self-contained code in regard to the insurance of the employees covered by it;
several remedial measures which the Legislature thought it necessary to enforce in regard to such
workmen have been specifically dealt with and appropriate provisions have been made to carry
out the policy of the Act as laid down in its relevant sections. Section 3(1) of the Act purports to
authorise the Central Government to establish a Corporation for the administration of the scheme
of Employees' State Insurance by a notification. In other words, when the notification should be
issued and in respect of what factories it should be issued, has been left to the discretion of the
Central Government and that is precisely what is usually done by conditional legislation.

The proper Legislature has exercised its judgment as to place, person, laws, powers; and the
result of that judgment has been to legislate conditionally as to all these things. The conditions
having been fulfilled, the legislation is now absolute.

That is the first answer to the plea raised by Mr. Chatterjee.

Assuming that there is an element of delegation, the plea is equally unsustainable, because there
is enough guidance given by the relevant provisions of the Act and the very scheme of the Act
itself. The preamble to the Act shows that it was passed because the legislature thought it
expedient to provide for certain benefits to employees in case of sickness, maternity and
employment injury and to make provision for certain other matters in relation thereto. So, the
policy of the Act is unambiguous and clear. The material definitions of "benefit period",
"employee", "factory", "insured person", "sickness", "wages" and other terms contained in s. 2
give a clear idea as to the nature of the factories to which the Act is intended to be applied, the
class of persons for whose benefit it has been passed and the nature of the benefit which is
intended to be conferred on them. Chapter II of the Act deals with the Corporation, Standing
Committee and Medical Benefit Council and their constitution; Chapter III deals with the
problem of finance and audit; Chapter IV makes provisions for contribution both by the
employees and the employer, and Chapter V prescribes the benefits which have to be conferred
on the workmen; it also gives general provisions in respect of those benefits. Chapter V-A deals
with transitory provisions; Chapter VI deals with the adjudication of disputes and claims; and
Chapter VII prescribes penalties. Chapter VIII which is the last Chapter, deals with
miscellaneous matters. In the very nature of things, it would have been impossible for the
legislature to decide in what areas and in respect of which factories the Employees' State
Insurance Corporation should be established. It is obvious that a scheme of this kind, though
very beneficent, could not be introduced in the whole of the country all at once. Such beneficial
measures which need careful experimentation have sometimes to be adopted by stages and in
different phases, and so, inevitably, the question of extending the statutory benefits contemplated
by the Act has to be left to the discretion of the appropriate Government. "Appropriate
Government" under s. 2(1) means in respect of establishments under the control of the Central
Government or a railway administration or a major port or a mine of oilfield, the Central
Government, and in all other cases, the State Government. Thus, it is clear that when extending
the Act to different establishments, the relevant Government is given the power to constitute a
Corporation for the administration of the scheme of Employees' State Insurance. The course
adopted by modern legislatures in dealing with welfare schemes has uniformly conformed to the
same pattern. The legislature evolves a scheme of socio-economic welfare, makes elaborate
provisions in respect of it and leaves it to the Government concerned to decide when, how and in
what manner the scheme should be introduced. That, in our opinion, cannot amount to excessive
delegation.
 The question of excessive delegation has been frequently considered by this Court and the
approach to be adopted in dealing with it is no longer in doubt. In the Edward Mills Co. Ltd.,
Beawar and Others v. The State of Ajmer and Another MANU/SC/0106/1954 :
(1954)IILLJ686SC , this Court repelled the challenge to the validity of s. 27 of the Minimum
Wages Act, 1948 (No. XI of 1948), whereby power had been given to the appropriate
Government to add to either part of the schedule any employment in respect of which it was of
opinion that minimum wages shall be fixed by giving notification in a particular manner, and it
was provided that on the issue of the notification, the scheme shall, in its application to the State,
be deemed to be amended accordingly. In dealing with this problem, this Court observed that
there was an element of delegation implied in the provisions of s. 27, for the legislature, in a
sense, authorised another body specified by it to do something which it might do itself; but it was
held that such delegation was not unwarranted and unconstitutional and it did not exceed the
limits of permissible delegation. Therefore, we must hold that the impugned section 1(3) of the
Act is not shown to be constitutionally invalid.

Before we part with these appeals, there is one more point to which reference must be made. We
have already mentioned that after the notification was issued under s. 1(3) by respondent No. 3
appointing August 28, 1960 was the date on which some of the provisions of the Act should
come into force in certain areas of the State of Bihar, the Chief Executive Officer of respondent
No. 1 issued notices giving effect to the State Government's notification and intimating to the
appellants that by reason of the said notification, the medical benefits which were being given to
them in the past would be received by them under the relevant provisions of the Act. It was
urged by the appellants before the High Court that these notices were invalid and should be
struck down. The argument which was urged in support of this contention was that respondent
No. 1 in all the three appeals were not entitled to curtail the benefits provided to the appellants
by them and that the said benefits were not similar either qualitatively or quantitatively to the
benefits under the Scheme which had been brought into force under the Act. The High Court has
held that the question as to whether the notices and circulars issued by respondent No. 1 were
invalid, could not be considered under Art. 226 of the Constitution; that is a matter which can be
appropriately raised in the form of a dispute by the appellants under s. 10 of the Industrial
Disputes Act. It is true that the powers conferred on the High Courts under Art. 226 are very
wide, but it is not suggested by Mr. Chatterjee that even these powers can take in within their
sweep industrial disputes of the kind which this contention seeks to raise. Therefore, without
expressing any opinion on the merits of the contention, we would confirm the finding of the
High Court that the proper remedy which is available to the appellants to ventilate their
grievances in respect of the said notices and circulars is to take recourse to s. 10 of the Industrial
Disputes Act, or seek relief, if possible, under sections 74 and 75 of the Act.

10. The result is, the appeals fail and are dismissed. There would be no order as to costs.

11. Appeals dismissed.

Case no.9----HINDU JEA BAND, JAIPUR Vs.

REGIONAL DIRECTOR, EMPLOYEES' STATEINSURANCE CORPORATION, 1987 AIR

1166

Legal Provisions --- Employees State Insurance, Act, 1948, section 1(5)--Whether
the power conferred under section 1(5) of the Act on the State Government to extend all or any
of the Provisions of the Act to other Establishments in the State
Suffers from the vice of excessive delegation of essential Legislative powers.Notification issued
by the Rajasthan State dated 20.9.1975 under section 1(5) of the E.S.I. Act, whereby shops in
which 20 or more persons had been employed for wages on any day of the preceding 12 months
were also brought under the purview of the Act with effect from 26.10. 1975--Whether the place
where business of supplying the services of musicians or band players a "shop"--Whether the
business being intermittent or seasonal, offends Articles 14, 19(1)(g) and 21 of the
Constitution--Employees State Insurance Act 1948, sections 1(4), 2(12).
1. All the provisions of the Employees State Insurance Act,1948 were extended with effect
from 26.10.1975, to certainclasses of establishments and areas in the State of Rajas-
than, by virtue of a Notification dated September 20,1975 issued under sub-section (5) of
section 1 of the Act. Item 3(iii) in the Schedule to the said Notification brought
within the purview of the Act shops in which 20 or morepersons had been employed
for wages on any day of the preceding 12 months.
2. M/s Hindu Jea Band, Jaipur had employed 23 persons on
wages during the relevant period, but did not comply with the provisions of the Act. The
demand made by the authorities of the Employees' State Insurance Corporation to make
contributions as required under the Act with effect from 26.10.1975 was questioned by
M/s Hindu Jea Band by a petition under section 75 of the Act before the Employees State
Insurance Court on two grounds; (i) that the place where it was carrying on business was not a
shop; and (ii) that its business being one of the intermittent or seasonal character of the Act
could not be extended to its business. Having lost the case before the E.S.I. Court and in appeal
before the High Court, the petitioner has come in appeal before the Supreme Court. The
petitioner also filed a writ petition under Article 32 of the Constitution challenging
the Notification as violative of Articles 14, 19(1)(g) and 21 of the Constitution, and section 1(5)
of the Act itself as suffering from the vice of excessive delegation of legislative powers.
Dismissing the petitions, the Court -------------
HELD:1. The place, where the petitioner has been carrying on business of making available
on payment of the stipulated price the services of the members of the group of
musicians employed by it on wages is a shop, to which the Act is applicable by virtue of the
Notification dated 20.9.1975 issued under section 1(5) of the Act which is a beneficient
legislation. Though the word 'shop' has not been defined in the Act. a shop is no doubt an
establishment(other than a factory) to which the Act can be extended under section 1(5) of the
Act provided other requirements are satisfied. [380D-E]
2. The fact that the services are rendered by the employees' engaged by the petitioner
intermittently or during marriages does not entitle the petitioner to claim any exemption from
the operation of the Act. as much as the place of business of the petitioner is a "shop" and not
a "factory" as defined in section 2(12) and section 1(4) refers only to the factories. Further, the
services of the employees of the petitioner are not confined only to marriages which now a days
take place throughout the year but also to provide music at several other social functions also
which may take place during all seasons. [380G-H; 381A]
The definition of an "employee" under the Act has a wider meaning. The employees who worked
outside the business premises but those whose duties are connected with the business are also
'employees' within the meaning of Sec.2 (9)(i) of the Act. Even these employees who are paid daily
wages or those who are part-time employees are employees for purposes of the Act.

Nagpur Electric Light & Power Ltd. v. Regional Director Employees State Insurance Corporation etc.,
[1967] 3 SCR 92, referred to.
 3. The power conferred upon the State under section 1(5) does not suffer from the vice of
excessive delegation of essential legislative powers. Nor does the application of the Act to
businesses like the one which is being carried on by the petitioner cannot be said to be violative
of Articles 14 or 19(1 )(g) or section 21 of the Constitution. [381D-E]

From the Judgment and Order dated 7.11. 1986 of the Rajasthan high Court in S.B. Civil Misc.
Appeal No. 59 of 1980. With Civil Writ Petition No. 197 of 1877 under Article 32 of the
Constitution of India. S. Rangarajan, B.P. Singh and ,Sanjay Parikh for the Peti- tioner.

The Judgment of the Court was delivered by VENKATARAMIAH, J. The petitioner M/s. Hindu
Jea Band, Jaipur which is a partnership firm carrying on the business of playing music on
occasions, such as, marriages and other social functions questioned its liability to pay the contri-
bution under the provisions of the Employees' State Insur- ance Act, 1948 (hereinafter referred to
as 'the Act') in a petition filed under section 75 of the Act before the Em- ployees' State
Insurance Court, Jaipur principally on two grounds (i) that the place where it was carrying on
business was not a shop and (ii) that its business being one of intermittent or seasonal character
the Act could not be extended to its business. The Employees' State Insurance Court rejected the
petition filed by the petitioner and directed it to pay the amount which had been computed as the
arrears by the Regional Director of the Employees' State Insurance Corporation, Jaipur. An
appeal filed against the decision of the Employees' State Insurance Court, Jaipur by the petitioner
was dismissed by the High Court of Rajasthan. This petition under Article 136of the Constitution
is filed against the judgment of the High Court. The petitioner has also filed a writ petition under
Article 32 of the Constitu- tion questioning the validity of sub-section (5) of section 1 of the Act
and the notification issued by the State Gov- ernment under it to which reference will be made
hereafter. The Act did not apply to shops and such other establishments straight away on the Act
coming into force in the State of Rajasthan. But by the notification dated September 20, 1975
issued under subsection (5) of section 1 of the Act the Government of Rajasthan extended all the
provisions of the Act to certain classes of establishments and areas in the State notification. Item
3 (iii) in the Schedule to the said notification brought within the purview of the Act shops in
which 20 or more persons had been em- ployed for wages on any day of the preceding 12 months
and appointed on October 26, 1975 as the date from which the said notification would come into
force. The petitioner as held by the Employees' State Insurance Court, had employed 23 persons
on wages during the relevant period. Since the petitioner did not comply with the provisions of
the Act the authorities of the Employees' State Insurance Corporation, Jaipur called upon the
petitioner to make contributions as required by the Act with effect from October 26, 1975. The
petition before the Employees' State Insurance Court was filed by the petitioner on such a
demand being made on it questioning the validity of the said demand. The first contention urged
in support of the petition is that since the petitioner was not selling any goods in the place of its
business but was only engaged in arranging for musical performances on occasions such as
marriages etc. its business premises cannot be called a 'shop'. We do not agree with the narrow
construction placed by the petitioner on the expression 'shop' which appears in the notification
issued under section 1(5) of the Act which is a beneficient legis- lation. The word 'shop' has not
been defined in the Act. A shop is no doubt an establishment (other than a factory) to which the
Act can be extended under section 1(5) of the Act provided other requirements are satisfied. In
Collins Eng- lish Dictionary the meaning of the word 'shop' is given thus: "(i) a place esp. a
small building for the retail sale of goods and services and (ii) a place for the performance of a
specified type of work; workshop." It is obvious from the above meaning that a place where
services are sold on retail basis is also a shop. It is not disputed that the petitioner has been
making available on payment of the stipulated price the services of the members of the group of
musicians employed by it on wages. We, therefore, hold that the place where the petitioner has
been carrying on business is a shop to which the Act is applicable by virtue of the notification
referred to above. The first contention, there- fore, fails.

