TABLE OF CONTENTS

A. Social Security .................................................................................................................... 6

B. Forms of social security ...................................................................................................... 7

I. Employees Compensation Act, 1923 .................................................................................... 12

A. Section 3............................................................................................................................ 14

1. Regional Director, Employees v. K.P. Gopi and Anr., 1995 Kerala HC- “Total
disablement” under S. 2(1)(1) of EC Act.............................................................................. 14

2. Mackinnon Mackenzie & Co. Pvt. Ltd. v. Ibrahim Mohammed Issak, 1969 ............... 15

3. Mst. Param Pal Singh v. M/S National Insurance Co., 2012 SC .................................. 17

4. Janki Ammal and Ors. v. Divisional Engineer, 1955 Madras HC ................................ 20

B. Section 4............................................................................................................................ 22

5. Paratap Narain Singh Deo v. Srinivas Sabata, 1975 SC ............................................... 24

6. K. Koodalingam v. Supt. Engineer and Ors., 1994, Kerala HC ................................... 25

II. The Employees’ State Insurance Act, 1948 .......................................................................... 28

7. Regional Director, ESI Corporation v. Francis De costa, 1996 SC. ............................. 29

8. TATA AIG General Insurance Company Ltd. v. Ram Avtar, 2017 Punjab and Haryana
HC 32

9. Regional Director, ESIC v. Bhavnaben D. Joshi, 2020 Gujarat HC ............................ 32

10. ESI Corporation v. Poonam Sharma, Delhi HC 2014. ............................................... 33

11. R. Ramakrishna v. Regional Director, ESI ................................................................. 34

12. Employees’ State Insurance Corporation v. Peter Sewing Machine Co., 1970 Delhi HC
36

13. Agents & Manufacfurers, Delhi Vs. The Employees State Insurance Corporation, New
Delhi and Ors. ....................................................................................................................... 37

14. Delhi Gymkhana Club Ltd. v. Employees State Insurance Corporation, 2014 SC. ... 38

15. Employees State Insurance Corporation v. RK Swamy, 1993 SC ............................. 40

 16. Employees State Insurance Corporation v. Hyderabad Race Club, 2004 SC ............ 42

17. Bangalore Turf Club Ltd. v. Regional Director, ESIC, 2014 SC ............................... 43

18. Hyderabad Asbestos Cement Products Ltd. v. Employees Insurance Court, SC 1977.
45

19. Kirloskar Brothers Ltd. v. ESIC, SC 1996. ................................................................ 48

20. Royal Talkies, Hyderabad v. ESIC, SC 1978 ............................................................. 49

21. The Managing Director, Hassan Cooperative Milk Producer’s Society Union Limited
v. Assistant Regional Director, ESIC, SC 2010.................................................................... 52

22. ESIC v. Venus Alloys Private Limited, 2019 SC. ...................................................... 53

23. Transport Corporation of India v. ESIC, 1999 SC ..................................................... 54

24. Royal Western Turf Club v. ESI, 2016 SC................................................................. 55

25. Western India Plywood Limited v. P. Ashokan, SC 1997. ........................................ 56

26. Dhropadabai v. Technocraft Toolings, 2015 SC. ....................................................... 59

27. TATA AIG General Insurance Company Ltd. v. Ram Avtar, 2017 Punjab and Haryana
HC (S. 53 and 61 of ESI Act- IMP) ...................................................................................... 59

28. United Insurance v. Vaneeta (Read this judgement) .................................................. 62

29. National Insurance Company v. Saroj, 2019 Punjab and Haryana HC ...................... 62

30. Kishore Lal v. Chairman, ESIC, 2007 SC. ................................................................. 66

31. IMA v. VP Shantha case............................................................................................. 67

III. Code of Social Security ........................................................................................................ 72

32. ESIC v. C.C. Santhakumar, SC 2006 ......................................................................... 75

33. Occupational Health and Safety Association v. UOI, SC, 2014. ............................... 78

34. Praveen Rashtrapal v. Chief Officer, Kadi Municipality and Ors., Gujarat HC, 2004.
78

IV. Provident fund....................................................................................................................... 81

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 35. Andhra University v. Regional Provident Fund Commissioner of Andhra Pradesh,
1985 SC................................................................................................................................. 83

36. The Associated Cement Companies Limited, Chaibassa Cement Works, Jhinkpani v.
Their Workmen, 1959 SC ..................................................................................................... 84

37. Management of Pratap Press, New Delhi v. Secretary, Delhi Press Workers’ Union and
its Workmen, SC 1960. ......................................................................................................... 84

38. Pipe Mill Mazdoor Union ........................................................................................... 85

39. Noor Niwas Nursery Public School v. Regional Provident Fund Commissioner, 2000
SC. 86

40. Saheli Marbels Private Limited, Udaipur v. Assistant Provident Fund Commissioner,
Udaipur, 2015 Delhi HC ....................................................................................................... 87

41. Calcutta Constructions Company v. Regional Provident Fund Commissioner and Ors.,
2015 Punjab & Haryana HC ................................................................................................. 88

42. PM Patel and Sons v. Union of India, 1985 SC. ........................................................ 89

43. The Officer In-charge, Sub-Regional Provident Fund Office v. Godavari Garments
Limited, 2019 SC .................................................................................................................. 90

44. Bridge and Roof Co. (India) Ltd. v. Union of India, 1962 SC ................................... 92

45. Jay Engineering Works Limited v. Union of India, 1962 SC..................................... 93

46. Pawan Hans Limited v. Aviation Karmachari Sanghatana, 2020 SC. ....................... 94

47. Manipal Academy of Higher Education v. Provident Fund Commissioner, 2008 SC 95

48. Shree Changdeo Sugar Mills v. Union of India, 2001 SC .......................................... 96

49. Management of Reynolds Pens v. Regional Provident Fund Commissioner, 2011

Madras HC ............................................................................................................................ 96

50. The Regional Provident Fund Commissioner (II), West Bengal v. Vivekananda
Vidyamandir and Ors., 2019 SC ........................................................................................... 97

V. Minimum Wages Act, 1948 ................................................................................................ 100

51. Unichoi v. State of Kerala, SC ................................................................................. 106

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 52. Kamani Metals v. Their Workmen, SC 1967 ........................................................... 106

53. Workmen represented by Secretary v. Reptakos Brett, SC 1991 ............................. 108

54. Express Newspaper v Union of India ....................................................................... 110

55. Bijay Cotton Mills v. State of Ajmer, 1954 SC. ....................................................... 112

56. Kartikere Gram Panchayat v. Labour Officer, Bangalore HC 2022 ........................ 114

57. FCI v. Prime Securities, Cuttack HC 2022 ............................................................... 114

58. Surya Rau v Surendra Ramakrishna Tendulkar ....................................................... 116

59. Sanjit Roy v State of Rajasthan ................................................................................ 117

VI. Payment of wages act.......................................................................................................... 119

60. AVD Costa ............................................................................................................... 120

61. Indian Statistical Institute v. State of WB, 1992 Cal HC ......................................... 122

62. Rupendra Swain v. Calcutta Dock Labour Board, 1968 Cal HC ............................. 122

63. Qasim Larry v. Md. Samsuddin, 1965 SC ................................................................ 123

64. Manager, General Motor Owner’s Association, Washim v. Mahmood Khan Vasir
Khan, 1966 Bom HC........................................................................................................... 124

65. State of WB v. Bachu Mondal .................................................................................. 125

66. Ganpatlal Moolchandji Joshi v. First Civil Judge, Nagpur ...................................... 125

67. Divisional Engineer v. Mahadeo Raghu ................................................................... 126

68. Hindustan Steel Ltd., Bhilai v. Presiding Officer ..................................................... 127

69. BN Elias v. Payment of Wages Authority ................................................................ 127

70. Anusuya Vithal v. JH Mehta .................................................................................... 127

71. Balmer Lawrie Workers’ Union case ....................................................................... 128

VII. Maternity Benefit Act ......................................................................................................... 129

72. B. Shah v. Presiding Officer, Labour Court, 1977 SC. ............................................ 133

73. Arulin Ajitha Rani v. Principal and Film and Television Institute of Tamil Nadu, 2008
Madras HC .......................................................................................................................... 134

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 74. Ruksana v. State of Haryana, 2011 Punjab and Haryana HC................................... 134

75. P. Geetha v. The Kerala Livestock Development .................................................... 135

76. Saumya Tiwari v. State of UP, Allahabad HC, 2021. .............................................. 136

VIII. POSH Act............................................................................................................................ 138

77. Nisha Bharti v. UOI .................................................................................................. 138

78. Vishakha v. Rajasthan .............................................................................................. 138

79. Apparel Export Promotion Council .......................................................................... 138

IX. Factories Act, 1948 ............................................................................................................. 143

80. VP Gopala Rao v. Public Prosecutor: ....................................................................... 143

81. Lal Mohammad v. Indian Railways ......................................................................... 144

82. Parimal Chandra Raha v. LIC................................................................................... 144

83. Indian Petrochemicals Corporation Ltd. v. Shramik Sena ....................................... 144

84. HS Sharma v. Artificial Limbs Manufacturing Corporation .................................... 144

85. State of Gujarat v. Jethalal Chelabhai Patel ............................................................. 144

86. John Douglas Keith Brown v. State of WB .............................................................. 145

87. Clothing Factory, National Workers v. UOI- Payment of overtime wages ............. 145

88. SM Dutta v. State of Gujarat .................................................................................... 145

X. Equal Remuneration Act, 1976 ........................................................................................... 146

89. Mackinnon Mackenzie & Co. Ltd v. Audrey D’Costa, 1987 SC. ............................ 147

90. Air India v. Nergesh Meerza, 1981 SC. ................................................................... 149

91. Air India Cabin Crew Association v. Yeshawinee Merchant, 2003 SC. .................. 150

92. Janta Shikshan Prasarak Mandal v. The Industrial Court, 2010 SC. ........................ 152

93. The Cooperative Store Ltd. Super Bazar v. Bimla Devi, 2005 Delhi HC. ............... 152

XI. Payment of Gratuity Act ..................................................................................................... 154

94. Beed Strict Central Cooperative Bank v. State of Maharashtra ............................... 154

95. YK Singla v. Punjab National Bank ......................................................................... 155

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XII. COntract Labour Regulation Act ........................................................................................ 156
96. Air India Statutory Corporation v. United Labour Union, 1996 SC. (Overruled) ... 158

97. Steel Authority of India v. National Union of Water Front Workers ....................... 159

98. AP State Road Transport Corporation v. Srinivas Reddy- Read from the slides ..... 160

99. Gammon India v. UOI .............................................................................................. 160

100. Balwant Rai Saluja v. Air of India ........................................................................ 160

101. Secretary, State of Karnataka v. Uma Devi- Read from slides ............................. 160

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 LABOUR LAW II

In reading 1, Proefschrif discusses the two approaches to social security.

A. SOCIAL SECURITY

Initially, labor laws were drafted in a narrow sense, and were only limited to the workplace. Social
security needs are generally contemplated by the family structures. For instance, joint family
system would deal with social security considerations. But this changed with industrialization. The
work was hazardous and prone to risk, loss of life and limb. Also, there was no guarantee of finding
a job, or when a worker is kicked out of job.

Thus, institutionalized practices to protect workmen were developed. Protections were given to
individuals beyond the industry they worked in. Thus, understanding of social security came. This
understanding was widened post World War II. People realized the importance of security of
workers. This kickstarted the process of the Beveridge Report. The Beveridge Report started the
process in UK of the state assuming the role of a welfare state. This Report indicated the reforms
needed post WW2. The Report uses the term ‘social security’ to talk about the need to protect the
workers, maintaining the income of workers, and providing them social security. It talked about
three measures to cover the economic risks of households:

i. Social insurance for basic needs.

ii. National assistance for special cases.
iii. Voluntary insurance for additions to the basic provision.

Thus, income protection, and continuation of living standards that the people had are focused upon.

The Atlantic Charter published a report which contained a definition of social security.

Section 9 of ICESCR says that social security is a basic human right. Also, it was recognized that
social security is something that we owe to each other as human beings.

Depending on historical, political and social contexts, the ambit of social security was defined.
US, etc. understand it in a narrow sese of income protection. While Latin America and India
understand it in a broader sense.

In the narrow approach, there are following elements:

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 1. The objective of social security is to offer a certain degree of income protection.
2. The instruments used to achieve this goal comprise social insurance and national provisions
regulated by law.
3. The main intervention implied in these instruments is to provide benefits in money or in
kind.
4. Social security focuses on specific, clearly defined risks.

In income protection as an objective, it has to guarantee a minimum income for everyone, and in
addition it has to maintain the existing standard of living to a certain degree.

From ILO’s perspective, 9 kinds of risks are identified and sought to be protected against under
social security:

i. Old age benefit.

ii. Survivor’s benefit – if the bread earner dies, his family is provided for.
iii. Family benefit – it generally refers to where child is born, for his education, marriage,
etc. The person may not be able to provide for these with his own income.
iv. Medical care – pregnancy or any injury due to the nature of work.
v. Maternity benefit – as break would have to be taken from work, monetary
compensation is provided.
vi. Unemployment benefit.
vii. Sickness leave benefit.
viii. Disability benefit.
ix. Employment injuries.

The benefits received are in the form of monetary sums. Usually, the employers and employees
are asked to make contributions. The money can be withdrawn if any of the condition triggers.

The idea is that if any such situation arises, there should be no stoppage in earnings, and a minimum
level of income is there to sustain themselves.

B. FORMS OF SOCIAL SECURITY

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The first form/method is social assistance – this has been existing since long in our systems. This
is the oldest form of social assistance. There is means test – not every single person would be
eligible to receive social assistance, but a certain threshold has to be seen as to the level of income.
If the income falls below that level, then only a person would get the benefit. This came in the
form of a legislation. The assistance is aimed at low-income households.

ILO defines social assistance as a service or scheme which provides benefits to persons of small
means granted as of right as sufficient to meet a minimum standard of needs and financed from
taxation. This definition gives 3 elements:

i. Benefit is given to persons of small needs.

ii. It is financed from public revenue i.e., taxation system.
iii. These rights have a legislative basis so that they can be claimed as a matter of right.

There are 2 criticisms also:

1. Political side – this leads to freeloading. Since the money is received irrespective of
whether person is working, it promotes idleness.
2. Critics from left believe that since this system is available to only a certain section of
persons who follow below a particular threshold income level, this stigmatizes this group
of people. As a result, the eligible persons do not come forward to claim their money, as
this would lead to a stigma that these groups are not willing to work and are just lazy.

Thus, they suggest to create a system where people can come forward and ask for these benefits,
rather than the assistance being means tested.