We do not find much substance in the second contention too. The fact that the services are
rendered by the employ- ees engaged by the petitioner intermittently or during marriages does
not entitle the petitioner to claim any exemption from the operation of the Act. The petitioner
cannot rely on sub-section (4) of section 1 of the Act which refers to factories only in support of
its case. We are concerned in this case with a shop and not a factory as defined under section
2(12) of the Act. Moreover the services of the employees of the petition- er are not confined only
to marriages. It cannot also be said that marriages take place only during a specified part of the
year. Nowa-days marriages take place throughout the year. The petitioner provides music at
several other social functions also which may take place 'during all seasons. The definition of an
'employee' under the Act has a wider mean- ing. The employees who worked outside the
business premises but those whose duties are connected with the business are also 'employees'
within the meaning of section 2(9)(i) of the Act. (see Nagpur Electric Light & Power Co. Ltd. v.
Regional Director Employees State Insurance Corporation Etc.), [1967] 3 S.C.R. 92. Even those
employees who are paid daily wages or those who are part-time employees are employ- ees for
purposes of the Act. Hence we do not find any merit in this special Leave Petition. The petition,
therefore, fails and it is dismissed.

Along with the Special Leave Petition the petitioner has presented before this Court a Writ
Petition under Article 32 of the Constitution questioning the validity of the notifi- cation issued
by the State Government on the ground that the power conferred under the Act on the State
Government by sub-section (5) of section 1 authorising the State Govern- ment to extend all or
any of the provisions of the Act to other establishments in the State suffers from the vice of
excessive delegation of essential legislative powers. It is also contended that the application of
the Act to businesses like the one which is being carried on by the petitioner during certain
seasons only of the year is violative of Article 14, Article 19(1)(g) and Article 21 of the Constitu-
tion. Having carefully considered the submission made by the learned counsel for the petitioner
we find no merit in any of the contentions urged in the writ Petition. The Writ Petition is
therefore, dismissed.

10. Bharagath EngineeringVs.R. Ranganayaki and Anr. (2003)2SCC138,

Pasayat, J.

1. The challenge in this appeal is to a Division Bench judgment of the High Court at Madras.
The point involved, though short, is interesting and relates to the question as to who can be
treated as an 'insured person' under Section 2(14) of the Employees' State Insurance Act,
1948
2. A brief reference to the factual position, which is almost undisputed, would suffice.
3. One Balakrishnan [hereinafter referred to as 'the deceased employee'] was employed by the
appellant [hereinafter referred to as 'the employer'] on and from 20th May, 1987. He lost his
life in an accident which was claimed to be arising out of and in the course of his
employment with the employer. Respondent No. 1 [hereinafter referred to as 'the claimant']
filed an application for compensation before the Commissioner for Workmen's
 Compensation, Trichy, under Workmen's Compensation Act 1923 [hereinafter referred to as
'the Compensation Act']. The employer questioned the maintainability of the proceeding on
the ground that Section 53 of the Act clearly barred entertainment of such an application. The
stand was accepted by the Deputy Commissioner of Labour and the Commissioner for
workmen compensation, who held that the deceased employee was covered by the Act and
was an 'insured person' as contemplated under Section 2(14) of the Act. The matter was
carried in appeal before the High Court by the claimant which, by the impugned order, held
that Section 53 of the Act had no application. Consequent upon recording a finding that the
deceased employee cannot be treated to be an insured person. It was noticed by the High
Court that the registration for the purpose of insurance was granted subsequent to the death
of the employee. In fact, the application for registration was submitted after the death of the
employee and at the time the registration was granted, the employee was dead. Registration
with the Employees' State Insurance Corporation [in short, 'the Corporation'] was considered
to be the outcome of a contract between the employee and the Corporation. It was, therefore,
held that an Direction was given to the authorities under the Compensation Act to deal with
the application.
4. In support of the appeal, learned counsel appearing for the appellant submitted that the High
Court's approach was erroneous because the language of Section 2(14) of the Act makes it
clear that even before an employee is registered for the purpose of insurance with the
Corporation, the obligation of the employer to pay contribution is not wiped out. Reference
was made to various provisions, more particularly to Rule 58(2)(b) of the Employees' State
Insurance (Central) Rules, 1950 [in short, 'the Rules] and Regulation (4) of the Employees'
State Insurance (General) Regulations, 1950 [in short, 'the Regulations']. Rule 58(2)(b) deals
with a situation where 'employment injuries' are sustained before the commencement of the
first benefit period. Merely because the contribution had not been paid by the time the
employee died, that does not affect the liability of the Corporation. There is a statutory
obligation to pay the contribution in respect of every employee once the factory or
establishment is covered by the Act and the obligation to pay the contribution commences
from the date of the application of the Act to such factory or establishment. With reference to
Section 38 of the Act, it was submitted that there was a statutory requirement for insurance in
relation to all employees. The scheme of the Act is conceptually different from other
 contracts of insurance and the relationship of the contractor and the contracte is not that of
the employee and the Corporation but that of the employer and the Corporation.
5. Learned counsel appearing for the Corporation submitted that Section 2(14) of the Act was
wide enough to cover an employee who dies even before the registration with the
Corporation. According to him, the benefit under the Act is more beneficial to the employee
than the compensation that could be awarded under the Compensation Act.
6. Learned counsel appearing for the claimant, on the other hand, submitted that only when the
person is registered for the purpose of insurance with the Corporation, the Act has
application and it is not that all the employees are automatically insured. What is
contemplated under Section 38 of the Act, which is a statutory requirement, is to insure all
the employees.
7. Section 2(14) of the Act, which is the pivotal provision, reads as follow:

"'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 benefit
provided by this Act."

8. 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 E.S.I. v. Harrisson Malayalam Pvt. Ltd.
MANU/SC/0422/1993 : (1994)ILLJ12SC , 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 E.S.I. Corporation v. Hotel Kalpaka
International MANU/SC/0244/1993 : (1993)ILLJ939SC , 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 bene closed, he could not be made liable.
Said view was reiterated in Employees' State Insurance Corporation v. Harrisons Malayalam
Limited MANU/SC/1655/1998 : (1999)ILLJ284SC That being the position, the date of
payment of contribution is really not very material. In fact, Section 38 of the Act cases 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
concerned employee.
9. 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(1C) 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
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 results in death
before the commencement of the first benefit period, Rule 58(2)(b)(ii) provides the method
of computation of dependent benefit. It provides for computation of dependent 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.
10. Rule 58(2)(b)(ii), insofar as it is relevant, reads as follows:

Dependents's benefits.

2(b) Where an employment injury occurs before the commencement of the first benefit period in
respect of a person the daily rate of dependent's benefit shall be:

(i) xxx xxx xxx

(ii) where a person sustained 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 off 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."

11. 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.

12. The civil appeal is, accordingly, allowed but in the circumstances, without any order as to
costs.

Case—11-- The Regional Director, Employees'State Insurance CorporationVs.M/s. High

Land CoffeeWorks of P.F.X. Saldanha & Sons and another AIR1992SC129,

K. Jagannatha Shetty, J.

1. These appeals by special leave are directed against the judgment of the Karnataka High Court
rejecting the claim of the appellant-Corporation for covering the factories of the respondents
under the provisions of the Employees' State Insurance Act, 1948 (the Act).

2. Section 1(4) excuses "seasonal factory" from the scope of the Act. The "seasonal factory" is
defined under Section 2(12) of the Act which is extracted hereunder:

Seasonal factory means a factory which is exclusively engaged in one or more of the following
manufacturing processes, namely, cotton, ginning, cotton or jute pressing, decortications of
groundnuts, the manufacture of coffee, indigo, lac, rubber, sugar (including gur) or tea or any
manufacturing process which is incidental to or connected with any of the aforesaid processes.

3. The factories of the respondents were excluded from the operation of the Act since they were
declared to be the seasonal factories within the meaning of the above stated definition. There is
no dispute on this aspect.

4. By Amending Act 44 of 1966 which came into force with effect from 28th January 1968, the
definition of "seasonal factory" has been amended. The definition as amended reads:
Seasonal factory means a factory which is exclusively engaged in one or more of the following
manufacturing processes, namely, cotton ginning, cotton or jute pressing, decortications of
groundnuts, the manufacture of coffee, indigo, lac, rubber, sugar (including gur) or tea or any
manufacturing process which is incidental to or connected with any of the aforesaid processes
and includes a factory which is engaged for a period not exceeding seven months in a year-

(a) in any process of blending, packing or re-packing of tea or coffee; or

(b) in such other manufacturing process as the Central Government may, by notification in the
Official Gazette, specify;

The expressions "manufacturing process" and "power" shall have the meaning respectively
assigned to them in the Factories Act, 1948.

5. After the said amendment, the Employees' State Insurance Corporation called upon the
respondents to pay the contributions payable under the Act and threatened to take coercive steps
to recover the arrears under the Revenue Recovery Act and prosecute them. Challenging the
validity of the demand made, the respondents approached the Employees' Insurance Court, inter
alia contending that the amendment to the definition of the expression "seasonal factory" brought
out by the Amending Act 44 of 1966 has not altered the position of the seasonal factory as
obtained prior to the amendment and Section 1(4) of the Act would still continue to exclude such
factory from the operation of the Act. The Employees' Insurance Court accepted the respondent's
plea. The Karnataka High Court has also agreed with the view taken by the Employees'
Insurance Court. The Corporation has now appealed to this Court.

6. The sole question for consideration is whether the respondents" factories in view of the
amendment to the definition of 'seasonal factory' have lost the benefit of exclusion from the Act.
The High Court on this aspect has observed that the purpose of the amendment was to enlarge
and not to restrict the statutory concept of 'seasonal factory' and the position of respondents
establishments as seasonal factories under and for the purpose of the Act remained unaltered
even after the amendment.

7. The view taken by the High Court seems to be justified. The statement of Objects and Reasons
of the Bill which later became the Act 44 of 1966 indicates that the proposed amendment was to
bring within the scope of the definition of 'seasonal factory', a factory which works for a period
of not exceeding seven months in a year- (a) in any process of blending, packing or repacking of
tea or coffee; or (b) in such other manufacturing process as the Central Government may, by
notification in the Official Gazette, specify. The amendment therefore, was clearly in favour of
the widening the definition of 'seasonal factory'. The amendment is in the nature of expansion of
the original definition as it is clear from the use of the words 'include a factory'. The amendment
does not restrict the original definition of "seasonal factory" but makes addition thereto by
inclusion. The word "include" in the statutory definition is generally used to enlarge the meaning
of the preceding words and it is by way of extension, and not with restriction. The word 'include'
is very generally used in interpretation clauses in order to enlarge the meaning of words or
phrases occurring in the body of the statute; and when it is so used, these words or phrases must
be construed as comprehending, not only such things as they signify according to their natural
import but also those things which the interpretation clause declares that they shall include. (See:
(i) Stroud's Judicial Dictionary, 5th ed. Vol. 3, p. 1263 and (ii) C.I.T. Andhra Pradesh v. Taj
Mahal Hotel, Secunderabad MANU/SC/0239/1971 : [1971]82ITR44(SC) (iii) State of Bombay
v. The Hospital Mazdoor Sabha and Ors. MANU/SC/0200/1960 : (1960)ILLJ251SC .

8. In view of these well accepted statutory construction, the decision of the High Court does not
call for interference. In the result the appeals and the special leave petition fail and are dismissed
with costs.

Case.12. Employees State Insurance CorporationVs.M/s. Hotel Kalpaka International,

AIR1993SC1530,

P.B. Sawant and S. Mohan, JJ.

The respondent-Hotel is situated in Kaloor, Cochin 17. It is a commercial establishment. In July

1985 this establishment obtained a Bar licence whereupon a Bar was started. After running the
business for some time it was closed down with effect from 31.3.88.