Second method of social security is social insurance. This is similar to the normal commercial
insurance. This is financed not just by the public revenue, but also by the persons benefitting from
the particular scheme. The aspect of voluntariness is taken away, and it is mandatory for both
employers and employees to make contribution. This method is very occupationalist, as the
benefits can be gained only when a person is in employment. The benefits include indemnity
against identified risks – illness, loss of job, death, etc. In 1883, Germany was the first country to
implement this. Their program was to provide sickness benefit to workers. In the next year only,
it was extended to provide work injury insurance, and later to old age and unemployment
insurance. ILO prefers this model overall all others.

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In some countries, instead of a centralized state body deciding where investment would go, it is
commercialized. Private bodies would take away the money and provide options. This provides
better opportunities to people and broadens the choices available. While ILO favors the centralized
model, World Bank prefers the involvement of private bodies.

Criticism: even though contribution from employers and employees is there, the amount in itself
is not enough to sustain the kind of support needed. Thus, the government often has to supplement
the amount of benefits. Hence, the fear is that this would not be very sustainable in the long run as
savings would not be enough. The cost on government would eventually become unmanageable,
making the system unmanageable in the long run. Therefore, there is a need to reduce government
expenditure, or come up with another form of social security.

However, despite the problems, this has remained a predominant form of social security.

Third form of social security is provident fund account. Every single person has an individual
account maintained as opposed to a common pool in case of social insurance. Contribution is from
both employer and employee. On the deposited amount, interest is earned. If any emergency
occurs, as a financial support, all the accumulated money is made available to the worker. This
system is primarily found in British colonies.

In colonies, provident fund came rather than social insurance because state didn’t want to incur
any liability. In social insurance, all benefits are getting pooled. But in provident fund, each person
has a different account. Therefore, benefits would be based on the savings accumulated over a
period of time. The money would be received on reaching a particular age, or upon occurrence of
any exigency. Amount can be withdrawn in lump sum or in certain instalments.

The amount in individual PF accounts also becomes a major source of investment for government.
There is EPFO as well for this purpose. Criticisms:

i. Provident funds largely depend on how long a person has worked. If a person has
worked for a short duration, then the amount accumulated in the PF account would be
very less. Hence, the security provided would be less.
ii. In lump sum payments, the person may spend it all in one go. There is no security
remaining for long term, and the person receiving benefit of PF may not be able to
realize benefit for the primary purpose. This is because there is a fear that instead of

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 using it as a security for a long period, people spend it on consumer goods, or given
away to younger members of family due to family pressure. Hence, it is suggested to
transfer the benefits of PF in instalments, rather than lump sum.

The idea behind provident funds is to have flexibility in deciding when and where the money is
going.

There are commercial savings accounts, which are common in Latin American countries. But here,
the person has the choice to determine where the money goes and the specifics.

Another form of social security is universal social allowances – they are funded out of
government revenue. However, as they are universal in nature, they do not take into account the
needs or the income level of an individual. A certain amount of money is given irrespective of
need or income. Thus, it does not discriminate between haves and have not. Also, this prevents
poverty trap – such as in case of social assistance, as only people below a certain income level are
given benefits, the low-income people would not have any incentive to earn more than that level.
This takes away the incentive to earn more. Universal social allowance takes away this problem,
and as every person irrespective of income would receive the allowance, it negates the fear that
people would not want to work more to earn more money.

The government has used these schemes for various purposes, and not just for social security. For
instance, France used this scheme to encourage more childbirths (as every person would get an
allowance irrespective of income level).

Criticism – universal social allowances, by themselves, do not create any benefit over social
assistance.

Another measure of social security is employer mandates – statutes which mandate that in case
an employee falls ill, suffers any loss, injury, goes on maternity leave, etc., then the employer
would have to give certain money. This is different from tort, as in tort, negligence of employer
has to be shown. Here, all that has to be shown is the employer suffered, death, loss, injury, etc.
and it was linked to the employment i.e., employee suffered loss/harm while he was working for
the employer i.e., linkage between injury suffered and the employment.

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Compensation would be based on salary and years worked. The idea is that employee would not
be able to deal with such losses due to low salary. Also, employer is assumed to have deep pockets,
and can bear such expenses. Moreover, employer is made responsible because the loss/injury
occurred while the person was working for the employer.

Criticisms:

i. It is assumed that the employer would be able to pay for such losses, but this may not
always the case. This not only leads to failure on part of employer due to lack of money,
but also evasion.
ii. The money is given in lump sum, and not in instalments. Therefore, there is a
possibility that the worker would use up the money for other purposes and commercial
goods, and not save it for future.

Through some provisions of Industrial Disputes Act also, employer mandate is visible, and it is
not just limited to employee compensation, but is broader. For instance, compensation has to be
paid in case of layoff, retrenchment, termination of services, etc.

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 I. EMPLOYEES COMPENSATION ACT, 1923

It is the oldest statute in social security in India. The demand for it started around 1883 when there
was a labor meeting held, and trade unions demanded some security for labor in terms of
compensation. In early 1900s, the railway workers again made demands for compensation to be
given compulsory in certain cases. The government took note of this and realized its need.
However, there were concerns that by allowing for compensation in any industry, it would kill the
industry itself. Thus, its ambit was limited, and slowly, it was widened.

Prior to this legislation, employees could get compensation only in case of fault or negligence of
employer. The cases were time consuming and litigation had to be done, which was not favorable
for either employer or employee.

The Compensation Act came as a midway solution for both employer and employees. For
employees, it provided an ease in getting payments, as element of proving negligence or fault was
done away with. Secondly, the amount of compensation was given. Therefore, it became easier for
employees to demand compensation. For employer, it reduced chances of litigation, so money was
saved. Also, as there was a proper formula through which minimum and maximum amount was
established, the fear of paying excess money was not there. Moreover, in section 4, a formula was
given that if death or disablement, amount equal to certain percentage of wage or a particular
amount, whichever is more, had to be given. Also, the amount of wages that had to be looked at
were also capped through factors.

The reason why employers were made liable was because employer is assumed to have deep
pockets, and secondly, if employee suffers injury or harm, they would not be able to pass that
burden to anyone else. While the employer can pass the burden to the consumers.

Other underlying assumptions of this Act – it does not provide for any safety/preventive measures
to be followed. It just accepts as a reality that if work is being done in an industry, accidents would
take place, and no amount of safety can prevent that. Thus, this Act only dealt with the
compensation to be given in case of any such loss, accident, etc.

The Preamble states that it is an act to provide for payment by certain classes of employers to their
employees of compensation for injury by accident.

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The Act is applicable not to all industries, but to certain categories of employers. Thus, it is
not universal. This is a feature of the Indian social security legislation. In Indian legislation, there
are certain thresholds, so there are many employees are not protected by any of the legislation,
while some employees are protected by multiple legislations, so it is a problem to see which
legislation would prevail.

There was opportunity to make similar protections available to all industries, but the legislature
chose to retain the threshold.

In section 2(e), employer includes anybody of persons whether incorporated or not and any
managing agent of an employer and the legal representative of a deceased employer, and, when
the services of an employee are temporarily lent or let on hire to another person by the person with
whom the employee has entered into a contract of service or apprenticeship, means such other
person while the employee is working for him.

Thus, a fairly wide definition is given.

Section 2(dd) defines employee as a person, who is-- (i) a railway servant as defined in clause
(34) of section 2 of the Railways Act, 1989 (24 of 1989), not permanently employed in any
administrative district or sub-divisional office of a railway and not employed in any such capacity
as is specified in Schedule II; or (ii) (a) a master, seaman or other members of the crew of a ship,
(b) a captain or other member of the crew of an aircraft, (c) a person recruited as driver, helper,
mechanic, cleaner or in any other capacity in connection with a motor vehicle, (d) a person
recruited for work abroad by a company, and who is employed outside India in any such capacity
as is specified in Schedule II and the ship, aircraft or motor vehicle, or company, as the case may
be, is registered in India; or (iii) employed in any such capacity as is specified in Schedule II,
whether the contract of employment was made before or after the passing of this Act and whether
such contract is expressed or implied, oral or in writing;

but does not include any person working in the capacity of a member of the Armed Forces
of the Union; and any reference to any employee who has been injured shall, where the
employee is dead, include a reference to his dependants or any of them.

Schedule II provides a long list of persons who are included in the definition of employees.

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 A. SECTION 3

Section 3 provides for employer’s liability for compensation. Section 3(1) states that 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.
Provided that the employer shall not be so liable:

a. in respect of any injury which does not result in the total or partial disablement of the
employee for a period exceeding three days;
b. in respect of any injury, not resulting in death or permanent total disablement caused by an
accident which is directly attributable to—
(i) the employee having been at the time thereof under the influence of drink or drugs,
or
(ii) the wilful disobedience of the employee to an order expressly given, or to a rule
expressly framed, for the purpose of securing the safety of employees, or
(iii) the wilful removal or disregard by the employee of any safety guard or other device
which he knew to have been provided for the purpose of securing the safety of
employees.

(IMP) Courts have had to look at the aspect of accident and course of employment.

1. REGIONAL DIRECTOR, EMPLOYEES V. K.P. GOPI AND ANR., 1995 KERALA HC-
“TOTAL DISABLEMENT” UNDER S. 2(1)(1) OF EC ACT

A workman was engaged in weaving work in a coir factory. He suffered a fall and sustained injury
to his back bone. When he resumed work, he couldn’t do the work he was doing earlier. He asked
for lighter work, but the request was denied. Question of partial or total disablement arose. The
medical board assessed his loss of earning capacity as 20%. On appeal, the Insurance Court held
that it was total disablement, because the employer failed to provide lighter work.

Court discussed the definition of total disablement under section 2(1)(1) of Employees
Compensation Act as disablement, whether of a temporary or permanent nature, as incapacitates
an employee for all work which he was capable of performing at the time of the accident resulting
in such disablement.

Court observed some pre-constitutional cases where it was the view that unless the workman has
become unable to do any work whatsoever he could not be regarded as having become totally
disabled. However, welfare considerations were paid emphasis in post-constitution period and it
was observed that permanent total disablement is to be judged from the nature of the job which

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the workman was doing and if the disablement renders the workman unfit to do that job, it would
be total disablement, and not partial.

(IMP) Thus, it is not necessary that the employment injury should render the employee totally
unfit to do any work whatsoever for holding that he is suffering permanent total disablement. It is
enough that he was incapacitated from doing the work which he was capable of doing at the time
of accident. The Court does not have to find out whether he can be trained to do some other work.
If he can do the work which he was performing just before the accident in a reduced form the result
is only permanent partial disablement. If he cannot do that work at all, then the consequence is
total permanent disablement.

2. MACKINNON MACKENZIE & CO. PVT. LTD. V. IBRAHIM MOHAMMED ISSAK, 1969

Arising “out of” employment; test of whether the accident took place during the person’s
employment

This discusses arising ‘out of’ employment. This refers to the work that the person is doing and
any incidental work related to it. Although it is difficult to identify and no single test can be laid
down, we have to see whether there is a causal relationship between the employment and injury
suffered, for injury to be considered arising out of employment. There should be a proximate cause,
and not very remote in nature.

(IMP Test) Was it part of the injured person’s employment to hazard, which caused the
injury. If it was, it would be considered as arising out of employment.

In this case, person was employed as a deckhand. He was working on a ship. He complained that
he had pain in chest and was examined. Upon examination, he was given medication. Doctor stated
it was nothing serious. Worker felt better and went to work. Later, he again complained of chest
pain, and doctor gave certain sedatives. One day, while ship was sailing, people saw him on the
deck. He was not supposed to be working. He was asked to rest. But he was found missing in
morning. His body was not found. He was presumed dead and compensation was demanded.
Company contended that compensation is not required to be paid. First, body is not found. Second,
it was not an accident/injury arising out of employment, as he was not doing any work on the deck.

The Court looked at some UK cases. In Lancashire and Yorkshire Railway Co. v. Highley,
burden of proof was discussed. Was it part of the injured person's employment to hazard, to
suffer, or to do that which caused his injury? If yea, the accident arose out of his employment.
If nay, 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.

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Court also looked at Kerr or Lendrum v. Ayr Steam Shipping CO. Ltd. where the steward of a
ship, which was in harbour, was lying in his bunk, when he was told by the captain to prepare tea
for the crew. He was shortly afterwards missing, and the next day his dead body, dressed' in his
underclothes only, was found in the sea near the ship.. The person was prone to nausea. The
inference which arbitrator drew was that he fell overboard because of nausea. House of Lords held
that when no evidence is there, presumptions have to be drawn. Just because an alternative view
is possible, the decision of lower court cannot be overturned. We have to see whether a
reasonable person would have reached the same conclusion in the facts and circumstances
of the case.

In Bender v. Owners, the chief cook on board a ship fell overboard on a sunny day and drowned.
Here as well, the Court observed that if a reasonable person could come to the same conclusion,
the higher court would not overturn the decision.

(IMP) At the end, the test in Lancashire and Yorkshire Railway Co. v. Highley was upheld
which provided that was it part of the injured person's employment to hazard, to suffer, or to
do that which caused his injury. If yea, the accident arose out of his employment. If nay, 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. To ask if the cause of the accident 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.

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. But this does not
mean that a workman who comes to court for relief must necessarily prove it by direct evidence.
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. 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 must be such as would induce a reasonable man
to draw it.

(IMP Facts) In this case, the person was clearly told that he should stay downstairs. There were
clear waters and no storm was there. The bulwark was also wide, so it was not possible to be

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thrown overboard. Thus, it was not an accident, and rather may have been done intentionally.
Secondly, there was no work he was required to do on the ship at that time. Hence, it cannot
be said that the accident arose out of employment.

(IMP) Hence, the test is that the accident should arise while performing the duties of
employment and at the place where the duties of employment require the person to be. There
should be a causal connection between the employment and the accident.

Proviso

Proviso to section 3(1) provides that the employer shall not be so liable:

c. in respect of any injury which does not result in the total or partial disablement of the
employee for a period exceeding three days;
d. in respect of any injury, not resulting in death or permanent total disablement caused by an
accident which is directly attributable to—
(iv) the employee having been at the time thereof under the influence of drink or drugs,
or
(v) the wilful disobedience of the employee to an order expressly given, or to a rule
expressly framed, for the purpose of securing the safety of employees, or
(vi) the wilful removal or disregard by the employee of any safety guard or other device
which he knew to have been provided for the purpose of securing the safety of
employees.

3. MST. PARAM PAL SINGH V. M/S NATIONAL INSURANCE CO., 2012 SC

Attracting S. 3; whether there was an accident; “arising out of employment” and “in the
course of employment”

The plaintiff was the truck driver for the second respondent (employer). First respondent is
insurance company. The driver was driving as part of transport business. He felt uncomfortable,
so he parked truck on the side. He died shortly after. His adopted son filed a claim for
compensation. First issue is regarding the validity of adoption. Second is that death was natural,
so there was no causal connection between the death and employment. Second issue is
relevant for us.