The Insurance Inspectors of the appellant verified the records of the respondent-establishment
on 29.9.87,9.10.87 and 19.10.87. It was reported that the employment strength of the respondent-
establishment including Chembaka Restaurant and Mayuri Bar was more than 19 as on 17.7.85.
Therefore, it was treated as covered under the Employees' State Insurance Act, 1948 (hereinafter
referred to as the Act) with effect from 11.7.85 provisionally. The fact of coverage was intimated
to the respondent by notice dated 21.3.88. Since the final date of coverage could be decided only
after verifying all the records pertaining to the date of functioning of the establishment, the
respondent was requested to produce all the records such as attendance register, wage register,
ledgers etc. from the date of starting of the establishment. The respondent was also called upon
to start compliance under the Act with effect from 11.7.85. But there was on compliance. Hence,
a notice was issued in From C-18 dated 26.3.88 along with a draft order for contribution amount
of Rs. 49,399.75 which was assessed under Section 45-A of the Act for the period 11.7.85 to
31.3.88. Though the respondent was afforded an opportunity to appear before the Officer, it was
not availed of. However, a letter dated 13.7.88 was received but the explanations were, not
acceptable to the appellant. Subsequently, a detailed order dated 3.8.88 under Section 45-A of
the Act was passed calling upon the respondent to pay a contribution of Rs. 49,399.75 together
with interest at 6 per cent, falling which it would be covered as an arrear of land revenue. Again,
reminder was sent on 22.9.88. No reply was received. Hence, in order to recover the contribution
under Section 45-A of the Act, a claim in Form-19 was sent to the District Collector, Ernakulam
on 31.10.88 requesting to recover the contribution for the period from 11.7.85 to 31.3.88.

Challenging these proceedings the respondent filed an application under Section 75 of the Act
before the Employees' Insurance Court, Alleppey. Inter alia it was contended that the applicant
(respondent in this appeal) at no time employed 20 or more persons during the relevant time. The
order was illegal because under Section 45-A of the Act the respondent was entitled to
reasonable opportunity of being heard. That was not afforded.

These contentions were refuted by the appellant. It was incorrect to state that on no occasion the
respondent employed 20 or more workmen since the inspection report dated 8.12.86 clearly
established to the contrary.

The contention that no opportunity had been afforded before initiating the revenue recovery
proceedings, was also denied in view of Form C-18 dated 23.6.88, show cause notice dated
3.8.88 and reminder dated 22.9.88.

By its order dated 6th June, 1990 the Employees' Insurance Court, Alleppey came to the
following conclusion:

In the result, I can only uphold the assessment made by the ESI Corporation. But when the
question of recovery is considered, certain other aspects cannot be ignored. The adhoc
assessment itself was made by the opposite party after the closure of the entire establishment. All
the employees working in the establishment had left by that time after accepting the termination
of their services. In respect of those employees who had already left, the ESI Corporation is now
trying to recover contribution. Now the position emerges is that despite the collection of
contribution it will be impossible to bring under coverage those employees, because, they are not
at all available for coverage and for enjoying the benefits under the scheme. Therefore, even if
the proceedings initiated earlier were sustainable, so long as the employees are not available for
the purpose of coverage, there is no meaning in collecting contribution alone. In these
circumstances, I can only hold that the applicant had failed to comply with provisions of the
Employees Insurance Act at the appropriate time. Therefore, according to me, after the closing of
the establishment such recovery steps are not justified but only the prosecution as contemplated
under Section 85 of the Employees Insurance Act is attracted. Therefore, it is upto the ESI
Corporation to decide whether any prosecution should be launched against the applicant for the
contravention or non-compliance of the requirements of the Employees Insurance Act and Rules.

Aggrieved by the same the appellant-Corporation preferred an appeal in M.F.A. No. 800 of
1990. A Division Bench of the Kerala High Court by its order dated 18th December, 1990 posed
the question for determination as to whether the appellant could proceed against respondent for
realisation of contribution under the ESI scheme, after the closure of establishment.

The High Court upheld the finding of the Insurance Court that the respondent had failed to
comply with the provisions of the Act at the appropriate time. However, it proceeded to hold that
the respondent-establishment was closed on 31.3.88. Ext.P3 notice calling upon the respondent
to pay the contribution was only on 23.6.88. Since the scheme was made after the closure of the
establishment, the appellant was not justified in proceeding against the respondent. In this view,
it dismissed the appeal. It is under these circumstances, the ESI Corporation has come up by way
of special leave to appeal.

Mr. M.L. Verma, learned senior counsel for the appellant urges the following. The closure of the
respondent-establishment was on 31.3.88 but the liability with reference to contribution arose
earlier. The demand is for the period 11.7.85 to 31.3.88. So long as the establishment is covered
by the provisions of the Act it is not open to the respondent to circumvent its liability by
contending that before actual recovery proceedings it had closed down. If the finding of the High
Court is accepted it would be the easiest way to evade the provisions of the Act.
 In R.M, Lakshmanamurthy v. The Employees' State Insurance Corporation, Bangalore
MANU/SC/0291/1974 : (1974)ILLJ304SC this Court has held that it is a beneficial piece of
social security legislation in the interest of labour. Further, the provisions of the Act will have to
be construed with that end in view in order to promote the scheme and avoid the mischief. Under
Section 26 of the Act all contributions are paid into a common fund. Such a fund will have to be
administered for the purposes of the Act as indicated under Section 28. Therefore, the employer
cannot contend that he did not collect the employees' contribution and hence, he cannot be called
upon to pay. Thus the impugned judgment is wrong and is liable to be set aside.

Per contra, Mr. P. Subramanian Poti, learned senior counsel for the respondent would argue that
the contention of the respondent throughout was that at no time it engaged 20 or more
employees. Therefore, it was under the belief that the Act would not be applicable. In that belief
the employer did not recover from the employees any contribution. Nor was the employer called
upon during that relevant time to comply with the provisions of the Act. It was entirely due to the
fault of the Officers of the appellant, the respondent did not make the contribution.

In any event, the establishment had been closed down on 31.3.88. It will be unjust to enforce the
provisions of the Act and to seek to recover contribution after the closure, more so, when the
employees have settled their claims and have gone away. Certainly, such a situation is not
contemplated under the Act. From this point of view the judgment of the High Court is right and
does not call for any interference.

In order to appreciate the rival contentions, it would be useful to set out the necessary legal
background. The Employees' State Insurance Act is an act for certain benefits to employees in
cases of sickness, maternity and employment injury and to make provision for certain other
matters in relation thereto. Section 1(4) makes it applicable to all factories, in the first
instance/Under Sub-section (5) of the said section, the Government may, by a Notification,
extend the provisions of the" Act to any other establishment or class of establishment, industrial,
commercial, agricultural or otherwise. Admittedly, in this case, the hotel industry like that of the
respondent has been notified under the Act. Under Section 26, a fund called Employees' State
Insurance Fund is created by all the contributions paid under this Act, the purposes, for which it
may be expended, are catalogued under Section 28.
Section 38 requires all employees in factories or establishments shall be insured. Section 39 talks
of contribution. In respect of an employee it shall comprise of contribution payable by the
employer (employer's contribution) and contribution payable by the employee. It is this
contribution which has to be paid to the Corporation. Section 40 imposes the liability to pay
contributions, in the first instance, on the principal employer. After such contribution the
employee's contribution could be deducted from his wages. Sub-section (4) of Section is
important. That says as follows:

(4) Any sum deducted by the principal employer from wages under this Act shall be deemed to
have been entrusted to him by the employee for the purpose of paying the contribution in respect
of which it was deducted.

(Emphasis supplied)

Therefore, this sub-section puts the matter beyond doubt that there is an entrustment. In other
words, the employer is a trustee.

Under Section 44 there is an obligation on the employer to furnish returns and maintain registers.
The benefits available to the insured persons are stated in Section 46:1. Sickness2. Maternity3.
Disablement4. Injury5. Medical treatment for and attendance on insured persons.

Lastly, there is power to prosecute under Section 85 which includes punishment for failure to
pay contributions as well as for contravention of or non-compliance with any of the requirements
of the Act. In the above legal background we may analyse the factual situation.

Two facts stare at us.

1. The liability to contribution of the respondent-employer relates to a period between 11.7.85 to

31.3.88. The respondent-establishment was closed on 31.3.88.

The contention of the respondent that at no time there were 20 or more employees in his
establishment has to be rejected because at no point of time the respondent sought an
adjudication on this aspect. On the contrary, the inspections made by the officials of the
appellant on 8.12.86, September 87 and October 87 state to the contrary. Therefore, we have to
proceed on the basis that the provisions of the Act are applicable to the respondent-
establishment, since (i) it is a notified industry, (ii) in the establishment more than 20 employees
were working at the relevant time.
From the above provisions it is clear that from the date of his commencement of business,
namely, 11.7.85, there was a liability to contribute. It has already been seen under Section 40 the
primary liability is his, to pay, not only the employer's contribution but also the employee's
contribution. Therefore, he cannot be heard to contend that since he had not deducted the
employee's contribution on the wages of the employees, he could not be made liable for the
same. The object of making a deeming entrustment Sub-section (4) of Section 40 will be
altogether rendered nugatory if such a contention were to be accepted. After all, when he makes
employee's contribution he is entitled to deduct from the wages. Therefore, by force of the
application of the statutory provisions, the liability to contribute, during this relevant period,
namely, 11.7.85 to 31.3.88, arose. There is no gainsaying in that. Hence, we reject the arguments
of Mr. Subramanian Poti, learned senior counsel for the respondent.

From the above statutory provisions, it would be clear that from out of the common fund
maintained under Section 26, the employees derive various benefits like sickness, maternity,
disablement, injury, medical treatment for and attendance on insured persons. Therefore, it is
beneficial piece of social security legislation. As a matter of fact, this Court had occasion to
consider the same in B.M. Lakshmanamurthy's case (supra). At page 370, paragraph 16 it was
held:

The Act is thus a beneficial piece of social security legislation in the interest of labour in
factories at the first instance and with power to extend to other establishments. Provisions of the
Act will have to be construed with that end in view to promote the scheme and avoid the
mischief.

The Insurance Court as well as the High Court have correctly upheld the demand for
contribution. But it is rather strange to conclude that the demand could not be enforced against a
closed business. If this finding were to be accepted it would not promote the scheme and avoid
the mischief. On the contrary, it would perpetrate the mischief. Any employer can easily avoid
his statutory liability and deny the beneficial piece of social security legislation to the employees,
by closing down the business before recovery. That certainly is not the indentment of the Act. To
hold, as the High Court has done, would set at naught all these beneficial provisions.

It is equally fallacious to conclude that because the employees had gone away there is no
liability to contribute. It has to be carefully remembered that the liability to contribute arose from
the date of commencement to the establishment and is a continuing liability till the closure. The
very object of establishing a common fund under Section 26 for the benefit of all the employees
will again be thwarted if such a construction is put.

We cannot also accept the finding of the High Court that because Ext. P3 notice was issued on
23.6.88 after the closure of the respondent-establishment on 31.3.88, the appellant was not
justified in proceeding against the respondent. The proceeding for the recovery is of the dues of
contribution which arose prior to the closure on 31.3.88. Therefore, it matters little when notice
was issued, calling upon to pay the contribution. In our considered view, such a notice is only a
reminder to the employer to discharge his statutory obligation.

For all these reasons, we have little hesitation in setting aside the impugned judgment of the
High Court which in turn upholds the order of Employees' State Insurance Court. The appellant
will be entitled to proceed with the recovery proceedings in accordance with law. Accordingly,
the appeal will stand allowed with costs.

Case--13. Kirloskar Brothers Ltd. Vs.Employees' State Insurance Corpn. AIR1996SC3261,

K. Ramaswamy, S.Saghir Ahmed and G.B. Pattanaik, JJ.

In these appeals short question that arises for consideration is whether the Employees' State
Insurance Act, 1948 (for short, 'the Act') would apply to the regional offices of the appellant at
Secunderabad in Andhra Pradesh and Bangalore in Karnataka State. The Appellant had
established its registered office at Poona for sale and distribution of its products from three
factories one situated at Kirloskarvadi, second at Karad in State of Maharashtra and the third one
at Deewas in the State of Madhya Pradesh. Admittedly factories situated in Maharashtra are not
covered under the Act. They set up regional offices at several places. The Governments of
Andhra Pradesh and Karnataka have applied the provisions of Section 2(g) of the Act to the
aforesaid regional offices situated at Secunderabad and Bangalore and the respondent had issued
notice Under Section 3(g) of the Act calling upon them to contribute their share of the health
insurance of the workmen working in the respective regional offices. Disputing the liability, the
appellant filed application before Insurance Court Under Section 75 of the Act. The Court had
held that the appellant's regional offices are covered under the Act and accordingly it directed
them to pay their contribution. The High Courts of Andhra Pradesh and Karnataka have upheld
the said orders. Hence these appeals by special leave.
In point of time, the judgment of the Andhra Pradesh High Court is the earliest rendered in
C.M.A. No. 593 of 1976. It had followed the decision of this Court in Hyderabad Asbestos
Cement Products Ltd. v. The Employees Insurance Court and Anr. MANU/SC/0228/1977 :
(1978)ILLJ181SC and held that the regional offices are established for sale or distribution of the
appellant's products, which have their connection to its factory at Deewas and as such the
appellant is liable to pay contribution. When similar question had arisen in the Orissa High
Court, in Misc. Appeal No. 187 of 1982, by an order dated March 5, 1987, the learned single
Judge had held that since the percentage of sale of products form Dewas at Bhubaneswar
regional office is not predominantly higher but is only incidental, it is not covered under the Act.
Therefore, the appellant is not liable to contribute to the insurance of the workmen. S.L.P. No.
7372 of 1987 against the said judgment was dismissed by a Bench of two Judges of this Court on
January 28, 1988 holding that having regard to the peculiar facts of the case, no interference
under Article 136 of the Constitution was called for. When the appeals came for hearing before a
Bench of two Judges, by an order dated January 17, 1990, the appeals were referred to this
Bench for decision. Thus these appeals have come before us.