Employer contended that since death was out of natural causes, it was not an accident, hence
employer is not liable to pay. In para 18, various claims were made. First, it was said that deceased

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was not under the employment, second, it was observed that deceased was not driving the truck,
but another driver was. Third, the deceased was under influence of drug or alcohol.

Court observes that the deceased was in fact driving, he was an employee and he was not under
influence of drug or alcohol. Thus, all pleas except the plea that it was not an accident are
superficial. The main issue is whether it is an accident or not.

Generally, when we think of accident, we think of it as something external. However, courts have
held that accident can be internal as well. If due to the nature of work, some internal condition is
resulted in, it would also be existing. Court observed that even if there is a pre-existing condition,
and it is triggered/accelerated due to the nature of work, it would still be accident. Leading case
on this is Clover Clayton & Co. v. Hughes. Here, a person had an aneurism of the aorta. While
doing work, due to strain, the aorta burst. Court considered whether this was an accident. Court
referred an earlier case and observed that accident can be due to internal condition also. Thus, if
due to lifting weight, aneurism is ruptured, it would be accident.

In Shakuntala Chandrakant v. Prabhakar Maruti Garvali, there were three factors discussed
to show accident:

1. stress and strain arising during the course of employment,

2. nature of employment,

3. injury aggravated due to stress and strain.

In Mallikarjuna G. Hiremath v. Branch Manager, Oriental Insurance Co. Ltd., principles to

attract section 3 were stated:

1) There must be a causal connection between the injury and the accident and the accident and the
work done in the course of employment.

2) The onus is upon the applicant to show that it was the work and the resulting strain which
contributed to or aggravated the injury.

3) If the evidence brought on records establishes a greater probability which satisfies a reasonable
man that the work contributed to the causing of the personal injury, it would be enough for the
workman to succeed, but the same would depend upon the fact of each case.

In Sundarbai v. The General Manager, Ordnance Factory, some principles relevant for accident
were observed:

(A) Accident means an untoward mishap which is not expected or designed by the workman.
“Injury” means physiological injury.
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(B) “Accident” and “injury” are distinct in cases where accident is an event happening externally
to a man; e.g. when a workman falls from a ladder and suffers injury. But accident may be an event
happening internally to a man and in such cases “accident” and “injury” coincide. Such cases are
illustrated by bursting of an aneurism, failure of heart and the like while the workman is doing his
normal work.

(C) Physiological injury suffered by a workman due mainly to the progress of disease unconnected
with employment, may amount to an injury arising out of and in the course of employment if the
work which the workman was doing at the time of the occurrence of the injury contributed to its
occurrence.

(D) The connection between the injury and employment may be furnished by ordinary strain of
ordinary work if the strain did in fact contribute to or accelerate or hasten the injury.

(E) The burden to prove the connection of employment with the injury is on the applicant, but he
is entitled to succeed if on a balance of probabilities a reasonable man might hold that the more
probable conclusion is that there was a connection.

Based on understanding of all these cases, the Supreme Court observed that job of driver is
stressful and requires driving long distances. Constant driving was a material contributory
factor that accelerated his unexpected death. In this manner, such an ‘untoward mishap’ can
be reasonably described as an accident owing to the nature of the employment. Hence, the
claimant was entitled to compensation.

Thus, to claim compensation, all that has to be show is that there was a pre-existing condition,
which has worsened or aggravated due to the nature of work and the stress and strain
involved in it.

For course of employment, Courts have said that it has to be looked in a broader context. All the
conditions of work, and special risks involved with work have to be taken into account. Regarding
course of employment, Courts have said that emphasis is on the time and place the injury has
occurred. The course of employment starts when a worker reaches the workplace, and it does not
end till he has left the workplace. Courts have also given an expanded meaning of the ‘course’ of
employment as not just limited to workplace, but also any other place which a worker visits not as
a general member of the public, but as a person employed by employer.

In one case, a person was required to go from station to station, and his job was to repair the clocks
in different stations. He was stabbed in a train. It was considered course of employment as if not
for the work given, he would not have travelled by train at that time. Thus, course of employment
covers the period of duty and any incidental work.

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Also, another term is arising ‘out of’ employment. Courts have held that there must be a causal
relationship between the accident and employment. It should be a proximate relationship.
However, Indian courts have relaxed this condition, as there may be circumstances where it is not
the job to suffer risks.

Bombay High Court has held that test of arising out of and in course of employment is whether
the particular accident would not have happened had the employee not been working in the
particular case under particular conditions.

If a worker independently takes up certain action and risks or gives peril to himself, then generally,
such person would not be entitled to compensation. However, in RB Mundra v. Master Bhanwari,
a person was required to drive the truck. They had to check whether tank was clear. The person
jumped in the tank and to see clearly, he lit a match. As there was some fuel left, the tank lit and
he died. This was not the job of the driver. Still, the Court, in order to benefit the claimants, held
this to be in course of employment.

With regard to mixed risks, most Courts have held that employer is liable, since this is a
beneficial piece of legislation.

The test therefore is whether person was performing the duties of his employment at the time
of accident. Also, the immediate act which leads to accident had some form of causal connection
with the employment.

4. JANKI AMMAL AND ORS. V. DIVISIONAL ENGINEER, 1955 MADRAS HC

Proviso to S. 3(1) applies only when injury has not resulted in death

An employee was sitting in a lorry. On a sharp turn, the person was thrown out and died. The
question arose as to whether employer was liable to compensate. Employer claimed that it didn’t
arise in course of employment. Because he was sitting on the land rail of the lorry. Also, he let go
of his hold on the rails and was making funny signs with his hands to a dumb friend. Thus, he
acted in a negligent manner.

Court had to decide whether it fell within the exemption clause. Court held that it was fit case for
compensation. The proviso to section 3(1) applies only to those cases where injury has not resulted
in death. Where, however, an injury has resulted in the death of a workman and has been caused
by an accident arising out of and in the course of his employment, it would be immaterial that the
workman (a) was at the time of the accident under the influence of drink or drugs or (6) wilfully
disobeyed any order or rule expressly made for the safety of workman, or (c) wilfully removed or
disregarded any safety guard or other device knowing to have been provided for the safety of

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workman. The aforesaid exceptions (a), (b) and (c) would apply only where an injury has not
resulted in the death of the workman.

Even if the person had wilfully disobeyed a rule or instruction, it itself is not enough. This is
because the interpretation has certain conditions.

(i) The injury must not have resulted in the death of the workman.

(ii) The workman must have wilfully disobeyed an order or a rule.

(iii) Such order or rule must have been made or framed expressly for the purpose of securing the
safety of workman.

(iv) Such accident must have been directly attributable to such wilful disobedience. In other words,
before this proviso can operate in an employer's favour, each of the seven distinct conditions must
be satisfied.

Firstly, an order or rule must have been given or framed; a mere warning or disclaimer of
responsibility is not enough.

Secondly, its substantial purpose must have been that of securing the safety of workmen as such.

Thirdly, the order or rule must contain words which, on the face of them, fairly and clearly indicate
that its purpose is that of securing the safety of workmen; otherwise it is not "expressly" so given
or framed.

Fourthly, its terms must have been brought to the notice of the individual workman who is injured.

Fifthly, it must have been disobeyed.

Sixthly, the disobedience must have been wilful, neither, for example, merely negligent nor due to
a mistaken mode of doing a particular task, nor due to a wrong decision in an emergency, but
deliberate.

Seventhly the accident (causing the injury, not resulting in death) must have been directly
attributable to the disobedience.

Where any of these conditions is absent, the proviso would not apply. Thus, if death results from
the accident or the disobedience of a rule or order, is not wilful (but only accidental or negligent)
or the rule or order is not expressly framed for the safety of workmen or disobedience is not directly
(but only indirectly) attributable to disobedience of rule or order, this proviso shall not apply and
the employer shall not be protected. This proviso is applied only to cases of injuries not resulting
in death; its applicability is limited to those cases where injury has not resulted in death: where

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injury has, however, resulted in death, the question about the disobedience of any rule or order is
not material so long as it can reasonably be held that the accident arose out of and in the course of
the employment.

(IMP) (“Wilful disobedience”) Also, the Court noted that wilful disobedience has a high bar.
Mere disobedience is not sufficient because it may be the result of forgetfulness or the result
of the impulse of the moment. The statute only exempts the employer from liability when the
disobedience is wilful, that is, deliberate and intended. It involves conduct of a quasi-criminal
nature, the intention of doing something either with the knowledge that it is likely to result
in a serious injury or with a wanton and reckless disregard of the probable consequences.
The concept embodied in these words concerns the mental state of the party at the time of
the calamity and is the antithesis of the idea imported by the word accident.

Disease

Not just accident and injuries, but diseases are also covered by section 3. This is mention in section
3(2). If an employee employed in any employment specified in Pat A of Schedule III contracts any
disease specified therein as an occupational disease peculiar to that employment, or if an employee,
whilst in the service of an employer in whose service he has been employed for a continuous period
of not less than six months (which period shall not include a period of service under any other
employer in the same kind of employment) in any employment specified in Part B of Schedule III,
contracts any disease specified therein as an occupational disease peculiar to that employment, or
if an employee whilst in the service of one or more employers in any employment specified in Part
of Schedule Ill for such continuous period as the Central Government may specify in respect of
each such employment, contracts any disease specified therein as an occupational disease peculiar
to that employment, the contracting of the disease shall be deemed to be an injury by accident
within the meaning of this section and, unless the contrary is proved, the accident shall be deemed
to have arisen out of, and in the course of, the employment.

Schedule III lists down the diseases and the conditions to be fulfilled to claim compensation.

Courts have held that if the disease is not listed in the Schedule, no compensation can be claimed.

B. SECTION 4

Section 4 gives the amount of compensation.

(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;

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(b) where permanent total disablement results from the injury, an amount equal to sixty per cent
of the monthly wages of the injured employee multiplied by the relevant factor; one lakh and forty
thousand rupees, whichever is more;

(c) where permanent partial disablement results from the injury,

(i) in the case of an injury specified in Part II of Schedule I, such percentage of the compensation
which would have been payable in the case of permanent total disablement as is specified therein
as being the percentage of the loss of earning capacity caused by that injury; and

(ii) in the case of an injury not specified in Schedule I, such percentage of the compensation
payable in the case of permanent total disablement as is proportionate to the loss of earning
capacity (as assessed by the qualified medical practitioner) permanently caused by the injury.

(d) where temporary disablement, whether total or partial, results from the injury, a half monthly
payment of the sum equivalent to twenty-five per cent. of monthly wages of the employee, to be
paid in accordance with the provisions of sub-section (2).

The relevant factor is given in the Explanation, and it refers to Schedule IV. For every age,
factor is given. This is a legal fiction created assuming that a person would have earned
money over his lifetime. For 16 years of age, the factor is the highest. While the more the age,
the less the factor.

Here, when there is death, 50% of wages is taken, while in case of permanent total disablement,
60% of wages is taken. This is because the disabled person himself would require money to take
care of himself.

Total disablement is defined in section 2(l), as meaning such disablement, whether of a temporary
or permanent nature, as incapacitates an employee for all work which he was capable of performing
at the time of the accident resulting in such disablement.

Provided that permanent total disablement shall be deemed to result from every injury specified in
Part I of Schedule I or from any combination of injuries specified in Part II thereof where the
aggregate percentage of the loss of earning capacity, as specified in the said Part II against those
injuries, amounts to one hundred per cent or more.

Section 2(g) defines partial disablement means where the disablement is of a temporary nature,
such disablement as reduces the earning capacity of an employee in any employment in which he
was engaged at the time of the accident resulting in the disablement, and, where the disablement
is of a permanent nature, such disablement as reduces his earning capacity in every employment

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which he was capable of undertaking at that time: provided that every injury specified in Part II of
Schedule I shall be deemed to result in permanent partial disablement.

Schedule I Part I lists 6 injuries leading in permanent loss of earning capacity. Part II lists injuries
deemed to result in permanent partial disablement. This is a finding of fact and has to be
determined in each case.

The test is not the actual loss suffered, but on the notional capacity and competitive capacity of
employee as against the market. For instance, in case of very severe facial disfigurement, even
though person can work, but it is difficult for him to get employment.

The disablement is seen from the perspective of work which the employee was capable of
performing at the time of accident, and not all kinds of work.

5. PARATAP NARAIN SINGH DEO V. SRINIVAS SABATA, 1975 SC

Payment of compensation; permanent total and permanent partial disablement

Appellant was the proprietor of 2 cinema halls, and respondent was working as carpenter for doing
some ornamental work. Carpenter fell down and suffered injuries leading in amputation of left arm
from the elbow. The employer claimed that it was permanent partial disablement, and not
total disablement.

The employee claimed that injury was in course of employment. Also, it needs to be seen whether
person is capable of doing the work which he was doing previously.

The commissioner observed that carpentry work cannot be done with one hand. Therefore,
100% loss of earning capacity has happened and hence full compensation has to be given.
The employer appealed.

The Court observed that even though the injury is listed in Part II as partial total disablement, seen
from the nature of work, it would be taken as permanent total disablement. The
determination of medical practitioner and commissioner is a finding of fact and Court would
not interfere with it.

As per section 4A, compensation under section 4 is to be paid as soon as it falls due. If the employer
does not accept the liability for compensation to the extent claimed, he shall be bound to make
provisional payment based on the extent of liability which he accepts, and, such payment shall be
deposited with the Commissioner.

If a person does not pay compensation within 1 month, he is required to pay simple interest at 12%
p.a. or at a higher rate not exceeding the maximum lending rates of any scheduled bank. This is

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done to encourage speedy payments. Also, if the Commissioner determines that there is no
justification for delay, then penalty up to 50% of the compensation can be levied.

In section 5, method of calculating wages is given.

In section 4(d), if temporary disablement, a half-monthly payment of 25% of monthly wages. The
half-monthly payment can be increased or turned into lump sum payment depending on the
assessment of medical officer if temporary disablement leads to permanent disablement or any
other condition.

Section 8 discusses distribution of compensation. It seems to be creating different categories of

persons. Compensation has to be directed through the commissioner instead of to the parties
directly. Also, the commissioner has been given a lot of power and discretion. There is no fixed
amount to be given to each of the dependants, and it is left to the determination of the
commissioner. Sometimes, law takes a paternalistic nature, which can be seen here. Paternalistic
side of law comes out.

IMP project issue- In Sir’s opinion, Section 8 must be tweaked. Opinion of the woman must also
be taken into account. Paternalistic side of Section 8.

Section 9 provides that compensation is not to be assigned, attached or charged.

As per section 14A, compensation is to be considered as a first charge on the assets transferred by
the employer. If the employer transfers his assets before payment of compensation, the
compensation would constitute first charge on the property.

S. 10(1)- Notice and Claim; S. 10A, 10B- IMP

Section 12 discusses contracting – wherein the principal engages contractors. The assumption
is that the principal would have deeper pockets and would have better financial capacity to pay
compensation. Hence, they are also liable to pay. Asking the employees to ask their immediate
employers to see whether the contractor has financial capacity is unjust. Secondly, the principal
has better capacity to undertake due diligence, ascertain the finances of contractor, and later on
recover compensation from them.

6. K. KOODALINGAM V. SUPT. ENGINEER AND ORS., 1994, KERALA HC

IMP on S. 12; principal engaging contractors; 4 essential conditions for attracting S. 12

Two appeals were clubbed together. The Superintending Engineer, PWD, which is the first
respondent, undertook an irrigation project. As a part of this project, he engaged the second
respondent as a contractor for the construction of a canal. The contractor employed certain

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workmen. They were engaged in removal of soil from the work site. There was a landslide, and
two workmen were buried underneath it, as a result of which they died. Their dependants claimed
compensation.

Only the first respondent contested the case, and the contractor was ex parte. The respondent
admitted that the deceased were employed by the contractor and the accident arose in the course
of employment. However, they contended that the contractor alone would be liable for the
compensation to be paid, as provided by a clause in the agreement. The lower court accepted this
contention and held the contractor as solely responsible for compensation. Appeal was preferred
from this Court and the issue for consideration was whether the first respondent is also liable to
pay compensation.

PWD argued that there is nothing in section 12 which mentions that it would have application
nothwithstanding any other agreement between the parties. Thus, if there is a contract to the
contrary, it should override section 12, as in the present case, wherein the clauses fixes sole liability
on the contractor.

The appellant contended that on an application of section 12 of the Employees Compensation Act,
the first respondent, being the principal, would be liable to compensate the workmen, and the
principal would then be entitled to be indemnified by the contractor. The respondent argued that
since an express clause in the agreement between the respondents provided that the contractor
would be solely responsible for the compensation, it would take primacy over section 12.

(IMP) The Court noted there are 4 essential conditions for the applicability of section 12:

1. The principal is carrying on a trade or business and, in the course of or for the purpose of
that trade of business, engages a contractor to execute the work.
2. The work is ordinarily a part of the trade or business of the principal.
3. The accident which gives rise to the liability for compensation must have occurred on, in
or about the premises on which the principal has undertaken, or usually undertakes to
execute the work or which is in his control or management.
4. The accident must have occurred while the workman was in the course of his employment
in executing the work.

Court observed that in the present case, all these conditions are satisfied. Therefore, the first
respondent is also liable to compensate the workmen. The Court rejected the contention of the
respondent regarding express clause in the agreement by referring the object of section 12.
The objective was to enable the workmen to proceed against either the contractor or the principal
so that their claims can be settled expeditiously, and to save the parties time and money.

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The Court also looked at the Report of the Select Committee wherein the intention was to enable
workmen to claim compensation from either principal or employer. Herein, government bodies
were not exempted and were considered liable in the same manner as private bodies.

Thirdly, the section would have made an explicit mention if it were subject to a contract to the
contrary. Moreover, the contract between the principal and contractor would only govern the
relations between them i.e., their inter se rights, and would have no effect on workers claiming
compensation from the principal.

Since it is a beneficial legislation, section 12 would apply nothwithstanding any agreement

between the principal and contractor regarding the liability for payment of compensation.
Agreements entered into between the principal and contractor can govern only their inter se rights
and liabilities and cannot affect the right of the workmen or their dependents to get compensation
either from the principal or from the contractor at their option. Court also held that the first
respondent would be entitled to recover the compensation by way of indemnity from the
contractor.

Hence, appeals were allowed.

The employee need not approach the immediate employer. He can approach the principal employer
and get the money

S. 14, 17- IMP

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 II. THE EMPLOYEES’ STATE INSURANCE ACT, 1948

This legislation is contributory in nature. The employer, employee and State contributes to a fund
which gives benefits to the employee. The purpose of benefit is set out in the Preamble – in case
of sickness, maternity and employment injuries. The legislation was initially introduced as
Workmen State Insurance Act, and was later widened with the term employees.

The Act applies only to a small category of working population:

1. A certain minimum threshold of workers (10 workers) is required.

2. Also, there is a threshold regarding wages of 21,000.
3. A major criticism is that first, a person has to fit the criteria of ‘employee’,
4. and second, the person must be working either in a factory or an establishment.
This leaves out a large number of workers. Instead of providing cover to all
employees, it is sectoral in nature, applies to only some workplaces, and within such
workplaces also, it does not apply to all the employees.

Under section 1(4) and 1(5), initial application can be seen. Initially, it was applicable to only non-
seasonal factories. Later, its scope was expanded.

A complex machinery is provided for in this Act. Chapter IV provides for contributions.
Employees and employers provide a particular amount, and the government tops it off with a
certain amount. The corpus is used for compensating the employees. For employees whose wages
fall below a particular level, they are exempted from contribution. The employer is still required
to contribute for such persons.

How are insurance schemes different from employer mandates?

Insurance schemes are general broader in mandate in comparison to the employer mandates.

ECA applies to very employer-employee relationship. But ESI Act does not apply to all employer-
employee relationships. Applies primarily to factories. For this Act to apply, you have to show
that it is a factory, and the manufacturing process is being carried out in the factory, further,
you have to also show that at least 10 individuals were employed.

After you have established that it is a factory, you have to also show the existence of an employer-
employee relationship. Beyond the normal employer-employee tests, there are some additional
requirements under the ESI Act.

Show that:

1. It is a factory.

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2. Existence of an employer-employee relationship.
3. Both employer and employee have made the contribution to the corpus.

If you are earning more than 25,000, then the Act does not apply to you.

If you are earning below a certain amount, then you as an employee do not have to make any
contribution. The employer will need to make the contribution.

Liability will always be on the employer. Employer will make the contribution on behalf of the
employee as well. Employee’s contribution is essentially a deduction from the wages of the
employee.

S. 46 of the ESI Act- Benefits conferred upon the insured persons. Here, maternity benefit is also
covered. Further, hospitals as well. The benefit is not automatic. There are conditions to be met
for obtaining the benefits.

For example, for sickness benefit, conditions must be met- S. 49.

For maternity benefits, the rules are even more complicated.

Disablement benefit- 90 percent of the standard benefit rate (S. 57 of ESI Central Rules)

What is the difference between “arising out of” and “Cause of”?

The work that you are supposed to do and the time period. Location and the time.

7. REGIONAL DIRECTOR, ESI CORPORATION V. FRANCIS DE COSTA, 1996 SC.

On the way to place of employment, 1 km away from factory at 4.15 pm, he met an accident. His
shift started at 4.30. He fractured his collarbone and was bedridden for 12 days. The Lorry he was
hit by also belongs to the employer.

Chapter V discusses benefits under the ESI Act. Benefits are wider in nature. There is sickness
benefit, confinement or miscarriage arising out of pregnancy, disablement benefits, medical
treatment, etc. For this case, section 46(c) is relevant, which provides the insured person
periodical payments for disablement as a result of an employment injury sustained as an
employee.

This is further explained in section 51 – a person who sustains temporary disablement, for not less
than 3 days, or permanent disablement, shall be entitled to periodical payment.

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Section 2(8) defines employment injury as a personal injury to an employee caused by
accident or an occupational disease arising out of and in the course of his employment, being
an insurable employment, whether the accident occurs or the occupational disease is contracted
within or outside the territorial limits of India.

In the present case, person was on the way to employment. Secondly, he was injured by the lorry
of the employer itself. Thirdly, the time is such that he would usually have been on the way to
work around that time.

The words “out of” indicate that the injury must be caused by an accident, which had its origin in
the employment. Any accident which occurred while going to the place of employment or not for
the purpose of employment, cannot be said to have arisen out of his employment. There is no
causal connection between the accident and the employment.

(IMP) (SC’s holding in this case) To show employment injury, the injury needed to be shown as
arising out of and in the course of employment. However, here, the Court observed that when the
injury arose, the person was not in the course of employment. The employment only begins when
a person reaches to the place of work. Going to and from the workplace would not be said to be
arising out of and in the course of employment unless it is incidental to the work.

If the shift began at 4.30 pm, then anything that came before it would not ordinarily be considered
in the course of employment.

Court gives an example to show an absurdity. If employment begins from the moment employee
sets out from his house to the place of work, then even if he falls down the stairs, it would have to
be treated as to have taken place in the course of his employment. This cannot be allowed.

Something which is ‘reasonably incidental’ to the employee’s employment should be included.

However, the Court construes reasonably incidental as being where the employee was at the
premises where he worked, and was injured while on a visit to the canteen or any other place for
a break. The term ‘reasonably incidental’ becomes narrower and its meaning is limited only to the
context of these cases only. If a man is going to and from his place of work, it would require a
special ‘deeming’ provision in a statute to make it deemed to arise out of and in his course of
employment- SC in Francis de Costa.

The deeming provision arises from section 51C which discusses accidents happening while
travelling in employer’s vehicle. An accident happening while an employee is, with the express or
implied permission of his employer, travelling as a passenger by any vehicle to or from his place
of work shall, notwithstanding that he is under no obligation to his employer to travel by that
vehicle, be deemed to arise out of and in the course of his employment, if —

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(a) the accident would have been deemed so to have arisen had he been under such obligation; and

(b) at the time of the accident, the vehicle —

(i) is being operated by or on behalf of his employer or some other person by whom it is provided
in pursuance of arrangements made with his employer, and

(ii) is not being operated in the ordinary course of public transport service.

Using this provision, an argument was made that the cycle used by the person was given to the
employee on loan. Court said in this regard that even if the money for cycle was given by employer,
the cycle belonged to the employee only. Thus, deeming provision is not applicable here.

An argument was made regarding proximity of time and space, and interpretation of statute in a
beneficial manner. However, Court rejected those arguments and observed that there are settled
principles which cannot be deviated from. For instance, Saurashtra Salt and General Manager,
BEST Undertaking cases have laid down the principles.

In Sir’s opinion, the scope of “arising out of” is much broader under the ESI Act in compared to
other legislations on account of certain deeming provisions such as S. 51C. What is impliedly
recognised in the ECA is getting explicitly acknowledged in the ESI Act in the form of S. 51C.

The Court laid down certain principles which should be borne in mind. In order to succeed, it has
to be proved by the employee that:

(1) there was an accident,

(2) the accident had a causal connection with the employment and

(3) the accident must have been suffered in course of employment.

Here, the Court concluded that the employee was unable to prove that the accident had any causal
connection with the work he was doing at the factory and in any event, it was not suffered in the
course of employment.

(IMP) Later, the Standing Committee Report discussed the introduction of section 51E that
commuting accidents to be treated as employment injury, because Francis De costa case had
the effect of excluding such accidents from the ambit of employment injury. Therefore, the
legislature sought to include them.

(IMP) Thus, subsequent to this judgment, in 2010, an amendment was brought and section
51E was inserted which created a deeming provision. An accident occuring to an employee

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while commuting from his residence to the place of employment for duty or from the place
of employment to his residence after performing duty, shall be deemed to have arisen out of
and in the course of employment if nexus between the circumstances, time and place in which
the accident occured and the employment is established.

It has to be shown from the facts that there was a nexus between the accident and the time, place
and circumstances.

The implementation of this amendment is bothersome.

8. TATA AIG GENERAL INSURANCE COMPANY LTD. V. RAM AVTAR, 2017 PUNJAB
AND HARYANA HC

The person is hit by a bicycle while he is on his way back to home. He has filed for compensation
under MV Act. In the arguments, the insurance company asks why are u seeking compensation
from us; instead, you must ask for compensation from the ESI.

Court held that this is not an employment injury within the scope of 51E.

But in Sir’s opinion, this is surely an employment injury since he was on his way back from work
and the route was back from work. But Court held that the test of employment injury under 51E is
not established.

Further, the Punjab and Haryana High Court in the case ignored the discussion surrounding the
introduction of S. 51 E and there has been a difficulty in the implementation of the amendment.

9. REGIONAL DIRECTOR, ESIC V. BHAVNABEN D. JOSHI, 2020 GUJARAT HC

A person was travelling to place of employment. He met an accident while crossing railway line
at 6.45am and his shift was to start at 7.30am. Decision of Poonam Sharma held that section is to
apply retrospectively. Secondly, going to work is deemed to arise in course of employment.

Here, objection is being raised by regional director is because there was no need to cross the
railway line. The accident did not occur en-route to employment, but because the deceased was
going along with his family to leave the family to the bus station. Therefore, it is not an
employment injury.

It was argued that section 51E does not give blanket compensation. A nexus between the time,
place and circumstances has to be shown. ESI corporation argued that time might have been same,
but the place and circumstances are different. The person was not on his way to employment.

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This argument was negated by the Court. The person only took a short detour. Also, given the fact
that it was an ordinary practice. Accident occurred to the insured person while he was crossing the
railway line for coming to the factory.

(IMP) Thus, Court gives a wider meaning to section 51E. Even if something happens out of
the ordinary, benefit is given to the employee. Court held that nexus between time, place,
circumstances and injury is met. But in Sir’s opinion, the nexus is not met because the person
had clearly taken a detour.

Sir is of the opinion that the implementation of ESI has been clearly problematic in varied
situations. Compensation should have been given in the Ram Avtar case but not in Bhavnaben
Joshi case.

10. ESI CORPORATION V. POONAM SHARMA, DELHI HC 2014.

Issue is whether section 51E has a prospective or retrospective application. Corporation

argued that it would be prospective in nature. It relied on C. Gupta v. Glaxo Pharmaceuticals
where it was observed that if a provision affects the substantial rights, it should have a prospective
application. Section 51E is widening the scope of section 2(8) by including any injury suffered by
employees while they are commuting. Thus, it is affecting the substantive rights.

The Court said that operation would be retrospective because it is a socio-welfare legislation,
therefore it should give benefits to more persons. Also, under ESI Act, the ESI contribution to
be made by the employer have already been made, so the corporation does not have to incur any
extra burden. Thus, a beneficial interpretation should be preferred.

Secondly, section 51E is not conferring any new rights. This is because the definition was not
amended in any way. Only a section was added which was declaratory and clarificatory.

Appeal from this case is pending before the SC.

If I fall down from the stairs, should I be given compensation under the ESI?

I should be because of 2 reasons:

1. It is a beneficial legislation.
2. Employer suffers no harm by payment of compensation. It is the ESI which is paying. So,
on the basis of a beneficial reading, I should be.