Shri R.F. Nariman, learned senior counsel for the appellant, raised two-fold contentions. It is
contended that as per material on record, the regional offices at Secunderabad and Bangalore are
transacting business of the products manufactured by Deewas factory ranging between 3% to
33%. It is not predominantly products of the factory at Deewas and the other factories are not
covered under the Act. Therefore, the view expressed by the Orissa High Court is correct
interpretation of the law and that of the High Courts of Andhra Pradesh and Karnataka is
incorrect. It is also contended that the decision said of the High Court of Orissa between the
same parties become final, it operates as res judicata, Therefore, the appellant is entitled to be
excluded from the purview of the Act.

Shri V.C. Mahajan, the learned senior counsel appearing for the State, contended that regional
offices having been established by the appellant at different places to sell or distribute their
products at the respective places, the quantum of business transaction is not relevant
consideration. Equally, the test of predominant business turnover of the products manufactured
by Deewas factory is not a relevant consideration. The test laid down in Hyderabad Asbestos
Cement Products Ltd. case, i.e., control by the principal employer connected with the sale or
distribution of the products of the appellant is relevant. Therefore, the test laid down by the
learned Judge of the Orissa High Court is not correct one, the Andhra Pradesh and Karnataka
High Courts' view has correctly laid down the test and commanded for acceptance. It is also
contended that the principle of res judicata cannot be applied in the facts of this case, since the
entire issue is now at large.

Having regard to the respective contentions, the question that arises for consideration is whether
the Act applies to the respective regional offices. Section 2(9) of the Act defines "employee" to
mean any person employed for wages in or in connection with the work of a factory or
establishment to which this Act applies... and includes any person employed for wages on any
work connected with the administration of the factory or establishment or any part, department
or branch thereof or with the purchase of raw materials for, or the distribution or sale of he
products of, the factory.... (Emphasis supplied), "Occupier" of the factory Under Section 2(15)
shall have the meaning assigned to it in the Factories Act. "Principal employer" defined in
Section 2(17) means, "in a factory, the owner or occupier of the factory and includes the
managing agent of such owner or occupier, the legal representative or a deceased owner or
occupier, and where a person has been named as the manager of the factory under the Factories
Act, 1948, the person so named; in any establishment under the control of any department of any
Government in India, the authority appointed by such Government in this behalf or where no
authority is so appointed the head of the Department; in any other establishment, any person
responsible for the supervision and control of the establishment". It would thus be seen that the
Principal employer is the exclusive owner or occupier of the factory and includes the managing
agent of the owner or occupier or where a person has been named as the manager of the factory
under the Factories Act the person so named or any other person responsible for the supervision
and control of the establishment etc., is the principal employer. Having established the regional
offices at the respective places, the person who keeps control or is responsible for the supervision
of the establishment at the respective regional offices in connection with factory whose finished
products are distributed or sold, would be the principal employer for the purpose of the Act. The
person appointed for sale or distribution of the products in the regional office is the employee
covered under the Act.

The object of the Act is to provide certain benefits to employees in of sickness, maternity,
employment injury and for certain other matters in relation thereto. Section 39 of the Act enjoins
upon the employer to make payment of contribution and deduction of the contribution of the
employees from their wages at the rates specified in the First Schedule to the Act and to credit
the same to their account. The employees covered under the Act in return would receive
treatment for sickness, maternity, payment for employment injury etc. Every human being has
the right to live and to feed himself and his dependents. Security of one's own life and livelihood
is a pre-condition for orderliness. Liberty, equality and dignity of the person are intertwined
precious right to every citizen. Article 1 of the Universal Declaration of Human Rights, 1948
assures human sensitivity and moral responsibility of every State and that all human beings are
born free and equal in dignity and rights. Article 3 assures everyone the right to life, liberty and
security of person. Article 25(1) assures that everyone has a right to a standard of living adequate
for the health and well-being of himself and of his family, including, among others things,
medical care and right to security in the event of sickness, disability etc. Article 6 of
International Covenant on Civil and Political Rights, 1966 assures that every human being has
inherent right to life. This right shall be protected by law. Article 7(b) recognises the right of
everyone for the enjoyment of just and healthy conditions of work which ensures in particular
safe and healthy working conditions. The Preamble of the Constitution of India, the Fundamental
Rights and Directive Principles constituting trinity, assure to every person in a welfare State
social and economic democracy with equality of status and dignity of person. Political
democracy without social and economic democracy would always remain unstable. Social
democracy must become a way of life in an egalitarian social order. Economic democracy aids
consolidation of social stability and smooth working of political democracy. For welfare of the
employees, the employer should provide facilities and opportunities to make their life
meaningful. The employer must be an equal participant in evolving and implementing welfare
schemes. Article 39[e] of the Constitution enjoins upon the State to secure health and strength of
the workers and directs that the operation of the law is that the citizens are not forced by
economic necessity to work under forced labour or unfavourable and unconstitutional conditions
of work. It should, therefore, be the duty of the State to consider that welfare measures are
implemented effectively and efficaciously. Article 42, there fore, enjoins the State to make
provision for just and human conditions of work and maternity relief. Article 47 imposes a duty
on the State to improve public health.

Economic security and social welfare of the citizens are required to be reordered under rule of
law. In C.E.S.C. Limited v. Subhash Chandra Bose MANU/SC/0466/1992 : (1992)ILLJ475SC ,
in paragraph 31 this Court surveyed various functions of the State to protect safety and health of
the workmen and emphasised the need to provide medical care to the workmen to prevent
disease and to improve general standard of health consistent with human dignity and right to
personality. In para 32, it was held that the term "health" implies more than an absence of
sickness. Medical care and health facilities not only protect against sickness but also ensures
stable manpower for economic development. Facilities of health and medical are generate
devotion and dedication to give the workers' best, physically as well as mentally, in productivity.
It enables the worker to enjoy the fruit of his labour, to keep him physically fit and mentally alert
for leading a successful, economic, social and cultural life. It was held that "medical facilities
are, therefore, part of social security and like gilt-edged security, it would yield immediate return
to the employer in the increased production and would reduce absenteeism on grounds of
sickness, etc." It would thus save valuable man power and conserve human resources.

Health is thus a state of complete physical, mental and social well being right to health,
therefore, is a fundamental and human right to the workmen. "The maintenance of health is the
most imperative constitutional goal whose realisation requires interaction of many social and
economic factors. Just and favourable condition of work implies to ensure safe and health
working conditions to the workmen. The periodical medical treatment invigorates the health of
the workmen and harnesses their human resources. Prevention of occupational disabilities
generates devotion and dedication to duty and enthuses the workmen to render efficient service
which is a valuable asset for greater productivity to the employer and national production to the
State." Interpreting the provisions of the Act in para 33, it was held that the Act aims at relieving
the employees from health and occupational hazards. The legal interpretation is to ensure social
order and human relations.

In Consumer Education & Research center and Ors. v. Union of India and Ors.
MANU/SC/0175/1995 : (1995)IILLJ768SC a three-Judge Bench of this Court held that the
jurisprudence of personhood or philosophy of the right to life envisaged in Article 21 of the
Constitution enlarges its sweep to encompass human personality in its full blossom with
invigorated health which is a wealth to the workman to earn his livelihood, to sustain the dignity
of person and to live a life with dignity equality. The expression 'life' assured in Article 21 does
not connote mere animal existence or continued drudgery through life. It has a much wider
meaning which includes right to livelihood, better standard of living, hygienic conditions in the
work place and leisure facilities and opportunities to eliminate sickness and physical disability of
the workmen. Health of the workman enables him to enjoy the fruits of his labour, to keep him
physically fit and mentally alert. Medical facilities, therefore, is a fundamental and human right
to protect his health. In that case health insurance, while in service or after retirement was held to
be a fundamental right and even private industries are enjoined to provide health insurance to the
workman.

In expanding economic activity in liberalities economy Part IV of the Constitution enjoins not
only the State and its instrumentalities but even private industries to ensure safety to the
workman to provide facilities and opportunities for health and vigour of the workman assured in
relevant provisions in Part IV which are integral part of right to equality under Article 14 and
right to invigorated life under Article 21 which are fundamental rights to the workman.
Interpretation of the provisions of the Act, therefore, must be read in the light not only of the
objects of the Act but also the constitutional and fundamental and human rights referred to
hereinbefore.

The principal test to connect the workmen and employer under the Act to ensure health to the
employee being covered under the Act has been held by this Court in Hyderabad Asbestos case,
i.e., the employee is engaged in connection with the work of the factory. The test of predominant
business activity or too remote connection are not relevant. The employee need not necessarily
be the one integrally or predominantly connected with the entire business or trading activities.
The true test is control by the principal employer over the employee. That test will alone be the
relevant test. The connection between the factory and its predominant products sold or purchased
in the establishment or regional offices are irrelevant and always leads to denial of welfare
benefits to the employees under the Act. When there is connection between the factory and the
finished products which are sold or distributed in the regional offices or establishment and
principal employer has control over employee, the Act becomes applicable. The test laid down
by the Orissa High Court, namely, predominant business activity, i.e., sale or distribution of the
goods manufactured in the factory at Deewas, is not a correct test. It is true that this Court in the
special leave petition arising from the Orissa High Court judgment, leave was declined holding it
to be of peculiar facts.
This Court has not laid down any law therein. Shri Nariman has contended that it would operate
as a precedent. Since the entire controversy between the parties is at large and this Court has
seisen of the issue and pending decision, Orissa case should have got posted with these appeals.
That case did not lay any law. The previous decision does not operate as res judicata. Therefore,
we do not find any merit in the contentions. Accordingly, we hold that the view expressed by the
Andhra Pradesh and the Karnataka High Courts is correct in law. The appellant, therefore, is
liable to pay contribution from the respective date of demand in 1975 in Andhra Pradesh case,
and on the respective date in Karnataka case Under Section 39 read with first schedule to the
Act.

The appeals are accordingly dismissed with the above modifications. No costs.

13. The Assistant Director vs M/S. Western Outdoor Interactive,

Brief Facts of the present case

1. The Hon'ble Bombay High Court heard two appeals together, one filed by the ESI
Corporation (ESIC) against Western Outdoor Interactive Pvt. Ltd. (Western Outdoor)
and another filed by Reliable Software Systems Ltd. (Reliable Software) against ESIC.
Both Western Outdoor and Reliable Software are engaged in the business of software
development.

2. The appeal by Western Outdoor was filed against an order passed by the Employees'
State Insurance Court (ESI Court) which held that the activities carried out by Western
Outdoor are not "manufacturing process" and hence it is not a "factory" under the ESI
Act.

3. The second appeal was filed by Reliable Software challenging the order of the ESI Court
which held that software development is a "manufacturing process" and hence Reliable
Software is a "factory" under the ESI Act.
 4. Both appeals involved the same question of law regarding the coverage of the software
development companies under the ESI Act and were therefore heard and decided
together.
5. Bombay High Court found that the ESI, Act 1948 is a progressive legislation------The
ESI Act is a welfare legislation and the application of ESI Act is not a regressive but a
progressive step. To think that if ESI Act is made applicable then it will affect IT industry
adversely is a futile fear.
6. ESI Circular dated 22 November 2002--------Reference was made to the circular dated 22
November 2002 issued by the ESIC where it was decided to treat certain establishments
engaged in IT enabled services and other commercial activities as "shops" for the purpose
of coverage under section 1(5) of the ESI Act. This circular and the scope of "factory" in
section 2(12) of the ESI Act read with the meaning of "manufacturing process" under
Explanation II of Section 2(m) of the Factories Act look interlinked and alike, but they
are separate issues and are not to be mixed up.
7. The ESI Court, while allowing the claim of Western Outdoor, has erroneously relied on
the circular dated 22 November 2002. The ESI Court ought not to have given undue
weightage to that circular.
8. The circular was issued with an object to enhance the meaning of word "shop" and it was
not with a view to restrict the meaning of manufacturing process which is one of the
ingredients of the "factory" under the ESI Act.

DEFINITIONS OF "FACTORY" AND "MANUFACTURING PROCESS" UNDER THE ESI

ACT & THE FACTORIES ACT

9. The definition of "factory" in the Factories Act and the ESI Act are not the same.
Explanation II of Section 2(m) of the Factories Act is inserted in the Factories Act and
not in the ESI Act. It marks the difference in its interpretation and application.
10. In the definition of "factory" under Factories Act the words "worker working" are used,
while in the ESI Act, in the section defining "factory", the term "person employed for
wages" are used. A difference in these two definitions of one word "factory" can be
explained by example. A clerk or staff in the premises is not covered under the definition
of "worker" under the Factories Act, however, under the ESI Act, the word "worker" is
 not used but the legislature chose the word "person" and for "working", the word
"employed" is used. Thus, the premises where person is employed for a clerical work is
covered under the definition "factory" under the ESI Act. Therefore, definition of
"factory" has wider meaning under the ESI Act than the Factories Act.
11. Reliance was placed on the decision in the case of Quzi Noorul, H.H.H. Petrol Pump and
Anr. Vs. Deputy Director, Employees' State Insurance Corporation, reported in {(2009)
15 SCC 30} wherein it was held that the words "manufacturing process" in different
statutes have different meanings and we cannot apply the definition of "manufacturing
process" in one statute to another statute".
12. The section defining the term "manufacturing process" allows for wide interpretation.
Though computer related activities like development, programming and application are
not mentioned in the definition and to that effect there is no amendment in the section;
the definition takes care of activities like development and application.
13. Reliance was placed on the clarification provided in a letter1 dated 9 December 2003
issued by the Joint Director, ESIC, New Delhi to the Regional Director where it was
communicated that the letters dated 9 March 2003 and 22 September 2003 issued by
Directorate General, Government of India, Ministry of Labour and Factories, Advisory
Services and Labour Institutes, clarified that the term 'software development' falls within
the meaning of 'manufacturing process' under section 2(k) the Factories Act. Adopting
this clarification, the court held that software development is a manufacturing process.
14. The present appeals being under the ESI Act, the interpretation of "manufacturing
process" and the term "factory" were to be understood for the purpose of ESI Act and not
under the Factories Act.

IMPORTANT OBSERVATIONS OF THE COURT

15. The ESI Act is welfare legislation and the application of ESI Act is not a regressive but a
progressive step. To think that if ESI Act is made applicable then it will affect IT industry
adversely is a futile fear.
PAYMENT OF GRATUITY ACT, 1972

Case no.14--- Birla Institute of Technology v. The State of Jharkhand & ors, CIVIL APPEAL
No.2530 OF 2012

The Supreme Court in it’s order of January 07 had majorly relied on verdict of the
Supreme Court in the case of Ahmadabad Pvt. Primary Teachers Association vs.
Administrative Officer and Others,  wherein the question arose for consideration was
whether “Teacher” could be regarded as an “employee” under Section 2(e) of the
Payment of Gratuity Act and, if so, whether he/she is entitled to claim gratuity amount
from his employer in accordance with the provisions of the Act. The Bench in the case
held that a teacher is not an employee within the meaning of the expression “employee”
as defined under Section 2(e) of the Act and hence he/she is not entitled to claim any
gratuity amount from his employer under the Act.

The Supreme Court while recalling the Judgment noted that during the course of hearing of the
appeal it was not brought to the notice of the Bench that the judgment of this Court
in Ahmedabad Pvt. Primary Teachers Association vs. Administrative Officer & Ors. on which
the reliance was placed for allowing the appeal necessitated the Parliament to amend the
definition of “employee” under Section 2(e) of the Payment of Gratuity Act by Amending Act of
2009 with retrospective effect from 03.04.1997. In other words, though the definition was
amended in 2009, yet the same was given retrospective effect from 03.04.1997 so as to bring the
amended definition on Statute Book from 03.04.1997.

14. Ahmedabad Pvt. Primary Teachers' ... vs Administrative Officer And Ors on 13 January,
2004

JUDGMENT ------the Judgment of the Court was delivered by DHARMADHIKARI. J.

This appeal has been preferred by Ahmedabad Private Primary Teacher's Association.
The Association complains that in the petition filed by an individual teacher [respondent
no. 2 herein] employed in a school run by Ahmedabad Municipal Corporation, the Full
Bench of the High Court of Gujarat by impugned judgment dated 04.5.2001 in Special
Civil Application No. 5272 of 1987 not only rejected the claim of the teacher for payment
 of gratuity under the provisions of Payment of Gratuity Act. 1972 [for short "the Act) but
has decided an important question of law against the teachers as a class that they do not
fall within the definition of 'employee' as contained in Section 2(e) of the Act and hence
can raise no claim to gratuity under the Act.

The definition of employee contanned in section 2(e) of the Act of 1972 reads as under-

'2(e). 'employee' means any person (other than an apprentice) employed on wages, in any
establishment, factory, mine, olifield, plantation, port, railway company or shop, to do
any skilled, semi-skilled or unskilled, manual, supervisory, technical or clerical work,
whether the terms of such employment are express or implied, [and whether or not such
person is employed in a managerial or administrative capacity, but does not include any
such person who holds a post under the Central Government or a State Government and
is governed by any other Act or by any rules providing for payment of gratuity].

15. [Italics giving emphasis] One of the learned Judges of the High Court in his separate
concurring opinion held that as gratuity payable to teachers employed in schools of
Ahmedabad Municipal Corporation are governed by statutory regulations known as 'Gratuity
Regulations of the Municipal Corporation of the city of Ahmedabad' framed by the
Corporation under Section 465(i)(h) of the Bombay Municipal Corporation Act. 1949. such
teachers even if held to be covered by main part of definition of 'employee' are expressly
excluded by the last exclusionary clause of the definition shown by underlining it as above.

16. As all the learned judges have unanimously held that teachers are not covered by the
definition of "employee' under section 2(e) of the Act, it has become necessary for this court
to consider the correctness of the view with regard to the applicability of the Act to the
teachers as a class.

17. We have heard the learned counsel appearing for all contesting parties.

18. As the legal question involved is general in nature affecting teachers as a class, on our
request, senior advocate Dr. Rajeev Dhawan appeared as Amicus Curiae. We are immensely
benefited by his able assistance which we thankfully acknowledge.
19. The Act is a piece of social welfare legislation and deals with the payment of gratuity which
is a kind of retiral benefit like pension, provident fund etc. As has been explained in the
concurring opinion of one of the learned judges of the High Court 'gratuity in its
etymological sense is a gift, especially for services rendered, or return for favours received.'
It has now been universally recognized that all persons in society need protection against loss
of income due to unemployment arising out of incapacity to work due to invalidity, old age
etc. For the wage earning population, security of income, when the worker becomes old or
infirm, is of consequential importance. The provisions contained in the Act are in the nature
of social security measures like employment insurance, provident fund and pension. The Act
accepts, in principle, compulsory payment of gratuity as a social security measure to wage
earning population in industries, factories and establishments.

20. Thus, the main purpose and concept of gratuity is to help the workman after retirement,
whether, retirement is a result of rules of superannuation, or physical disablement or
impairment of vital part of the body. The expression, 'gratuity' itself suggests that it is a
gratuitous payment given to an employee on discharge, superannuation or death. Gratuity is
an amount paid unconnected with any consideration and not resting upon it. and has to be
considered as something given freely voluntarily or without recompense. It is sort of
financial assistance to tide over post-retiral hardships and inconveniences.

21. The following important words and expressions in the definitions clause 2(e) are before us
for consideration and interpretation in the light of the arguments advanced which project
different points of view:-

22. 2(e). '2(e). 'employee' means any person (other than an apprentice) employed on wages, in
any establishment, factory, mine, olifield, plantation, port, railway company or shop, to do
any skilled, semi-skilled or unskilled, manual, supervisory, technical or clerical
work......................... whether or not such person is employed in a managrial or
administrative capacitv [Italics giving emphasis] The learned counsel appearing for the
Teacher's Association and also the learned Amicus Curiae very strenuously urged that a
beneficial, purposeful and wide interpretation should be placed on the definition of employee
in section 2(e) of the Act particularly in the light of the fact that earlier in the definition
 clause, there was an income limit of wages being not more than Rs. 2.300 per month, for
extending coverage of gratuity benefit to the employees. That wages or salary limit has.
however, been done away with by introducing amendment to the definition clause 2(e) of the
Act. Now gratuity-is payable to all employees irrespective of the quantum of salary or wages
paid to them. It is. further, pointed out that in the unamended definition clause, employees
working in managerial or administrative capacity were excluded from the definition of an
'employee' but after the amendment introduced with effect from 01.7.1984, even employees
in managerial or administrate capacity and without any bar or limit on their salaries or wages
are brought within the definition of "employee" to extend the benefit of gratuity to them.
Learned counsel appearing for the appellant and the learned Amicus Curiae, therefore,
contended that a very wide meaning has to be given to the word 'employee" in the definition
contained in Section 2(e) of the Act.

23. On the other hand, learned senior counsel Shri R.F, Nariman contends that the Act is one of
the labour welfare legislations. The words and expressions used in the provisions of the Act
should be considered in the lignt of the provisions contained in other labour legislations
where similar expressions and definitions have been used. He has referred to the definition of
'employee' in section 2(i) of the Minimum Wages .Act. Section 2(13) of the Payment of
Bonus Act and compared those provisions with definition of 'employee' in section 2(1) of the
Provident Funds Act. Reference is also made to definition of 'workman' under section 2(s) of
the Industrial Disputes Act Thus, on comparative reading of the various definitions in
different enactments in the field of labour legislation, the learned counsel appearing for the
respondents argues that a teacher cannot be said to be employed either for skilled, semi-
skilled. unskilled, manual, supervisory technical or clerical work. He/she is also not
employed in any managerial or adminastrative capacity. The teacher is engaged in imparting
education for intellectual or moral development of student. He'She does not answer any of
the above mentioned descriptions in the definition clause with regard to the nature of work.

24. The learned Amicus Curiae,in is counter reply submitted that the words-'skilled', 'semi-
skilled or 'unskilled, do not quality the words 'manual'. 'supervisory', 'technical' or 'clerical'. It
is contended that all the words 'skilled', 'semi-skilled', 'unskilled', 'manual', 'supervisory',
 'technical', or 'clerical', because of the commas in between them have to be read disjunctively
and they all qualify the word 'work' which is mentioned at the end of all these words.

25. We have critically examined the definition clause in the light of the arguments advanced on
either side and have compared it with the definitions given in other labour enactments. On
the doctrine of 'pari matreria, reference to other statutes dealing with the same subject or
forming pan of the same system is a permissible aid to the construction of provisions in a
statute. See the following observations contained in Principles of Statutory Interpretation by
G.P. Singh [8th Ed.]-Synopsis 4 at pg. 235 to 239:-

26. 'Statutes in Pari Materia:- It has already been seen that a statute must be read as a whole as
words are to be understood in their context. Extension of this rule of context permits
reference to other statutes in pari materia i.e. statutes dealing with the same subject matter or
forming part of the same system. Viscount Simonds in a passage already noticed conceived it
to be a right and duty to construe every word of a statute in its context ard he used the word
context in its widest sense including 'other statutes in pari materia'. As stated by Lord
Mansfield 'where there are different statutes in pari materia though made at different times,
or even expired, and not referring to each other, they shall be taken and construed together,
as one system and as explanatory of each other.....

27. The application of this rule of construction has the merit of avoiding any apparent
contradiction between a series of statutes dealing with the same subject, it allows the use of
an earlier statute to throw light on the meaning of a phrase used in a later statute in the same
context, it permits the raising of a presumption, in the absence of any context indicating a
contrary intention, that the same meaning attaches to the same words in a later statute as in an
earlier statute if the words are used in similar connection in the two statutes, and it enables
the use of a later statute as parliamentary exposition of the meaning of ambiguous
expressions in an earlier statute.

28. The definition of 'workman' contained in section 2(s) of the Industrial Disputes Act, 1947
meaning "any person employed in any industry to do any skilled or unskilled manual
supervisory technical, operational, or clerical work' came up for consideration before this
 Court when teachers claimed that they are covered by the definition of the Industrial Disputes
Act. In the case of A. Sundarambal v. Govt. of Goa, Daman and Diu.[1988] 4 SCC 42 this
Court negatived the claim of teachers that they are covered by the definition of 'workman'
under industrial Disputes Act thus:-

29. "Even though an educational institution has to be treated as an 'industry', teachers in an

educational institution cannot he consulted as workman.