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As a general rule, compensation should be paid under ESI only if you are in the ordinary route to
the place of employment.

A lot of definitions contained in ESI Act are used to interpret ECA also. However, section 51E is
applicable only to ESI Act, and not to ECA. Also, when both Acts are similar, why are there
differential benefits under both the Acts and whether the differentiation is justified. In ESI Act, a
person seems to be much better protected than ECA.

S. 2(9) of the ESI Act provides the definition of an employee. The concept of employment is very
different in social security legislations compared to industrial legislations. Even if the individual
is not under your control but is working on your premises, he is still your “employee” for the
purpose of social security legislations such as ESI. As long as he is connected with your work,
he will be entitled to compensation in case of an employment injury.

The ID Act provisions or concepts will not apply for the purpose of cases under the ESI.

One reason can be because under ESI Act, the employer is not additionally burdened because there
is ESI contribution already made.

S. 51A Presumption: Let’s say a person works in a foundary and falls down and dies. The
Commissioner says that the person must have committed suicide. But the employee’s dependant
claimed that it was an employment injury. Since there was no clear evidence, the Court awarded
compensation under the ESI Act.

11. R. RAMAKRISHNA V. REGIONAL DIRECTOR, ESI

(IMP) Court held that, unless the disablement is of such a nature as reduces the earning
capacity, the insured person is not entitled to the disablement benefit. So, the benefit
contemplated under Clause (b) of Section 51 is available only to an insured person who sustains a
permanent total or partial disablement which affects the earning capacity prejudicially. In other
words, it will have the effect of reducing the earning capacity.

(IMP) Disablement benefit will be awarded under ESI only if actual loss in earnings is shown.

Under the ECA, it is not the actual loss of earnings that is to be taken into account. It is the potential
loss of earnings that have to be taken into account. Compensation will be calculated on the basis
of potential loss of earnings in ECA. ESI does not do so. In a Madras HC case, in an ESI
matter, the Court interpreted S. 63 of the ESI Act to hold that actual loss has to be shown.

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Section 2(12) defines factory as any premises including the precincts thereof whereon ten or more
persons are employed or were employed on any day of the preceding twelve months, and in any
part of which a manufacturing process is being carried on or is ordinarily so carried on, but does
not include a mine subject to the operation of the Mines Act, 1952, or a railway running shed.

The Act does not give definition of establishment.

Also, definition of employment and employee is applicable only to this Act, as it gives a specific
definition. Section 2(9) defines employee.

RK Swamy, Hyderabad Racing Club, Sewing Company and other sent cases.

ESI Act applies to factories and establishments, but not seasonal factories. Factory has been
defined in section 2(12) of the ESI Act.

Premise means a geographical area with a certain boundary. But it does not only mean a single
building. Premise is interpreted liberally.

Secondly, 10 or more persons are employed. These persons can be employed on any day of the 12
preceding months. Also, they should be engaged in manufacturing process.

Also, unlike the ECA, here, for manufacturing process, reference is made to Factories Act, 1948.
Section 2(k) of Factories Act defines “manufacturing process” as any process for—

i. making, altering, repairing, ornamenting, finishing, packing, oiling, washing, cleaning,

breaking up, demolishing, or otherwise treating or adapting any article or substance
with a view to its use, sale, transport, delivery or disposal; or
ii. pumping oil, water, sewage or any other substance; or
iii. generating, transforming or transmitting power; or composing types for printing,
printing by letter press, lithography, photogravure or other similar process or book
binding;
iv. constructing, reconstructing, repairing, refitting, finishing or breaking up ships or
vessels;
v. preserving or storing any article in cold storage.

(IMP) (Can come for exam) For a place to be called a factory, 4 conditions are necessary:

1. Geographical or physical unity.

2. Unity of occupation or ownership.
3. Unity of employment.
4. Unity of work.

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These 4 conditions have to be established for a place to be called a factory. This means that even
film studios can be factory.

Factory has a wide meaning. If several buildings are there in which different processes are carried
out, as long as there is some unity, they would constitute a single unit and be called a factory.

12. EMPLOYEES’ STATE INSURANCE CORPORATION V. PETER SEWING MACHINE CO.,

1970 DELHI HC

Control of principal employer over immediate employer is must; if contractor operates

independently without any relation or control by principal employer, then cannot be classified as
immediate employer

Peter Sewing Machine Co. was engaged in making and assembling sewing machine parts. Alone,
it employed less than 20 employees. However, on its premises, it allowed 2 contractors to carry on
their business with factory power. The contractors also manufacturing sewing machine parts.
However, there was no agreement between the company and the contractors as to management of
affairs or purchase of manufactured items.

Question arose as to whether company was a factory under section 2(12). Court observed in the
negative because although there was physical unity, but the other three unities – unity of
occupation/ownership, unity of employment and unity of work, were absent.

Initially, the number used to be 20 employees for factory. The Court observed the elements of a
factory under S. 2(12) need to be established.

S. 2(12) of ESI Act- "factory" means any premises including the precincts thereof-

(a) whereon ten or more persons are employed or were employed for wages on any

day of the preceding twelve months, and in any part of which a manufacturing process is

being carried on with the aid of power or is ordinarily so carried on, or

(b) whereon twenty or more persons are employed or were employed for wages on

any day of the preceding twelve months, and in any part of which a manufacturing

process is being carried on without the aid of power or is ordinarily so carried on.

Regarding 20 or more persons, the Court discussed immediate employer under section 2(13),
which provides that “immediate employer” in relation to employees employed by or through him,
means a person who has undertaken the execution on the premises of a factory or an establishment
to which this Act applies or under the supervision of the principal employer or his agent, of the

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whole or any part of any work which is ordinarily part of the work of the factory or establishment
of the principal employer or is preliminary to the work carried on in, or incidental to the purpose
of, any such factory or establishment and includes a person by whom the services of an employee
who has entered into a contract of service with him are temporarily lent or let on hire to the
principal employer and includes a contractor.

The Court also discussed principal employer under section 2(17).

The aspect of control is important. The concept of immediate employer comes when there is
a contract. The essentials are:

1. He has undertaken the execution of whole or any part of work.

2. Which is ordinarily part of the work of factory or establishment of the principal
employer, or is preliminary or incidental.
3. On the premises of factory.

Here, although the work undertaken is similar, but the contractors are undertaking work
independently. There is no contract between contractor and company, and contractors are not
required to sell their manufactured items to the company.

For an Immediate employer, it has to be shown not only that the work undertaken is similar both
also it is linked to the work or control of the principal employer.

To show that they working in the same factory, you have to also show the unity of ownership or
occupation of the factory because they were occupying the space independently. They are
independent employers; not immediate employers.

They were not working or coordinating with each other. Unless you are coordinating with each
other, you cannot show that it is a factory.

13. AGENTS & MANUFACFURERS, DELHI VS. THE EMPLOYEES STATE INSURANCE
CORPORATION, NEW DELHI AND ORS.

Company manufacturing wooden products. 2 of them are factories and the other place where
polishing and cleaning takes place. ESI has clubbed all 3 premises and are saying that if we
combine the 3, then it is essentially a factory, and has asked for compensation on this basis.

Employer is arguing that they cannot be totalled up together. Secondly, he argues that the office is
to be considered as a taken unit, and it cannot be called a “manufacturing process”. He says don’t
add it up and if it doesn’t add up to 20, then ESI provisions can’t be invoked.

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ESI says that must be added because all 3 of them are intrinsically linked notwithstanding that they
are separate premises.

The Court held that it does not matter if the premises are geographically separate. As long as the
premises are carrying out work which is intrinsically related, it is a factory. Further, the Court
looks at the definition given in Halsbury laws of England which provides that 2 buildings even if
geographically apart by considerable distances will be considered to be a factory if the work is
intrinsically related.

With respect to the second argument regarding “manufacturing process”, the Court held that it
must be read to include even polishing and sale of goods to be an integral part of the manufacturing
process. Manufacturing process is a continuous thing. Need to give a very broad interpretation to
the term “manufacturing process”.

14. DELHI GYMKHANA CLUB LTD. V. EMPLOYEES STATE INSURANCE CORPORATION,

2014 SC.

The Club is registered under the Companies Act. It has an objective to promote various sports and
recreation amongst its members. The club has a kitchen where food is cooked and served to
members. The Delhi Government issued a notification making the ESI Act applicable to
establishments. As a result, the club was sought to be brought within the ambit of the Act on
the ground that preparation of food in the kitchen amounts to a manufacturing process.

ESI Court held that the ESI Act cannot be applicable to the club. The HC reversed this judgment
and held that the club is a factory under ESI Act.

Club contended that the decisions considering kitchen as manufacturing process are in respect of
hotels, and appellant is a club which runs the kitchen only for the benefit of members and not for
making any profits. But Court rejected it.

Club also claimed that they already were given social security benefits to its employees, so ESI
Act should not be applicable to it. There is a provision under the ESI Act that if the establishment
provides benefits which are similar to or better than ESI Act, then ESI Act would not be applicable.

Here, cooking was done using LPG cylinders. This comes within the ambit of using power to
constitute manufacturing process. Also, more than 20 persons were employed to prepare food.

Objectives of club are to promote hunting, racing, tennis and other games, athletic sports and
recreations.

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It is established that for hotels, preparation of food is considered a manufacturing process.
However, the argument is made by Club that in hotels, the benefits are not limited to members,
but are available tow world at large. Secondly, the intent of hotels is to earn profits, while the club
does not have any such objective.

Court responds by saying that Club caters to elite people of Delhi. Kitchen is there to provide
service to them, and constitutes an integral part of the Club. It does not matter whether Club is run
for a profit motive or not. What matters to the employees is their wages and benefits, and it does
not matter whether it is for profit or non-profit. Therefore, the Club should come within the ambit
of factory because of the relationship it shares with its employees, and the nature of club itself
should not be important.

Also, since this is a beneficial legislation, a liberal and wide meaning should be adopted. This
would amount to include kitchen into manufacturing process.

Regarding the argument of benefits and medical facilities already provided to employees by the
Club, Court holds that this is not enough to claim exemption from ESI Act. As the aim is to provide
as much benefits to the employees as possible.

Court held that preparation of food items amounts to manufacturing process, and since
kitchen forms an integral part of the club, the club falls within the purview of ESI Act. Held
that the club falls within the definition of “factory” under ESI Act.

Court looks into the definition of “manufacturing process” under the ESI Act and holds that
“cooking” forms a part of “manufacturing process” under the statute. The definition is very wide
and will include cooking.

Court also deals with the argument regarding S. 1(4). Exclusion under 1(4) of the SI Act does not
apply.

Hence, appeal was dismissed.

For a place to be called a factory, 4 conditions are necessary:

1. Geographical or physical unity.

2. Unity of occupation or ownership.
3. Unity of employment.
4. Unity of work.

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Further, ESI Act can also apply to shops/establishments provided that the government by
notification makes the Act applicable to establishments as well.

15. EMPLOYEES STATE INSURANCE CORPORATION V. RK SWAMY, 1993 SC

Advertising agency held to be a shop by SC even if it renders services at varied prices

Issue is if advertisement agencies are coming under purview of shops. Under section 1(5), the
government has power to expand the scope of establishments. Establishments per se are not
covered under ESI Act, rather Act is made applicable to establishments by government under
section 1(5). Shops and Establishments Act is relevant here. Here, the government by notification
applied the Act to shops also (not offices). The argument is whether advertisement agency
rendering services to customers is shop or not.

At lower level, ESI Court held that it was a shop, and the Single Bench reversed the order of ESI
Court and held that respondent was not a shop.

Activities carried on here were that sometimes clients visit the office of respondent. Respondent
renders advise to clients as to how their products are to be advertised, and for such service
rendered, respondent gets paid. In this manner, he not only gave advise and received compensation,
but all solutions related to it were given.

The Division Bench held that respondent was not a shop. This was because the payments that
person was receiving was not for supply of a tangible item, but for supply of ideas. Secondly, the
services sold were not sold on retail basis. Unlike a shop where everything has a fixed price, the
price here varied according to volume, nature and complexity of work. The price varies from
person to person. The Division Bench emphasised that a shop, even in its expanded meaning,
must be a place where goods and services in a tangible form were sold, such as an
entertainment programme which appealed to the senses, or the reservation of action in
transport. Even if it were accepted that a shop meant a place where goods and services were sold,
it could not legitimately be held that the premises in which an advertising agency conducted its
business was a place where services were sold. The concept of sale necessarily involved a unit of
work or of service, a definite price for the same and its availability on retail basis to anyone who
asked for it. The Division Bench, therefore, upheld the contentions of the Respondent and
dismissed the appeal.

The High Court was fearful about what a wider meaning of shop could result in.

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ESI argued that a shop is a place where services are rendered for consideration. It does not
matter whether it is an advertisement agency where different prices for different kinds of
services are charged. Also, shops not only include material items, but services also. This is
more so because it is a beneficial legislation so wider interpretation is required.

The advertisement agency referred the correspondence between Government of Tamil Nadu and
the Appellants. The correspondence showed that larger area of commercial activity was not
intended to be covered by ‘shop’. A consultative process happened, and it was clear intention on
part of government that only shops would be covered, and not larger establishments such as the
respondent. Also, case of Hindu Jea Band was referred wherein dictionary meaning of shop was
referred. Shop meant a place especially a small building for the retail sale of goods and services.
Thus, aspect of retail goods, and stipulated prices, along with fixed wages paid to people are
essential for there to be a shop.

International Ore and Fertilizers case was also referred where again dictionary meaning of shop
was referred as a house or building where goods are made and prepared for sale and sold. And a
place of business where one’s ordinary occupation is carried on. Here, establishment was engaged
in facilitating emergence of contracts between foreign principals and state trading corporations.
Here, they were controlling and directing the activities for the premises in question. Therefore,
establishment was considered a shop. Also, if two meanings are possible, wider meaning should
be preferred.

The Court referred various cases and interpreted the facts in that light. It observed that clients call
on an advertising agency to initiate campaigns for promotion of their products. Advertising
campaigns can be conducted in the different media and otherwise. The advertising agency gives
advice in this behalf and as to possible expenses. The advertising agency prepares and presents
alternative campaigns for the client to choose from. For such purpose it must prepare the necessary
art work and the appropriate words to go with it. It employs specialists in these fields. The
advertising agency is paid for the service it renders as aforesaid by the client. It also receives
commission from the media through whom advertising is done.

Anyone who has products to sell may approach an advertising agency. The advertising agency will
prepare an advertising campaign for him utilising the services of the experts it employs in this
behalf. It sells the campaign to the client and receives the price thereof. Indubitably, the price will
depend upon the nature of the campaign, but that does not make any great difference. Essentially,
the advertising agency sells its expert services to a client to enable the client to launch an effective
advertising campaign of his products. The premises of an advertising agency can, therefore,
reasonably be said to be a ‘shop’.