30. The teachers employed by educational institutions whether the said institutions are imparting
primary, secondary, graduate or postgraduate education cannot be called as 'workman' within
the meaning of Section 2(s) of the Act. Imparting of education which is ihe main function of
teachers cannot he considered as skilled or unskilled manual work or supervisors work or
technical work or clerical work Imparting of education is in the nature of a mission or a noble
vocation. The clerical work, if any. they may do, is only incidental to their principal work of
teaching."

The definition of 'employee' as contained in section 2(i) of the Minimum Wages Act. 1948 came up for
consideration before this Court in the case of Haryana Unrecognised Schools' Association v. State of
Haryana, [1996] 4 SCC

225. In section 2(i) of the Minimum Wages Act. the word 'employee is defined to mean: 'any person who
is employed for hire or reward to do any work, skilled or unskilled, manual or clerical, in a scheduled
employment in respect of which minimum rates of wages have been fixed". This Court held that as
teachers are not employed for any skilled or unskilled, manual or clerical work, it is not open to the State
Government to include their employment as a scheduled employment under the Minimum Wages Act.
The relevant observations need to be quoted:-

31. "A combined reading of sections 3, 2 (i) and 27 of the Minimum Wages Act. 1948 and the
Statement of Objects and Reasons of the legislation makes it explicitly clear that the State
Government can add to either part of the Schedule any employment where persons are
employed for hire or reward to do any work skilled or unskilled, manual or clerical. If the
persons employed do not do the work of any skilled or unskilled or of a manual or clerical
nature then it would not be possible for the State Government to include such an employment
in the Schedule in exercise of power under Section 27 of the Act. Since the teachers of an
educational institution are not employed to do any skilled or unskilled or manual or clerical
 work and therefore, could not be held to be an employee under Section 2(i) of the Act, it is
beyond the competence of the Stale Government to bring them under the purview of the Act
by adding the employment in educational institution in the Schedule in exercise of power
under Section 27 of the Act. Hence, the State Government in exercise of powers under the
Act is not entitled to fix the minimum wage of such teachers. The impugned notifications so
far as the teachers of the educational institution are concerned are accordingly quashed."

32. [Emphasis added by Italics] The definitions of 'employee' in other labour legislations which
need to be considered for comparison are first section 2(13) of the Payment of Bonus Act,
1965 where the definition reads as under:-

33. '2(13). 'Employee' means any person (other than an apprentice) employed on a salary or wage
not exceeding [three thousand and five hundred rupees] per mensem in any industry to do
any skilled or unskilled, manual, supervisory. managerial, administrative, technical or
clerical work for hire or reward, whether the terms of employment be express or implied.'
[Emphasis added] Section 2(0) of the Employees' Provident Funds Act, 1952 defines
'employee' as under:-

34. "2(f), 'employee' means any person who is employed for wages in any kind of work, manual
or otherwise, in or in connection with the work of [an establishment] and who gets his wages
directly or indirectly from the employer."

35. [Emphasis added | Learned counsel appearing for the Corporation does not dispute that
definition of employee under the Employees Provident Funds Act, 1952 is very wide and
may include even a teacher in an educational establishment because the expression in the
definition clause used is 'any person' who is employed for wages in any kind of work, manual
or otherwise, in or in connection with the work of [an establishment] and who gets his wages
directly or indirectly from the employer.' It is submitted that suite such language of wide
import in defining 'employee' is not used in the Payment of Gratutuity Act of 1972, the
definition is restrictive and not expansive. It has to be understood as excluding 'teachers' who
are not doing any kind of skilled or unskilled, manual, supervisor), managerial,
administrative, technical or clerical work.
36. It is not disputed that by notification dated 3rd April. 1997. issued in exercise of powers,
under section l(3)(c) of| the Payment of Gratuity Act, 1972. the Gratuity Act is extended to
educational institutions in which ten or more persons are employed or were employed on any
day preceding 12 months. I he relevant part of the notification leads as under:-

37. IN EDUCATIONAL INSTITUTIONS 'Notification No. 5-42013/1/95-SS II. Dated 3rd

APRIL 1997-In exercise of the powers conferred by CI. (c) of sub-clause (3) of Sec 1 of the
Payment of Gratuity Act. l972, (39 of 1972). the Central Government hereby specifies the
educational institutions in which ten or more persons are employed or were employed on any
day preceding 12 months as a class of establishments to which the said Act shall apply effect
from the date of publication of this notification.

38. Provided that nothing contained in this notification shall effect the operation of the
notification of the Ministry of Labour S.O. 239 dated 8th January. 198:

39. An educational institution, therefore, is an 'establishment' notified under section l(3)(c) of the
Payment of Gratuity Act, 1972. On behalf of the Municipal Corporation, it is contended that
the only beneficial effect of the Notification issued under section l(3)(c) of the Act of 1972,
is that such non-teaching staff of educational institutions as answer the description of any of
the employments contained in the definition clause 2(e), would be covered by the provisions
of the Act. The teaching staff being not covered by the definition of 'employee' can get no
advantage merely because by notification 'educational institutions' as establishments are
covered by the provisions of the Act.

40. Having thus compared the various definition clauses of word 'employee' in different
enactments, with due regard to the different aims and objects of the various labour
legislations, we are of the view that even on plain construction of the words and expression
used in definition clause 2(e) of the Act, 'teachers' who are mainly employed for imparting
education are not intended to be covered for extending gratuity benefits under the Act.
Teachers do not answer description of being employees who are 'skilled', 'semi-skilled' or
'unskilled'. These three words used in association with each other intend to convey that a
person who is 'unskilled' is one who is not 'skilled' and a person who is 'semi-skilled' may be
 one who falls between two categories meaning he is neither fully skilled nor unskilled. The
Black's Law Dictionary defines these three words as under:-

41. "Semi-skilled work. Work that may require some alertness and close attention, such as
inspecting items or machinery for irregularities, or guarding property or people against loss
or injury.

42. Skilled work. Work requiring the worker to use judgment, deal with the public, analyze facts
and figures, or work with abstract ideas at a high level of complexity.

43. Unskilled work. Work requiring little or no judgment, and involving simple tasks that can be
learned quickly on the job.

44. In construing the above mentioned three words which are used in association with each other,
the rule of construction noscitur a soclls may be applied. The meaning of each of these words
is to be understood by the company it keeps. It is a legitimate rule of construction to construe
words in an Act of Parliament with reference to words found in immediate connection with
them. The actual order of these three words in juxtaposition indicates that meaning of one
takes colour from the other. The rule is explained differently; 'that meaning of doubtful
words may be ascertained by reference to the meaning of words associated with it.' [See
Principles of Statutory Interpretation by Justice G.P. Singh (8th E.d.), Syn. 8 at pg.

45. 379. The word 'unskilled' is opposite of the word 'skilled' and the word 'semi- skilled', seems
to describe a person who falls between the two categories i.e. he is not fully skilled and also
is not completely unskilled but has some amount of skill for the work for which he is
employed. The word 'unskilled' cannot, therefore, be understood dissociated from the word
'skilled' and 'semi-skilled to read and construe it to include in it all categories of employees
irrespective of the nature of employment. If the Legislature intended to cover all categories
of employees for extending benefit of gratuity under the Act, specific mention of categories
of employment in the definition clause was not necessary at all. Any construction of
definition clause which renders it superfluous or otiose has to be avoided.
46. The contention advanced that teachers should be treated as included in expression 'unskilled'
or skilled' cannot. therefore, be accepted. The teachers might have been imparted training for
teaching or there may be cases where teachers who are employed in primary schools are
untrained. A trained teacher is not described in industrial field or service jurisprudence as a
'skilled employee'. Such adjective generally is used for employee doing manual or technical
work. Similarly, the words 'semi- skilled' and 'unskilled' are not understood in educational
establishments a describing nature of job of untrained teachers. We do not attach much
importance lo the arguments advanced on the question as to whether 'skilled', 'semi-skilled'
and 'unskilled' qualify the words 'manual", 'supervisory', 'technical, or 'clerical' or the above
words qualify the word 'work', liven if all the words are read disjunctively or in any other
manner, (rained or untrained teachers do not plainly answer any of the descriptions of the
nature of various employments given in the definition clause, framed or untrained teachers
are not 'skilled', 'semi-skilled', 'unskilled', 'manual', "supervisory", 'technical" or 'clerical'
employees. They are also not employed in 'managerial' or 'administrative' capacity.
Occasional!}, even if they do some administrative work as part of their duty with teaching,
since their main job is imparting education, they cannot be held emploved in "managerial" or
'administrative' capacity. The teachers are clearly not intended to be covered by the definition
of "employee".

47. The Legislature was alive to various kinds of definitions of word 'employee' contained in
various previous labour enactments when the Act was passed in 1972. If it intended to cover
in the definition of 'employee' all kinds of employees, it could have as well used such wide
language as is contained in section 2(1) of the Employees' Provident Funds Act, 1952 which
defines 'employee to mean 'any person who is employed for wages in any kind of work,
manual or otherwise, in or in connection with the work of [an establishment ...........Non-use
of such wide language in definition of 'emplovee' in section 2(e) of the Act of l972 reinforces
our conclusion that teachers are clearly not covered in the definition.

48. Our conclusion should not be misunderstood that teachers although engaged in very noble
profession of educating our young generation should not be given any gratuity benefit. There
are already in several States separate statutes, rules and regulations granting gratuity benefits
to teachers in educational institutions which are more or less beneficial than the gratuity
 benefits provided under the Act. It is for the Legislature to take cognizance of situation of
such teachers in various establishments where gratuity benefits are not available and think of
a separate legislation for them in this regard. That is the subject matter solely of the
Legislature to consider and decide.

49. In conclusion, we find no merit in this appeal. It is, hereby, dismissed but without any order
as to costs

MATERNITY BENEFIT ACT, 1961

All female employees --- contractual, ad hoc, permanent or temporary are entitled for maternity
leave. The Maternity Benefit Act, 1961 protects the employment of women during the time of
her maternity and entitles her of a ‘maternity benefit’ – i.e. full paid absence from work – to take
care for her child. The act is applicable to all establishments employing 10 or more employees.
The Act is applicable to all establishments which are factories, mines, plantations, Government
establishments, shops and establishments under the relevant applicable legislations, or any other
establishment as may be notified by the Central Government.

As per the Act, to be eligible for maternity benefit, a woman must have been working as an
employee in an establishment for a period of at least 80 days in the past 12 months. Payment
during the leave period is based on the average daily wage for the period of actual absence.

Important Elements of Maternity Benefit (Amendment)Act of 2017 as follows:

1. Increased Paid Maternity Leave: The Maternity Benefit Amendment Act has increased
the duration of paid maternity leave available for women employees from the existing 12
weeks to 26 weeks. Under the Maternity Benefit Amendment Act, this benefit could be
availed by women for a period extending up to a maximum of 8 weeks before the
expected delivery date and the remaining time can be availed post childbirth. For women
who are expecting after having 2 children, the duration of paid maternity leave shall be
12 weeks (i.e., 6 weeks pre and 6 weeks post expected date of delivery).
2. Maternity leave for adoptive and commissioning mothers: Maternity leave of 12 weeks to
be available to mothers adopting a child below the age of three months from the date of
 adoption as well as to the “commissioning mothers”. The commissioning mother has
been defined as biological mother who uses her egg to create an embryo planted in any
other woman.
3. Work from Home option: The Maternity Benefit Amendment Act has also introduced an
enabling provision relating to "work from home" for women, which may be exercised
after the expiry of the 26 weeks' leave period. Depending upon the nature of work,
women employees may be able to avail this benefit on terms that are mutually agreed
with the employer.
4. Crèche facility: The Maternity Benefit Amendment Act makes crèche facility mandatory
for every establishment employing 50 or more employees. Women employees would be
permitted to visit the crèche 4 times during the day (including rest intervals)
5. The Maternity Benefit Amendment Act makes it mandatory for employers to educate
women about the maternity benefits available to them at the time of their appointment.

Case—15

Smt. Shweta Tripathi vs Govt. Of Nct Of Delhi on 17 September, 2013

1. The brief facts of the case are that the first and second Applicants have been appointed as
Welfare Officers on contract basis under the Department of Social Welfare with effect
from 25.8.2009 and 14.7.2010 respectively. They are presently posted in Children Home
for Girls, Nirmal Chaya Complex, Jail Road, New Delhi. Applicant No.1, vide her
representation dated 20.06.2012 applied for maternity leave through proper channel
expecting her date of delivery as 27.7.2012 but the Respondent No.2 rejected it by
returning the said representation in original itself on 26.07.2012 but scribbling on it as
under:-

R/o with the remarks that the leave is not entitled as per circular dated 14.9.2009. This is not
understood why the Superintendent recommending/forwarding the same when the circular has
already been issued.
Similarly, Applicant No.2 applied for maternity leave with effect from 15.8.2012 for six months
but in her case, the Respondent No.3, vide its order dated 02.11.2012, granted only 12 weeks
leave with effect from 15.08.2012 to 06.11.2012.