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Thus, even if services are provided which vary in terms of price, establishment can be
considered a shop- SC.

In regard to correspondence of appellants and the government, Court agreed that there is a doctrine
of contemporaneous exposition, but it does not apply here. This is because the appellants did not
proceed on the basis that advertisement agencies are not shops while implementing the
notification.

Further, the Court also discussed the concept of a “Beneficial Legislation”. Though not ordinarily
understood as a shop, an advertising agency will be considered a shop for the purpose of ESI Act.

Therefore, appeal was allowed.

16. EMPLOYEES STATE INSURANCE CORPORATION V. HYDERABAD RACE CLUB, 2004

SC

Club was held to be an establishment under ESI Act

Question arose as to whether the Hyderabad Race Club was an establishment under the ESI
Act. The government, through notification in 1975, made the Act applicable to
establishments. HC held it was an establishment. However, the HC reduced the liability of the
Club for ESI contribution for period between 1975-86 on the ground that the position of law during
that time was uncertain. Therefore, ESIC appealed to SC.

Club argued that it is neither an establishment nor a shop under the AP Shops and Establishments
Act. Hence, the notification is not applicable to it.

SC relied upon RK Swamy and Cochin Shipping cases to hold that the Club is an
establishment under ESI Act.

Another question was regarding from when did the liability of Club started. The Court observed
that although the notification came in 1975, the law in regard to Clubs falling within the ambit of
establishment was clarified in Hindu Jea Band, Jaipur v. Regional Director, ESIC in 1987.
Therefore, the Club cannot be asked to make ESI contributions for 1975-86 when the law regarding
whether clubs fall within the ambit of establishments for the purpose of the ESI Act, was unclear
prior to Hindu Jea Band. Therefore, appeals failed.

(IMP) Hyderabad Race Club seems to be the starting point of social clubs and racing clubs
within the ambit of establishments under ESI Act.

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 17. BANGALORE TURF CLUB LTD. V. REGIONAL DIRECTOR, ESIC, 2014 SC

Test for determining whether an activity is an establishment; BWSS Test applied

The matter was earlier before 2 Judge Bench which was of opinion that law in Hyderabad
Race Club was not correct, and hence, there should be reconsideration. According to them,
race club should not be considered as shop. As ‘shop’ in common parlance refers to a place
we go shopping to, and racing club is not for that purpose, even though it may provide
services.

Court observes that Hyderabad Race Club seems to be saying that all establishments are covered
by the ESI Act. While this is not true and only certain categories of establishments are
included. Surely, a race club cannot be a shop.

Court also discussed application of Bangalore Water Supply where clubs were held to be industry.
However, Court observed that definition and purpose of industry under IDA and establishment
under ESI Act is different. Industry was purposefully made wide to include all possible
activities in it. While under ESI Act, establishment is not defined. This does not mean IDA
and ESI Act are pari materia. As the intention for IDA is resolution of disputes, while
intention for ESI Act is social security.

Therefore, 2 Judge Bench was of opinion that matter should be referred to 3 Judge Bench.

(IMP) There are two issues before the Court:

i. Whether Hyderabad Race Club decision is correct.

ii. Do the appellants come within definition of establishment, and if yes, whether it is
a shop?

Court looks at relevant provisions and the notification in State of Karnataka.

Appellant first argued that race club cannot be considered as shops. They refer Karnataka Shops
and Establishments Act. Since shop is not defined under ESI Act, refence should be made to shop
in the Karnataka Act. Also, shop should be understood in traditional and common parlance
meaning where goods are sold at retail prices. Third, shop is a building where goods are sold or
kept for sale, and therefore it requires well-defined and enclosed premises. A permanent structure
of 4 walls and a roof is required for an establishment to be called a shop. While race club is a wide
open area and there are no enclosed premises. Services are offered in the open as races are
conducted in open areas.

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ESI argued that although definition of shop is not given in ESI Act, reliance should be on dictionary
meaning as external aid of construction, and Shops and Establishments Act is not pari materia, as
intention is different. Also, since ESI Act is beneficial piece of legislation, expansive and wider
meaning should be taken. Third, nature of activities carried on by race club should be seen. They
are very much like any other shop. Although membership is required, but money is being paid for
availing services. Activities like betting on races, get tickets, etc. are conducted. This is similar
to going to a shop and purchasing goods.

Also, the requirement of having 4 walls and roof would allow establishments to escape liability by
deliberately not providing for such structure.

Court looks at various cases as to interpretation of Act and definitions. Court concludes that
primarily rule of interpretation for beneficial legislation is liberal rule of interpretation. Therefore,
traditional meanings can be expanded, and dictionary meanings can be used to expand the scope.
The content, scheme and objects of legislature must be considered. Based on this, dictionary
meaning would be preferable to achieve the objects of legislature.

Court looks at dictionary meaning of establishment. An institution or place of business,

permanent commercial organization, place with its fixtures and organized staff, grounds, fixtures,
equipage, etc.

The dictionary meaning gives rise to a fairly wide meaning of establishment. Court also recognizes
that establishment is any place where business is conducted. Court sees whether race club is a
place where business is conducted. KR Lakshmanan v. State of TN – here, similar activities are
being carried out by the Club – placing bets, etc.

Court said that establishment means the place for transacting any business, trade or profession or
work connected with or incidental or ancillary thereto. However, the Court said that such
dictionary meanings cannot be fully valid for construing social welfare legislation in a
welfare state.

(IMP) Court then holds that test of finding out whether an activity is establishment is whether the
activity is systematically and habitually undertaken for production or distribution of the goods or
services to the community with the help of employees in manner of trade or business in such an
undertaking. Thus, the Court seems to be applying the triple test of Bangalore Water supply. And
there is no basis for why the Court is applying this test and where is it coming from. As the
dictionary meanings do not give rise to such interpretation.

(IMP) In this manner, Court just wants to fit the race club within the meaning of establishment so
as to justify Hyderabad Race Club.

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Also, in regard to establishments and notifications in that regard, most of them give a list in the
Schedule as to the establishments covered. Therefore, one way of interpreting establishment is to
see the type of activities covered in the exhaustive list given and interpret on those lines.

After this, the Court looks at various cases. Definition of shop has undergone a great change. It is
used in a wider sense than its ordinary meaning. There is no requirement of house or building, but
a business establishment where a systematic or organized commercial activity takes place with
regard to sale or purchase of goods or services, and includes an establishment that facilitates the
above transactions as well.

(IMP) Second question is whether the club provides entertainment. Entertainment is an activity
that provides with amusement or gratification. The Court answers in the affirmative, and therefore
a service is provided by the club.

Also, here, it is not just a race club, but some connected activities, such as buying and selling
horses, carry on business of hotel-keepers, to establish clubs, hotels, etc. also. All these aspects are
given in the MOA of the Bangalore Turf Club, so it does not matter that these activities are not
being conducted at the moment, as the club can resume these in the future.

(IMP) The Court indicates that even if a club solely conducts races, it can be a shop.

Hence, the race club was held to be a shop as it provided various services such as
entertainment, betting on races, and other activities of the MOA.

Court referred Shops and Establishments Act Preamble which refers to different objectives – to
regulate conditions of work and employment of shops, commercial establishments, etc. Thus, the
context of the Act is different from that of the ESI Act. Shops and Establishment Act is intended
to be regulatory as it provides for registration, prescribes penalties, etc. While ESI Act provides
for benefits to employees in case of sickness, maternity and employment injuries. They have a
different scope and application and do not overlap in their scheme of operation. Therefore, the
Acts cannot be considered to be pari materia.

(IMP) Shop is a subset of an Establishment.

18. HYDERABAD ASBESTOS CEMENT PRODUCTS LTD. V. EMPLOYEES INSURANCE

COURT, SC 1977.

The appellant company is a factory manufacturing asbestos sheets. Persons have a factory in
Sanatnagar, Andhra Pradesh, where asbestos sheets are manufactured. In Vikjaywada
Zonal office, person are engaged in canvassing for sales.

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Question is whether the Vijaywad zonal office are factories under the ESI Act, and whether the
persons working in the Vijaywada zonal office are employees, and whether persons employed in
other zonal offices can be counted for purpose of considering a factory.

The Company argued that there is distinction between factory and establishment, and zonal
and branch offices cannot be brought within ambit of factory. As for establishment, separate
notification is there.

Secondly, whether under definition of employee, not only the conditions of section 2(9), but also
conditions of section 2(12) need to be fulfilled. For persons to be considered as employees, they
should not only be employees, but should also be working in or in connection with a factory.

Court looks at section 2(9) and considers the ambit of the definition. Referring some cases,
Court discusses Nagpur Electric Light and Power Company v. regional director, ESIC. Here,
company was engaged in transforming and transmitting electrical energy and question was
whether engineers, clerks, accountants could be considered as employees. Court held that all the
employees working with regard to transmission of energy were connected to the work of factory.
Non-manual workers can also be considered employees if they are engaged in connection with the
work of factory i.e., transmission of energy. Secondly, duties of the administrative staff is clearly
connected to the work of factory. Thirdly, the cable jointers, linemen, wiremen, etc. were engaged
in connection with work of factories were also included. Thus, persons typically engaged in
establishments and not factories could also be said to be employees.

In ESIC v. Raman Chittur Harihar Iyer, question was whether persons who sell the products of
factory would be considered employees. Court looked at definition of employees under section
2(9) which includes work incidental or preliminary to or connected with the work of factory or
establishment. Since work of factory starts with raw materials and ends with finished articles, it is
difficult to accede to the argument that the work of selling the products of factory was connected
with the work of the factory.

In another case, ESIC v. Ganpathia Pillai, question was whether persons employed in managing
agent’s office can be considered employees. Court observed that only persons who are in some
manner or other connected with the manufacturing process can be said to be employees under
section 9.

Post these cases, the legislature amended the definition under section 2(9). The amended section
includes any person employed for wages on any work connected with the administration of the
factory or any part, department or branch thereof or with the purchase of raw materials or for the
distribution or sale of products of the factory. It will be seen that the work connected with the

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administration of the factory, the purchase of raw materials and the distribution or sale of products
are brought within the scope of the definition. This seems logical to do so as well.

(IMP) Thus, Court said that after the amendment, administration of factory and selling the
products of factory can also be said to be connected with the work of factory.

The Court then looks at definition of factory where manufacturing process is required. The person
should not just be employee, but should also be engaged in a factory. This is because under section
38, it is clear that Act maintains a distinction between factories and establishments. This is the
argument of the appellants.

However, the Court rejects the argument. This is because even before the amendment the word
employee included persons connected with the work of the factory. The Supreme Court has laid
down that a person employed in connection, with the work of the factory would, fall within
the definition as it stood before the amendment (and not just employees engaged in the
manufacturing process) and it may not be open to the learned Counsel to contend that it is only
employees that are employed in the factory that would fall within the definition.

Secondly, not just employees in factories, but all the employees should be covered. This
interpretation is clear from section 39 where contribution is from employees, and not confined to
employees in factories. Thus, employees would not just be limited to employees in the factory.
There is no justification for reading the words employees in factories in section 38 as meaning
persons employed in factories only.

(IMP) Court held that on a reading of the relevant sections it is clear that the word “employee”
would include not only persons employed in the factory but also persons connected with the work
of the factory. The employee may be working within the factory or outside the factory or may be
employed for administrative purposes or for purchase of raw materials or for sale of the finished
goods all such employees are included within the definition of employee.

Artificial Distinction between “employees of the factory” and “employees in connection with the
work of the factory”.

The argument is that the persons performing sales are not employees of the factory but are
employees in connection with the work of the factory.

But this artificial distinction does not work out. Compensation has to be made to all employees.

Thus, appeal was dismissed.

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Aspect of “geographical proximity” in the context of a factory is not given much attention. In fact,
the connection of the work is given a lot of importance.

19. KIRLOSKAR BROTHERS LTD. V. ESIC, SC 1996.

Appellant had registered office in Pune, and undertook distribution of its products from 3
other factories in different locations – Dewas, Kirloskarvadi, and Karad. The status of these
factories is not in contention.

They also had regional offices at Secunderabad and Bangalore from where sale of products
was done. It was under question whether these regional offices were liable to make ESI
contributions. ESI Court held that they are covered under the Act, and HCs upheld the order.

Orissa HC held otherwise – since the percentage of products of factory are not predominantly
higher, therefore they are not factories.

Appellant argued that since 3-33% of products manufactured by the factory are sold, it is not the
predominantly products being sold. While ESIC argued that control by principal employer
connected with the sale or distribution of the products of the appellant is relevant. The test of
predominant business turnover of products or quantum of business is not relevant.

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.

(V IMP) 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.

In regard to predominant business activity, SC observes that it is not a correct test, and it is arising
only out of the peculiar facts of the case. Essentially, the control by the principal employer has to
be seen.

The true tests are:

1. Control by the principal employer over the employee.

2. The employee should be engaged in connection with the work of the factory and the principal
employer should exercise sufficient control over them.

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The focus is on the employees themselves, and that they should be protected. Court does not go
into the mathematical precision or numerical threshold because it may be the case that a number
of regional offices are opened, in which case, each office would only get a small percentage of
products to sell.

20. ROYAL TALKIES, HYDERABAD V. ESIC, SC 1978

Concept of immediate and principal employers; S. 2(9)(ii) of ESI Act; employee must work in
premises of principal employer and must carry out work which is related to the purpose, even if
peripheral to the purpose of the establishment

Question is regarding who is an employee under the ESI Act. there was a theatre which had a cycle
stand and a canteen. These were leased out to contractors, who employed their own persons.
Question was whether owners of theatre could be considered as employers of persons working in
the cycle stand and the canteen.

There is concept of immediate and principal employers. ESIC said that contractors may be
immediate employers, but theatre owners are principal employers. Notice of demand was sent to
principal employers. Owner raised 2 contentions – theatres are not covered within ambit of ESI
Act, and second, they are not liable to pay contribution in relation to canteen and cycle stand, since
owner does not share any relationship with the persons employed by contractors.

Lower court finds that all canteens were within premises. There were mixed entries for them.
Persons running canteens were responsible for managing them. Theatre owners had no role.
Canteens were to be run only when shows were taking place. Management had no supervisory
control. They only reserved limited rights with themselves. Also, contract appears to be proper and
not sham. There is no supervision or control. The intermediaries are also involved in the process.