2. However, the contention of the learned counsel for the Applicants is that just because the
Applicants are contractual employees in the matter of maternity leave there cannot be any
discrimination.

3. In this regard, he has relied upon the Order of this Tribunal in OA No.939/2011 Dr.
Shipla Sharma Vs. The Chairman, NDMC and Others, the relevant part of which reads as
under:-

4. On a careful consideration, even this letter issued by the respondents is found to be

misconceived, having proceeded on an erroneous premise. Extra Ordinary Leave is dealt
with under Rule 32 which falls in Chapter IV dealing with kinds of leave due and
admissible. As against this, the maternity leave falls in Chapter V dealing with special
kind of leaves other than study leave. The maternity leave is dealt with in Rule 43 falling
in Chapter V referred to above which is a self contained provision and has not been
subjected to the conditions applicable to extra ordinary leave. The respondents have, thus,
erred on proceeding on an incorrect premise. As a matter of fact, CCS (Leave) Rules are
not applicable to the applicant in view of rule 2 (h) which excludes the applicability of
the said Rule to persons employed on contract except when the contract provides
otherwise. A plain reading of the Agreement entered into between the parties, as referred
to above, does not satisfy the requirement of Clause 2 (h) of the CCS (Leave) Rules for
there is no provisions whatsoever with regard to the leave admissible to the applicant in
the said Agreement. That being so, the question now arises as to how the applicants
entitlement to the maternity leave is to be determined. In this regard, the applicants
counsel has placed much reliance on the judgment of the Honble High Court in the case
of Dr. Hemlata Saraswat . In that case, the petitioner questioned the communication dated
27.4.2006 denying her maternity leave on the ground that she was working as Medical
Officer on consolidated salary and there was no provision in the rules for granting her
maternity leave. Thus, the question that arose for consideration in that case was that if
there was no provision in the Rules for granting maternity leave, could the petitioner still
claim special maternity leave. The question was answered in the affirmative. The
respondents on the other hand have taken conscious decision that the case of Dr. Hemlata
Saraswat (supra) is not applicable to the applicant herein for the reason, as stated in the
impugned order, as the State Government of Rajasthan had taken a decision to grant
maternity leave to the temporary female employees and thus, the contractual employees
are also entitled to get the same benefits. I have carefully perused the judgment in the
case of Dr. Hemlata Saraswat and found that the stand taken by the respondents is
misconceived. For better understanding of this aspect of the matter, it is considered
appropriate to refer to the judgment in the said case in details. The Honble High Court
clearly expressed its opinion in para 6 of its judgment to the effect that the
communication dated 27.4.2006 emanating from the Directorate of Medical and Health
Services, Rajasthan, Jaipur denying maternity leave to the petitioner with cryptic
observation that the rules do not mention about grant of such leave to the Medical Officer
working on consolidated salary cannot be said to be justified nor appear bona fide,
particularly for having been issued even after the decisions of this Court in the case of
Neetu Choudhary (decided on 19.4.2005) and Smt. Sumitra Choudhary (decided on
19.9.2005; and this writ petition deserves to be allowed with costs. Although law on the
question in issue has been well settled yet the Rajasthan High Court proceeded to deal
with the matter in more details with a view to ensure avoidance of avoidable litigation
and also to sound warning against unjustified denial of maternity leave for which the
officer concerned might be held personally responsible for the costs and consequences.
The Court thus observed that As shall be noticed hereafter, the aforementioned decision
in Neeta Choudhary has been affirmed by the Honble Division Bench with rather strong
comments on the attempt on the part of the Government to deny maternity benefit to its
employees against the basic norms of quality, and so also against the propositions of
gender justice and betterment of status of women; and, in view of settled position of law,
there would not have been any necessity to expound further on the principles applicable
but for the reason that such litigations are still of recurrence before this Court, it appears
apposite to deal with the aspect a bit more in detail in the hope that such perfunctory
approach would be corrected by the authorities concerned obviating the necessity of such
 avoidable litigation and also for the warning that for any such unjustified denial of
maternity leave, the Officer concerned might be held personally responsible for the costs
and consequences.The Court then proceeded to deal with the case law on the subject. The
Court heavily relied upon the Supreme Courts judgment in the case of Muncipal
Corporation of Delhi v. Female Workers (Muster Roll) & Anr., 2000(3) SLJ 369, in
paragraphs 8 to 16.

5. It has further been held in this case by the Honble Court that the provisions in
International Convention where India is signatory should be read in the contract of the
employment. Reference in this regard has been made to the Convention of Elimination of
All Forms of Discrimination against Women adopted by the United Nation on
18.12.1979. Accordingly, even casual female workers and female workers employed on
daily wage basis are entitled to the benefit of Maternity Benefit Act, 1961. As a matter of
fact, the Honble Supreme Court directed issuance of notification under the proviso to sub
Section (1) of Section 2 of the Maternity Benefits Act, 1961, if that is not already issued.
Section 27 of the Maternity Benefits Act, 1961, deals with effect of laws in agreement
inconsistent with that Act. Sub section (1) of Sec.27 of the Maternity Act, 1961 provides
that the provisions of this Act shall have effect notwithstanding anything inconsistent
therewith contained in any other law or in the terms of any award, agreement or contract
of service. Sub Section (2) of this Section, however, provides that it will be open to the
woman to enter into agreement with her employer for granting her rights and privileges in
respect of any matters which are more favourable to her than those to which she would be
entitled to under this Act. (Para 23 of Muncipal Corporation of Delhi v. Female Workers
(Muter Roll) & Anr., (supra)). In view of the aforesaid, the respondents NDMC too can
be viewed as an industry to which provisions of the Maternity Benefits Act, 1961, are
extendable. Furthermore, the applicant having been appointed in Charak Palika Hospital,
Moti Bagh, New Delhi, hospitals too are reckoned in law as an industry, as held by the
Honble Supreme Court in the case of Bangalore Water Supply and Sewage Board v. A.
Rajappa , 1978 LIC 467. Although the agreement for service between the parties does not
contain any provisions with regard to grant of maternity leave, the same has to be read
into the contract of service between New Delhi Municipal Council and the applicant and
 thus the applicant becomes entitled to all the benefits under the Maternity Benefits Act,
1961. Absence of such a provision in the agreement between the parties will not help so
as to deprive the applicant of her maternity leave in view of Section 27 of the Maternity
Benefits Act, 1961, as referred to above, which would have the effect of rendering such a
condition as unlawful. Any condition in the agreement, which tends to deprive a woman
of maternity leave, would also be viewed as opposed to public policy as well as law and
consequently void in terms of Section 23 of the Indian Contract Act, 1872.

6. The present case is a glaring instance of avoidable litigation. Had the authorities
concerned dealt with the matter with due regard to their constitutional duties, this
litigation could have been avoided. Instead, they have chosen to proceed in utter
disregard of their duties in flagrant violation of the requirements of rules and even
disregard to the decisions rendered by the Courts. The Application thus deserves to be
allowed with costs.

7. The application is, therefore, allowed. The impugned order dated 13.1.2011 stands
quashed. The respondents shall take up the matter for consideration of sanctioning of
maternity leave to the applicant as applied for and consequential benefits thereof shall be
accorded to the applicant within a period of 30 days from the date of receipt of a certified
copy of this order. The applicant shall also be entitled to cost quantified at Rs.10,000/-
(Rupees Ten Thousand only). It shall be permissible for the respondents, if they so
desired but only after making payment to the applicant, to recover the amount of costs
strictly in accordance with law from the person/persons responsible for this unnecessary
litigation.

8. The learned counsel for the Applicants has also relied upon the judgment of the Apex
Court in Municipal Corporation of Delhi Vs. Female Workers (Muster Roll) and Another
2000 SCC(L&S) 331 wherein it has been held that the provisions of the Maternity
Benefit Act,1961 are applicable even to women engaged on casual basis or muster roll
basis. The relevant part of the said judgment reads as under:-
9. The provisions of the Act which have been set out above would indicate that they are
wholly in consonance with the Directive Principles of State Policy, as set out in Art.39
and in other Articles, especially Art.42. A woman employee, at the time of advanced
pregnancy cannot be compelled to undertake hard labour as it would be detrimental to her
health and also to the health of the foetus. It is for this reason that it is provided in the Act
that she would be entitled to maternity leave for certain periods prior to and after
delivery. We have scanned the different provisions of the Act, but we do not find
anything contained in the Act which entitles only regular women employees to the
benefit of maternity leave and not to those who are engaged on casual basis or on muster
roll on daily wage basis.

10. The Industrial Tribunal, which has given an award in favour of the respondents, has
noticed that women employees have been engaged by the Corporation on muster roll, that
is to say, on daily wage basis for doing various of works in projects like construction of
buildings, digging of trenches, making of roads, etc., but have been denied the benefit of
maternity leave. The Tribunal has found that though the women employees were on
muster roll and had been working for the Corporation for more than 10 years, they were
not regularised. The Tribunal, however, came to the conclusion that the provisions of the
Maternity Benefit Act had not been applied to the Corporation and, therefore, it felt that
there was a lacuna in the Act. It further felt that having regard to the activities of the
Corporation, which had employed more than a thousand women employees, it should
have been brought within the purview of the Act so that the maternity benefits
contemplated by the Act could be extended to the women employees of the Corporation.
It felt that this lacuna could be removed by the State Govt. by issuing the necessary
notification under the Proviso to Sec.2 of the Maternity Act. This Proviso lays down as
under :

11. "Provided that the State Government may, with the approval of the Central Government,
after giving not less than two month's notice of its intention of so doing, by notification in
the Official Gazette, declare that all or any of the provisions of this Act shall apply also to
any other establishment or class of establishments, industrial, commercial, agricultural or
otherwise."
 12. It consequently issued a direction to the management of the Municipal Corporation, Delhi
to extend the benefits of Maternity Benefit Act, 1961 to such muster roll female
employees who were in continuous service of the management for three years or more
and who fulfilled the conditions set out in Sec.5 of the Act.

13. We appreciate the efforts of the Industrial Tribunal in issuing the above directions so as
to provide the benefit of the Act to the muster roll women employees of the Corporation.
This direction is fully in consonance with the reference made to the Industrial Tribunal.
The question referred for adjudication has already been reproduced in the earlier part of
the judgment. It falls in two parts as under :

(i) Whether the female workers working on muster roll should be given any maternity
benefit?

(ii) If so, what directions are necessary in this regard.

The award made by the Industrial Tribunal completely answers the question in both the respects.

14. . Learned counsel for the Corporation contended that since the provisions of the Act have
not been applied to the Corporation, such a direction could not have been issued by the
Tribunal. This is a narrow way of looking at the problem which essentially is human in
nature and anyone acquainted with the working of the Constitution, which aims at
providing social and economic justice to the citizens of this country, would outrightly
reject the contention. The relevance and significance of the doctrine of social justice has,
times out of number, been emphasised by this Court in several decisions. In Messrs
Crown Aluminimum Works v. Their Workmen, 1958 SCR 651 : (AIR 1958 SC 30), this
Court observed that the Constitution of India seeks to create a democratic, welfare State
and secure social and economic justice to the citizens. In J.K.Cotton Spinning &
Weaving Mills Co.Led v. Badri Mali, (1964) 3 SCR 724 : (AIR 1964 SC 737),
Gajendragadkar, J., (as his Lordship then was), speaking for the Court, said (Para 19) :

"Indeed the concept of social justice has now become such an integral part of industrial law that
it would be idle for any party to suggest that industrial adjudication can or should ignore the
claims of social justice in dealing with industrial disputes. The concept of social justice is not
narrow, onesided, or pedantic, and is not confined to industrial adjudication alone. Its sweep is
comprehensive. It is founded on the basic ideal of social-economic equality and its aim is to
assist the removal of socio-economic disparities and inequalities; nevertheless, in dealing with
industrial matters, it does not adopt a doctrinaire approach and refuses to yield blindly to abstract
notions, but adopts a realistic and pragmatic approach."

15. The Respondents have filed their reply stating that the judgment of this Tribunal in Dr.
Shipla Sharmas case (supra) is not applicable in the facts and circumstances of the
present case and it is distinguishable. They have stated that the said judgment was passed
in respect of the employees working in NDMC, which is an autonomous body, whereas
the Applicants are working under the Govt. of NCT of Delhi.

16. Further, they have submitted that assuming that maternity leave is applicable to the
Applicants, even then they can get only 12 weeks in total as per Section 5(3) of the
Maternity Benefit Act, 1961 which provides as under:- 5(3) The maximum period for
which any woman shall be entitled to maternity benefit shall be twelve weeks of which
not more than six weeks shall precede the date of her expected deliver.