At lower level, it was observed that canteens are meant for benefit and services of the persons
visiting theatres and not general public. Cycle stand is also for benefit of persons coming to theatre.
Using this reasoning, Court held the owners as principal employer under section 2(17) of ESI
Act which defines principal employer as:

(i) in a factory, the owner or occupier of the factory and includes the managing agent of
such owner or occupier, the legal representative of 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;
(ii) 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;
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 (iii) in any other establishment, any person responsible for the supervision and control of
the establishment.

Section 2(9) defines employee as any person employed for wages in or in connection with the
work of a factory or establishment to which this Act applies and —

(i) who is directly employed by the principal employer on any work of, or incidental or
preliminary to or connected with the work of, the factory or establishment, whether
such work is done by the employee in the factory or establishment or elsewhere; or
(ii) who is employed by or through an immediate employer on the premises of the factory
or establishment or under the supervision of the principal employer or his agent on
work which is ordinarily part of the work of the factory or establishment or which is
preliminary to the work carried on in or incidental to the purpose of the factory or
establishment; or
(iii) whose services are temporarily lent or let on hire to the principal employer by the
person with whom the person whose services are so lent or let on hire has entered into
a contract of service; 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 the products of, the factory or establishment.

Under section 2(9)(ii) the main question lies. The Insurance court noted that since the services
were meant for people visiting theatre only, it meant that persons were employees and owners of
theatre were principal employers.

An appeal was made against this. Court observed that there was no contractual relationship of
master and servant between the cycle stand and canteen workers and the owners. Still, they are
included in section 2(9)(ii) because the operations of keeping a cycle stand and running a canteen
are incidental or adjuncts to the primary purpose of the theatre.

Court notes that first, persons should be employed in connection with the work of a factory or
establishment. Secondly, there should, be some nexus of the work done with the factory or
establishment. The nexus need not be very proximate, and some loose nexus can also amount to
employment. Even if there is a loose connection with the work of the establishment which is
ancillary or incidental, and even if there is no obligation on the owner of establishment to maintain
such facilities, it would still be in connection with the establishment.

Here, the question is whether the amenity or facility has a link with the establishment, even though
peripheral. Here, there is in fact a connection of employees in cycle stand and canteen with the

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theatre. Even though there is no employment contract, but by virtue of the language of statute, a
very wide meaning is intended.

Thus, a very wide interpretation of employment was taken by the Court. This appears to be a
subjective test based on the facts and circumstances.

In the second part, even if the principal employer has no direct relationship with the immediate
employer, if the employee is working on the premises of principal employer, or under his
supervision, or some work which is incidental or preliminary, it would still be considered as
employment.

What is required to be satisfied is that the work done by the employee must be (a) such as is
ordinarily (not necessarily nor statutorily) part of the work of the establishment, or (b) which is
merely preliminary to the work carried on in the establishment, or (c) is just incidental to the
purpose of the establishment.

(IMP) All that the statute requires is that the work should not be irrelevant to the purpose of the
establishment. It is sufficient if it is incidental to it. A thing is incidental to another if it merely
appertains to something else as primary. Surely, such work should not be extraneous or contrary
to the purpose of the establishment but need not be integral to it either. Much depends on time and
place, habits and appetites, ordinary expectations and social circumstances.

The canteen and cycle stand can be considered as incidental to the movie or cinema services
provided. Therefore, they are within the ambit of employees. Thus, as long as the work is not
completely incidental or contrary to purpose of establishment, it can be included in ambit of
employment. The intent is to cover almost all the cases in order to benefit the employees.

Hence, appeal was dismissed.

However, if there is a shop selling scientific literature in the premises of the theatre, then the
employee cannot be said to have any connection.

Similarly, if the lawyer has a chamber inside the hotel, the employee of the lawyer cannot be said
to have any connection.

Work must necessarily be a part of the work of the principal employer or incidental to the work.
Loose connection to the work is sufficient.

Very fact-specific.

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 21. THE MANAGING DIRECTOR, HASSAN COOPERATIVE MILK PRODUCER’S SOCIETY
UNION LIMITED V. ASSISTANT REGIONAL DIRECTOR, ESIC, SC 2010.

Multiple cooperative societies are formed and they are challenging the decision. Societies have
been made liable in respect of workers engaged by contractors in relation of delivery of milk to
consumers. The delivery services are engaged by societies, and these delivery services engage own
employees to deliver milk to consumers.

The Court discusses section 2(9). Merely being employed in connection with work is not enough,
and the person should be included in either of the 3 categories of section 2(9). Court says first
clause is regarding direct employees only. Regarding second clause, no direct relationship is
required. But here, person should be either working on the premises of the establishment or under
supervision of principle employer, and work should be preliminary, ancillary or incidental to the
employment.

Court discusses the clauses of agreement between the union and contractors. Contractors could
engage workers for the purpose of distributing milk and loading and unloading. There was limited
control in respect of setting the route, and removal of workers who misbehaved.

Here, it was established that these persons entered premises for the purpose of loading and
unloading milk. However, Court noted that mere entry in premises is not enough, there should be
work done in premises.

So the next consideration is whether they are in supervision of the principal employer. Court
discussed CESC Ltd. v. Subhash Chandra Bose, where Court found that it should be something
more than mere exercise of some remote or indirect control over the activities of the workers.
Consistency of vigil should be there.

Here, control was with the contractors only. There was only a minimum degree of control, which
the Court considered was inevitable in contracts of such nature. Also, contractor could not be
deemed to be an agent of the principal employer.

Therefore, these persons could not be said to be employees. Relationship is just contractual, and
is not a relationship of employment under ESI Act.

Now there are methods of digitally monitoring the route, etc. so that the principal employer retains
information as to the efficiency of the service. In such case, the test of supervision can be said to
be fulfilled. As anyways, for supervision, for simple tasks, supervision need not be detailed and
pervasive. Since the task of delivering items is fairly simple, even if high degree of supervision is
not exercised, it would suffice.

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Here, there can be controversy with respect to degree of control exercised by principal employer.
This is because deciding the routes, and hiring and firing the persons is not minimum degree of
control, but something more than that.

Also, generally as well, the suppliers of products do not specify the route for the delivery persons.
Some degree of independence is left to the delivery partners. But this is not the case here. In this
case, control was sought to be exercised by the Union in higher degree.

However, it can depend on the industry concerned also – since milk can spoil easily and there can
be pilferage or adulteration. The Court may have taken these factors into consideration to say that
this level of control is inevitable and not essential.

Merely visiting the premises to drop off the milk is not working in the premises.

Is the Court correct in holding that there was no control in this case? In Sir’s opinion, Court
shouldn’t have held that there must be “consistency of vigil” in case of a beneficial legislation,
which is meant for providing benefits to certain individuals.

22. ESIC V. VENUS ALLOYS PRIVATE LIMITED, 2019 SC.

Question was whether directors of the company who receive remuneration and carry out
activities come under the definition of employees under ESI Act.

Both parties rely on ESIC v. Apex Engineering Private Ltd., where it was held that although
directors are not employees, managing director is employee. Both parties interpret this case
differently. Venus alloys argued that since directors were not employees,

If remuneration for certain work done, then person should be covered under employee, irrespective
of director or not.

HC relied on Sakal Papers v. ESIC where it was held that directors are not employees.

ESIC argues that if remuneration is paid to a person for discharge of work, the remuneration would
be covered under wages and contribution would have to be made. The title of job does not matter,
what matters is the work done. Reliance in placed on Saraswath Films v. Regional Director, ESIC.

Venus Alloys argued that in Apex – director was engaged as managing director for remuneration
of Rs. 1000. Thus, he was given extra wages for additional duties. This is not the case here.

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Court refers Saraswath Films and observed that definition is of wide import and comprehensive
nature. In this case, even security guards were considered employees because of the work they
were doing.

In Apex, it was observed that a director can have dual capacity. If a person performs some
additional work that comes within ambit of employee, he would come within ambit of ESI
Act since he is a different person, even though he is a principal employer with regard to other
employees in the company.

Court observes this applies even strongly where the director is given remuneration for the duties
discharged. Here, persons were paid Rs. 3000 per month and they had to perform some duties.

Thus, Court observed the following:

1. Directors can be employees if they are assigned some duties and are given remuneration
for such performance.
2. Person can be in dual capacity – in relation to company, he can be employee, company
being a separate legal entity, and in relation to other employees, he can be an employer.
3. In case of a firm, since it is not a juristic person, the persons (partners) cannot be employees.

Thus, a director of a company, who had been receiving remuneration for discharge of duties
assigned to him, falls within the definition of employee under ESI Act.

23. TRANSPORT CORPORATION OF INDIA V. ESIC, 1999 SC

There is this undertaking whose head office is located in Secunderabad and there are multiple
offices across India. There is one such office in Bombay. But no notification has been issued to
cover the Bombay office under ESI. But the AP Government has issued a notification to cover the
head office in Secunderabad under the ESI.

The question is by virtue of the notification in Secunderabad, would all the offices in the rest
of the country also be covered under ESI Act?

The employer argues that this would amount to extraterritorial operation of the Act. Maharashtra
government should have issued a notification to cover the offices in Maharashtra under ESI. He
argues that only employees working in Secunderabad should be covered.

ESI argues that we must look at facts. Secunderabad office is the head office. The purpose is to
transport goods and services from one place to another. Loading and unloading. But at the same
time, Head office remains the Secunderabad. Bombay office remains under the direction and

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control of the Secunderabad office. Further, a power of attorney has been issued by the
Secunderabad office. People can get transport from Secunderabad office to other offices and from
other offices to Secunderabad. So, these are not separate establishments but are all connected.

Court held that the local offices are all just appendages of the principal office. They are doing the
work of the principal employer in different places across the country. That being the case, you
have to just show that there is a nexus and control. This test was also applied by Court in
Kirloskar and Hyderabad Asbestos cases.

Test is control by Principal employer- Just this test has to be applied

24. ROYAL WESTERN TURF CLUB V. ESI, 2016 SC

Whether casual workers if engaged perennially are covered under definition of employee as defined in Section
2(9) of the Employees State Insurance Act, 1948.

Sub-section (3) of S. 39 inter alia, deals with employer’s liability to pay both employer’s
contribution and the employee’s contribution where wages are payable to an employee for a
portion of the week. One of the circumstances when wages may be payable to an employee for
a portion of the week is that an employee is employed for less than a week, that is to say, a
casual employee. Thus Section 39(4) and Section 42(3) clearly envisage the case of casual
employees. In other words, it is the intention of the Legislature that the casual employees
should also be brought within the purview of the Act. It is true that a casual employee may not
be entitled to sickness benefit as pointed out in the case of Gnanambikai Mills (1974 Lab.IC
798)(Mad) (supra). But, in our opinion, that cannot be a ground for the view that the intention of
the Act is that casual employees should not be brought within the purview of the Act. Apart from
sickness benefit there are other benefits under the Act including disablement benefit to which
a casual employee will be entitled under Section 51 of the Act. Section 51 does not lay down
any benefit period or contribution period. There may again be cases when casual employees are
employed over the contribution period and, in such cases, they will be entitled to even the sickness
benefit. In the circumstances, we hold that casual employees come within the purview of the Act.
In Andhra Pradesh State Electricity Board v. Employees’ State Insurance Corporation, Hyderabad,
(1977) 1 LabLJ 54, Regional Director, ESIC, Bangalore v. Davangere Cotton Mills, (1977) 2
LabLJ 404, and Employees’ State Insurance Corporation, Chandigarh. v. Oswal Woollen Mills
Ltd., 1980 LabIC 1064, the Andhra Pradesh High Court, Karnataka High Court and the Punjab
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and Haryana High Court have rightly taken the view that casual employees are employees within
the meaning of the term “employee” as defined in Section 2(9) of the Act and, accordingly, come
within the purview of the Act.

In our opinion, the Turf Club is liable to make the contribution as per notification dated 18.9.1978
along with interest at such rate as provided in the Act and the Rules till the date of actual payment.

S. 53. Bar against receiving or recovery of compensation or damages under any

other law.
An insured person or his dependants shall not be entitled to receive or recover, whether
from the employer of the insured person or from any other person, any compensation or
damages under the Workmen's Compensation Act, 1923 or any other law for the time
being in force or otherwise, in respect of an employment injury sustained by the insured
person as an employee under this Act.

S. 61. Bar of benefits under other enactments

When a person is entitled to any of the benefits provided by this Act, he shall not be
entitled to receive any similar benefit admissible under the provisions of any other
enactment.

A Full Bench of the Kerala High Court held that there cannot be the intention of the State to restrict
benefits only under the ESI and benefits can be obtained under ESI, ECA as well as tort law.

Further, another Court held that individuals can claim compensation under ESI as well as MV Act.

25. WESTERN INDIA PLYWOOD LIMITED V. P. ASHOKAN, SC 1997.

The question is whether a person can claim damages on account of injuries suffered in course
of employment if he has already received benefits under ESI Act. Person was operating a
machine, got stuck, and his hand had to be amputated. He was allowed to continue work without
deduction of salary. He claimed contribution under ESI Act. Since injury arose in course of
employment, ESIC direct contribution to be paid by company which it did.

Apart from that, employee also wanted compensation for the injury suffered under tort. This
was opposed by the employer on ground of section 53 which provides for bar against receiving

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or recovery of compensation on damages under any other law – insured person cannot receive
any compensation or damages under ECA or any other law for the time being in force or otherwise,
in respect of employment injury sustained as an employee under ESI Act.

Section 61 provided bar of benefits under other enactments – when a person is entitled to any
of the benefits provide by ESI Act, he shall not be entitled to receive any similar benefit admissible
under the provisions of any other enactment.

Different Courts have taken a different stance in this regard. The Kerala HC in the present case
sets up a 3 Judge Bench to decide whether compensation can be claimed. HC states that section
53 and 61 do not bar an action by injured employee under tort. They may bar compensation
only under any legislation.

Appellant argued that ESI Act is a self-contained Code. Therefore, remedy must lie within the Act
itself, and any claim under any other legislation or any other law is debarred.

While respondent submitted Section 53 should be construed in such a way that an aggrieved
employee is able to receive adequate compensation on account of the injury which is sustained by
him. It was contended that the amount which was paid under the Employees Insurance Act could
not be regarded as an adequate measure of damages suffered by the respondent and, therefore,
Section 53 should not be construed in such a way as to prevent an employee from bringing about
an action in tort.

KS Vasanta v. KSRTC – workman was travelling to work on a transport provided by employer

and suffered injury due to accident. Court held that section 53 amounted as a bar to any claim by
insured under any other law or the ECA. This was argued by the appellants.

Respondents relied on HAL v. P Venn Perumal – since right to sue under MVA originates from
substantive law of tort law and not an enactment, therefore section 61 is not a bar.