17. The statements made by the Respondents in their reply are contradictory. On the one
hand, they have stated that the contractual employees are governed by Section (5) 3 of
theMaternity Benefit Act, 1961 according to which the maximum admissible period of
maternity leave is 12 weeks. On the other hand, they have submitted that the contractual
employees are governed by the CCS (Leave) Rules, 1972 with the conditions contained
in the DOP&T OM dated 12.4.1985 as amended from time to time. From a reading of
Sec.2 of the Maternity Benefit Act, 1961it would be seen that the said Act is not
applicable to the Applicants herein.

18. In the above facts and circumstances of the case, I allow this OA with the direction to the
Respondents to treat the period of absence of both the Applicants for duty to the extent of
180 days as maternity leave with consequential benefits, in terms of Rule 43 of the CCS
(Leave) Rules, 1972. They shall also comply with the aforesaid direction issuing
 appropriate orders and giving the monetary benefits to the Applicant within a period of 2
months from the date of receipt of a copy of this order.

Case. No.16. Case – 16.Municipal Corporation of Delhi v. Female Workers (Muster Roll) AIR
2000 SC 1274

1.S. SAGHIR AHMAD, J. – Female workers (muster roll), engaged by the Municipal
Corporation of Delhi (for short ―the Corporation‖), raised a demand for grant of maternity leave
which was made available only to regular female workers but was denied to them on the ground
that their services were not regularised and, therefore, they were not entitled to any maternity
leave. Their case was espoused by the Delhi Municipal Workers Union (for short ―the Union‖)
and, consequently, the following question was referred by the Secretary (Labour), Delhi
Administration to the Industrial Tribunal for adjudication:

   ―Whether the female workers working on muster roll should be given any maternity benefit?
If so, what directions are necessary in this regard?‖

   2. The Union filed a statement of claim in which it was stated that the Municipal Corporation
of Delhi employs a large number of persons including female workers on muster roll and they
are made to work in that capacity for years together though they are recruited against the work of
perennial nature. It was further stated that the nature of duties and responsibilities performed and
undertaken by the muster-roll, which have been working with the Municipal Corporation of
Delhi for years together, have to work very hard in construction projects and maintenance of
roads including the work of digging trenches etc. but the Corporation does not grant any
maternity benefit to female workers who are required to work even during the period of mature
pregnancy or soon after the delivery of the child. It was pleaded that the female workers required
the same maternity benefits as were enjoyed by regular female workers under the Maternity
Benefit Act, 1961. The denial of the benefits exhibits a negative attitude of the Corporation in
respect of a humane problem.

   3. The Corporation in their written statement, filed before the Industrial Tribunal, pleaded that
the provisions under the Maternity Benefit Act, 1961 or the Central Civil Services (Leave) Rules
were not applicable to the female workers, engaged on muster roll, as they were all engaged only
on daily wages. It was also contended that they were not entitled to any benefit under the
Employees; State Insurance Act, 1948. It was for these reasons that the Corporation contended
that the demand of the female workers (muster roll) for grant of maternity leave was liable to be
rejected.

   4. The Tribunal, by its award dated 2-4-1996, allowed the claim of the female workers (muster
roll) and directed the Corporation to extend the benefits under the Maternity Benefit Act, 1961 to
muster-roll female workers who were in the continuous service of the Corporation for three years
or more. The Corporation challenged this judgment in a writ petition before the Delhi High Court
which was dismissed by the Single Judge on 7-1-1997. The Letters Patent Appeal (LPA No. 64
of 1998), filed thereafter by the Corporation was dismissed by the Division Bench on 9-3-1998
on the ground of delay.

   5. The Industrial Tribunal, which has given an award in favour of the respondents, has noticed
that women employees have been engaged by the Corporation on muster roll, that is to say, on
daily-wage basis for doing various kinds of works in projects like construction of buildings,
digging of trenches, making of roads, etc., but have been denied the benefit of maternity leave.
The Tribunal has found that though the women employees were on muster roll and had been
working for the Corporation for more than 10 years, they were not regularised. The Tribunal,
however, came to the conclusion that the provisions of the Maternity Benefit Act had not been
applied to the Corporation and, therefore, it felt that there was a lacuna in the Act. It further felt
that having regard to the activities of the Corporation, which had employed more than a thousand
women employees, it should have been brought within the purview of the Act so that the
maternity benefits contemplated by the Act could be extended to the women employees of the
Corporation. It felt that this lacuna could be removed by the State Government by issuing the
necessary notification under the proviso to Section 2 of the Maternity Act. This proviso lays
down as under:

   ―Provided that the State Government may, with the approval of the Central Government,
after giving not less than two months‘ notice of its intention of so doing, by notification in the
Official Gazette, declare that all or any of the provisions of this Act shall apply also to any other
establishment or class of establishments, industrial, commercial, agricultural or otherwise.‖
   6. It consequently issued a direction to the management of the Municipal Corporation, Delhi to
extend the benefits of the Maternity Benefit Act, 1961 to such muster-roll female employees who
were in continuous service of the management for three years or more and who fulfilled the
conditions set out in Section 5 of the Act.

   7. We appreciate the efforts of the Industrial Tribunal in issuing the above directions so as to
provide the benefit of the Act to the muster-roll women employees of the Corporation. This
direction is fully in consonance with the reference made to the Industrial Tribunal. The question
referred for adjudication has already been reproduced in the earlier part of the judgment. It falls
in two parts as under:

   (i) Whether the female workers working on muster roll should be given any maternity benefit.
   (ii) If so, what directions are necessary in this regard.

   8. Learned counsel for the Corporation contended that since the provisions of the Act have not
been applied to the Corporation, such a direction could not have been issued by the Tribunal.
This is a narrow way of looking at the problem which essentially is human in nature and anyone
acquainted with the working of the Constitution, which aims at providing social and economic
justice to the citizens of this country, would outrightly reject the contention. The relevance and
significance of the doctrine of social justice has, times out of number, been emphasised by this
Court in several decisions. In Crown Aluminium Works v. Workmen [AIR 1958 SC 30] this
Court observed that the Constitution of India seeks to create a democratic, welfare Stae and
secure social and economic justice to the citizens. In J. K. Cotton spg. & Wvg. Mills Co. Ltd. v.
Labour Appellate Tribunal of India [AIR 1964 SC 737], Gajendragadkar, J., (as his Lordship
then was), speaking for the Court, said:

   ―Indeed, the concept of social justice has now become such an integral part of industrial law
that it would be idle for any party to suggest that industrial adjudication can or should ignore
the claims of social justice in dealing with industrial disputes. The concept of social justice is not
narrow, or one-sided, or pedantic, and is not confined to industrial adjudication alone. Its sweep
is comprehensive. It is founded on the basic ideal of socio-economic disparities and inequalities;
nevertheless, in dealing with industrial matters, it does not adopt a doctrinaire approach and
refuses to yield blindly to abstract notions, but adopts a realistic and pragmatic approach.‖

   9. A just social order can be achieved only when inequalities are obliterated and everyone is
provided what is legally due. Women who constitute almost half of the segment of our society
have to be honoured and treated with dignity at places where they work to earn their livelihood.
Whatever be the nature of their duties, their avocation and the place where they work, they must
be provided all the facilities to which they are entitled. To become a mother is the most natural
phenomenon in the life of a woman. Whatever is needed to facilitate the birth of child to a
woman who is in service, the employer has to be considerate and sympathetic towards her and
must realise the physical difficulties which a working woman would face in performing her
duties at the workplace while carrying a baby in the womb or while rearing up the child after
birth. The Maternity Benefit Act, 1961 aims to provide all these facilities to a working woman in
a dignified manner so that she may overcome the state of motherhood honourably, peaceably,
undeterred by the fear of being victimised for forced absence during the pre-or post-natal period.

   10. Next it was contended that the benefits contemplated by the Maternity Benefit Act, 1961
can be extended only to workwomen in an industry and not to the muster-roll women employees
of the Municipal Corporation. This is too stale an argument to be heard. Learned counsel also
forgets that the Municipal Corporation was treated to be an ―industry‖ and, therefore, a
reference was made to the Industrial Tribunal, which answered the reference against the
Corporation, and it is this matter which is being agitated before us.

   11. Now, it is to be remembered that the municipal corporations or boards have already been
held to be ―industry‖ within the meaning of ―the Industrial Disputes Act‖. In Budge Budge
Municipality v. P.R. Mukherjee [AIR 1953 SC 58] it was observed that the municipal activity
would fall within the expression ―undertaking‖ and as such would be an industry. The decision
was followed in Baroda Borough Municipality v. Workmen [AIR 1957 SC 110] in which the
Court observed that those branches of work of the municipalities which could be regarded as
analogous to the carrying-on of a trade or business, would be ―industry‖ and the dispute
between the municipalities and their employees would be treated as an ―industrial disputer‖.
This view was reiterated in Corpn. of the City of Nagpur v. Employees [AIR 1960 SC 675]. In
this case, various departments of the Municipality were considered and certain departments of
the Municipality were considered and certain departments including the General Administration
Department and the Education Department were held to be covered within the meaning of
―industry‖.

   12. Taking into consideration the enunciation of law as settled by this Court as also the High
Courts in various decisions referred to above, the activity of the Delhi Municipal Corporation by
which construction work is undertaken or roads are laid or repaired or trenches are dug would
fall within the definition of ―industry‖. The workmen or, for that matter, those employed on
muster roll for carrying on these activities would, therefore, be ―workmen‖ and the dispute
between them and the Corporation world have to be tackled as an industrial dispute in the light
of various statutory provisions of the industrial law, one of which is the Maternity Benefit Act,
1961. This is the domestic scenario. Internationally, the scenario is not different.

   13. Delhi is the capital of India. No other city or corporation would be more conscious than the
city of Delhi that India is a signatory to various international covenants and treaties. The
Universal Declaration of Human Rights, adopted by the United Nations on 10-12-1948, set in
motion the universal thinking that human rights are supreme and ought to be preserved at all
costs. This was followed by a series of conventions. On 18-12-1979, the United Nations adopted
the ―Convention on the Elimination of all Forms of Discrimination against Women‖.

Article 11 of this Convention provides as under:

“Article 11

1. States/parties shall take all appropriate measures to eliminate discrimination against women in
the field of employment in order to ensure, on a basis of equality of men and women, the same
rights, in particular:

   (a) the right to work as an inalienable right of all human beings;

   (b) the right to the same employment opportunities, including the application of the same
criteria for selection in matters of employment;
  (c) the right to free choice of profession and employment, the right to promotion, job security
and all benefits and conditions of service and the right to receive vocational training and
retraining, including apprenticeships, advanced vocational training and recurrent training;

  (e) right to equal remuneration, including benefits, and to equal treatment in respect of work of
equal value, as well as equality of treatment in the evaluation of the quality of work;

   (f) the right to social security, particularly in cases of retirement, unemployment, sickness,
invalidity and old age and other incapacity to work, as well as the right to paid leave;

   (g) the right to protection of health and to safety in working conditions, including the
safeguarding of the function of reproduction.

   2. In order to prevent discrimination against women on the grounds of marriage or maternity
and to ensure their effective right to work, States/parties shall take appropriate measures:

   (a) to prohibit, subject to the imposition of sanctions, dismissal on the grounds of pregnancy or
of maternity leave and discrimination in dismissals on the basis of marital status;

  (b) to introduce maternity leave with pay or with comparable social benefits without loss of
former employment, seniority or social allowances;

  (c) to encourage the provision of the necessary supporting social services to enable parents to
combine family obligations with work responsibilities and participation in public life, in
particular through promoting the establishment and development of a network of child-care
facilities;

  (d) to provide special protection to women during pregnancy in types of work proved to be
harmful to them.

   3. Protective legislation relating to matters covered in this article shall be reviewed periodically
in the light of scientific and technological knowledge and shall
be revised repealed or extended as necessary.‖ (emphasis supplied)
   14. These principles which are contained in Article 11, reproduced above, have to be read into
the contract of service between the Municipal Corporation of Delhi and the women employees
(muster roll); and so read these employees immediately become entitled to all the benefits
conceived under the Maternity Benefit Act, 1961. We conclude our discussion by providing that
the direction issued by the Industrial Tribunal shall be complied with by the Municipal
Corporation of Delhi by approaching the State Government as also the Central Government for
issuing necessary notification under the proviso to sub-section (1) of Section 2 of the Maternity
Benefit Act, 1961, if it has not already been issued. In the meantime, the benefits under the Act
shall be provided to the women (muster roll) employees of the Corporation who have been
working with them on daily wages.

   15. For the reasons stated above, the special leave petition is dismissed.