However, Court notes that even though section 61 may not bar, section 53 provides ‘any other
law’. The position is clear after A Trehan v. Associated Electrical Agencies – person suffered
injuries on face and he lost vision under left eye. He filed claim under ESI Act for 7 lakhs as well
as under ECA and tort law. Commissioner relied on the Kerala HC decision observing that
legislature could not have intended to create a bar on claiming more advantageous benefit under
the ECA. However, the Division Bench of HC observed:

“The bar under section 53 is absolute as can be seen from the use of the words shall not be entitled
to receive or recover, "whether from otherwise the employer of the insured person or from any
other person", "any compensation or damages" and "under the Workmen's Compensation Act,

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1923 (8 of 1923), or any other law for the time being in force The words "employed by the
legislature" are clear and unequivocal. When such a bar is created in clear and express terms it
would neither be permissible nor proper to infer a different intention by referring to the previous
history of the legislation. That would amount to bypassing the bar and defeating the object of the
provision. In view of the clear language of the section we find no justification in interpreting or or
construing it as not taking away the right of the workmen who is an insured person and an
employee under the Employees Insurance Act to claim compensation under the Workmen's
Compensation Act. We are of the opinion that the High Court was right in holding that in view of
the bar created by Section 53 the application for compensation filed by the appellant under the
Workmen's Compensation Act was not maintainable.”

(IMP) In the present case, the Court went on further to note that not just any Act, but also the tort
law does not become applicable. Section 53 disentitles an employee who has suffered an
employment injury from receiving or recovering compensation or damages under the ECA or any
other law for the time being in force or otherwise.

(IMP) The use of the expression "or otherwise" would clearly indicate that this section is not
limited to ousting the relief claimed only under any statute but the wordings of the section are such
that an insured person would not be entitled to make a claim in torts which has the force of law
under the Employees Insurance Act. Even though the Employees Insurance Act is a beneficial
legislation the Legislature had thought it fit to prohibit an insured person from receiving or
recovering compensation or damages under any other law, including torts, in cases where the
injury had been sustained by him is an employment injury.

Although this is a beneficial legislation, but the bar is created with a clear intention that employers
do not have to defend against multiple suits under multiple jurisdictions.

Thus, the appeal was allowed.

Whether getting compensation under ESI would bar you from obtaining compensation from any
other person (including the State, when it grants ex gratia compensation)?

Project topic- Can I claim insurance against a private insurance company despite insurance
under the ESI Act- Refer to Tata AIG Avtar case; also consider the scenario where I want
to claim insurance for hospital expenses incurred in recovery from a private hospital.

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(Whether only ESI Hospital should be involved for obtaining insurance from ESI fund or
any private hospital)

26. DHROPADABAI V. TECHNOCRAFT TOOLINGS, 2015 SC.

Legislature has placed limits on the legislations compensation can be claimed. This case further
clarifies it.

Here, employee suffered injury, claimed compensation under 1923 Act, claim is denied, and
he moved to Labour Court. Employer took two arguments – first, since he was a person covered
under ESI Act, he should not be covered under ECA. Second, accident

Jyoti Ademma case – compensation under ECA shouldn’t be denied just because remedy is
available under ESI Act. Labour court decided based on this and allowed compensation.

While HC relied on A. Trehan and said that section 53 and 61 acts as a bar. Here, Court discussed
that ESI Act provides for more coverage and wider remedies. Only 1 difference between ESI and
ECA is that in ECA, there is lump sum amount, and in ESI, there is periodic payment. However,
the legislative wisdom in this regard cannot be doubted. Court said that compensation can be only
claimed under ESI Act.

Thus, the SC held that once an employee is an “insured person” under Section 2(14) of the
1948 Act, neither he nor his dependents would be entitled to get any compensation or
damages from the employer under the 1923 Act.

Court again applies the decision of A. Trehan and Section 53 and 61 acts as a clear bar. ESI is a
later legislation and a more comprehensive one. Choice taken away from the employee’s side.

Section 46 provides the benefits.

Whether benefits of hospitals to persons are gratuitous in nature or whether if there are any
deficiencies in service, compensation can be claimed under the Act. Also, whether such a case
would fall before consumer forum, or before the ESI Court under its powers under section 75.

27. TATA AIG GENERAL INSURANCE COMPANY LTD. V. RAM AVTAR, 2017 PUNJAB
AND HARYANA HC (S. 53 AND 61 OF ESI ACT- IMP)

Person left work around 10.30 at night and going back home. An auto drives over and he passes
away while he is on his way home. His father claimed compensation in MV Act and the ESI
Act.

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It is argued by insurance company that ESI Court has already given some compensation, therefore
a bar is created by section 53. The section requires that a person should be insured, and he cannot
claim compensation from any other law. There must be an employer employee relationship and an
employment injury.

Lower Court says that since compensation is claimed already under ESI Act, therefore that amount
would be deducted.

High Court says that there are 3 reasons why the compensation can be given. One can be that
this was not arising out of the course of employment. Second was that compensation was claimed
from the insurance company, hence it is not an employer employee relationship. Third was that
the benefits under ESI and MVA are entirely different. Compensation under MVA is much wider
than ESI Act.

First argument is that any person has to be understood as persons to whom the ESI Act is
applicable. ESI Act governs relationship of employer and employees, and not a person as
compared to the world at large. Thus, the intent of legislation has to be looked at.

Second, the benefits, as per section 61, would not apply if better benefits are available under
any other Act.

Third, injury suffered must be an employment injury, and here, no pleadings or evidence is given
by insurance company to say that it is an employment injury. However, this ground is questionable
because section 51E deems all such injuries as employment injuries.

Court says that the difference in language means something as legislature has drafted section 53
and 61 in a different manner. Section 53 has to be read in a narrow manner, and would be limited
to employment injuries, in the course of employment, and between employer and employee.

Section 167 of MVA says that if any remedy is available under ECA, then either remedy under
ECA or MVA can be claimed but not under both. However, the legislature has deliberately not
referred to ESI Act. This means that remedy under both MVA and ESI can be claimed.

(IMP) Court observed: the bar against claiming compensation from anywhere else is contemplated
only if the injured/deceased sustained the injuries as an employee under this Act. This would show
that the bar created by Section 53 of the Act would be only regarding any other any other
subsequent compensation, if claimed, by the injured or the dependents; in the capacity of
injured/deceased being an employee under the ESI Act. This would mean that it is not the claim
of compensation under Motor Vehicles Act which would be excluded by Section 53 of the Act,
rather, it would be any other compensation, if claimed, under any other Act having provisions for

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similar compensation for the employees as defined under the ESI Act. This means that Section 53
of the Act only bars receipt of compensation from the employer or any other person under any
other labour law which might be providing compensations for the employees/workmen. This is
also clarified by the provision of Section 61 of the Act; which specifically says that once a person
is provided benefit under the ESI Act, he shall not be entitled to receive any 'similar benefits'
admissible under the provisions of any other enactment. Giving any other unrestricted
interpretation to the provisions of Section 53 of the Act would render the Section 61 of the Act as
superfluous.

Hence, read with Section 61 of the Act, Section 53 can be interpreted to prohibit only a second
claim of similar compensation in his capacity as employee from the employer or from any person
required to compensate such an injured person/dependent in his capacity as an employee under the
ESI Act. Since there is no commonality between the benefits available under Motor Vehicles Act
and under the provisions of ESI Act, therefor, the provisions of two Acts cannot be mixed up to
deny compensation to a person under Motor Vehicle Act.

At the end, Court allows compensation under MVA and reduces the compensation under ESI Act.

For an “employment injury”, it is important to establish a nexus between circumstances, time and
place.

Here, the problem is that this seems to be an employment injury. But Court says that this is not an
“employment injury”. Secondly, if there is no employer and employee relationship and no
employment injury, why is compensation under ESI Act being given at all. Court seems to be
taking a more relaxed approach instead of asking the person to return the compensation under ESI
Act, because of the beneficial nature of legislations.

In another case, employees are working in a factory, a private vehicle comes, and employees were
injured while loading and unloading. Here, Court held that this is not an employment injury. This
is also problematic as it is the employer’s responsibility for ensuring safety of the workmen. Also,
section 51A creates a presumption in favour of accident arising in course of employment.

ESI Act has more relaxed provisions for determining whether an “employment injury” has
occurred in comparison to ECA Act. ESI has a number of deeming provisions.

Amount under MV Act is much higher compared to the ESI Act. Amount under MV is a one-time
payment.

MV Act- compensation claimed against a stranger. ESI Act- compensation claimed against
employer.

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A conjoint reading of S. 53 and 61 reveals that the bar is against claiming similar compensation
against employer under ESI Act or any other labour legislations.

This judgement was quoted with approval by the Delhi HC in the case of United India Insurance
v. Vipin Kumar- Read this.

28. UNITED INSURANCE V. VANEETA (READ THIS JUDGEMENT)

Truck came into the factory and hit the person. Person was granted compensation under the ESI
Act. Question is whether the person can claim compensation against the stranger as well. For a
claim to be initiated under MV Act as well as the ESI Act, three conditions must be satisfied
(primarily on the basis of interpretation of Tata AIG)

1. Accident must have taken place in a public place.

2. It must not be an employment injury though in the workplace.
3. It must be against a third party.

Problem with this judgement: Even though it was not an employment injury, compensation was
given to the dependants under the ESI Act. But the Court did not go into this.

Public Place- If it takes place in the place of employment.

These types of cases are very judge-dependent. Depends on how they analyse the facts and whether
nexus between time, circumstances and place is established.

29. NATIONAL INSURANCE COMPANY V. SAROJ, 2019 PUNJAB AND HARYANA HC

Person met with an accident while he was travelling to his place of work.

13. A plain reading of the aforesaid extract from para 8 of the judgment leaves no manner of doubt
that a workman is not in the course of his employment from the moment he leaves his home and
is on his way to 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 with him.

14. In the case at hand, the injured victim (claimant) was on a public road i.e., a public place,
therefore, 1 do not accept contention of the Company that he sustained injuries in the course of

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employment to oust jurisdiction of the Tribunal under the Act to entertain an application for grant
of compensation. This apart, the Act contains provisions to grant compensation even in cases of
"no fault liability" and in "hit and run" motor accidents. There is no provision in the Act which
excludes the jurisdiction of the Tribunal to grant compensation if the injured/victim happens to be
an employee covered within the purview of the 1948 Act.

When the facts and circumstances of the present case are examined in the light of

judgment Tilak Raj and others' case (supra) as well as provisions of Section 51E of the

ESI Act, I find it difficult to accept contention of the insurance company that injury

sustained by the victim was an employment injury, therefore, the provisions of the ESI

Act can be invoked to create bar under Section 53 of the ESI Act. That being so, the

question with regard to maintainability of claim against a third party for tortious liability

but in regard to employment injury would be examined in detail, in an appropriate case.

In this view of the matter, the principal contention raise by the insurance company is

not tenable and accordingly rejected.

14. To be fair to the insurance company, counsel has also sought to contest entitlement

of the claimants on the premise that they filed an application for grant of benefits under

the ESI Act and the ESI Corporation accepted their claim and awarded a sum of Rs.

60,000/- in lump sum and benefit of monthly pension. The mere fact that the claimants

filed an application for grant of benefit under the ESI Act or the same was allowed by

the Corporation would not create estoppel as injury sustained by the deceased was not

an employment injury, in view of findings recorded hereinbefore. If the claimants have

received any benefit under the ESI Act on a wrongful assumption and they are otherwise

not entitle to said benefit, the claimants may refund the amount to the ESI Corporation

or the Corporation may initiate proceedings for recovery, if so permitted in law.

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S. 52 of the ESI Act- dealing with “dependent’s benefit”. Not all the dependents will get benefits
equally.

Definition of “dependant” is in the context of S. 52. Definition of “family” is in the context of S.

56.

“dependant” defined under S. 2(6A) of the ESI Act.

“Family” defined under S. 2(11) of the ESI Act.

“Occupational Disease”- Just like the ECA Act, the ESI also provides for occupational disease
under S. 52A.

If something is added to the ECA Schedule but not to the ESI, it will be automatically presumed
that it will be added to the schedule for the ESI Act.

S. 54- A medical board shall be created to determine whether:

(a) whether the relevant accident has resulted in permanent disablement; or

(b) whether the extent of loss of earning capacity can be assessed provisionally or
finally; or
(c) whether the assessment of the proportion of the loss of earning capacity is
provisional or final; or
(d) in the case of provisional assessment, as to the period for which such assessment
shall hold good.

S. 55- Any decision under this Act of a medical board or a medical appeal tribunal may be
reviewed at any time by the medical board or the medical appeal tribunal, as the case may
be, if it is satisfied by fresh evidence that the decision was given in consequence of the
non-disclosure or mis-representation by the employee or any other person of a material
fact (whether the non-disclosure or misrepresentation was or was not fraudulent).

S. 55A Review of Dependant’s Benefit

(1) Any decision awarding dependants' benefit under this Act may be reviewed at any
time by the Corporation if it is satisfied by fresh evidence that the decision was given in
consequence of non-disclosure or misrepresentation by the claimant or any other person

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of a material fact (whether the non-disclosure or misrepresentation was or was not
fraudulent) or that the decision is no longer in accordance with this Act due to any birth
or death or due to the marriage, re-marriage or cesser of infirmity of, or attainment of the
age of eighteen years by, a claimant.

Benefits under the ECA are broader in comparison to the ESI. ESI gives you compensation only in
case of an accident which results in an injury.

S. 56. Medical Benefit

Set up of Special Hospitals by ESI.

S. 56-59B- Provisions relating to Medical Aid. Interesting study with respect to Federalism.

S. 60- Benefit is not assignable or attachable.

S. 65- Benefits not to be combined

If I am unwell, do I get a sickness benefit or disablement benefit?

If I am pregnant and I am suffering a sickness which is linked to the pregnancy, then should I get a
maternity benefit or a sickness benefit?

It depends on my choice. I can choose only one benefit; not both.

S. 68. Corporation's rights where a principal employer fails or neglects to pay any contribution.

S. 69. Liability of owner or occupier of factories, etc. for excessive sickness benefit- Very
Interesting Section.
If there are unsanitary conditions or proper health standards are not being maintained and because of
that, lot of sickness is happening, then the person so required to maintain the factory will be required
pay to excess compensation.
This is a provision which is used to ensure that the principal employer actually maintains proper
sanitary standards.

S. 58(4)

S. 72, 73- IMP

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S. 74, 75- Establishment of ESI Courts and Jurisdiction of ESI Courts.

30. KISHORE LAL V. CHAIRMAN, ESIC, 2007 SC.

Appellant’s wife is admitted to ESI dispensary for treatment. Condition keeps on getting worse.
The person claims deficiency in services provided. He admits her to private clinic. It is found
that the initial diagnosis itself was wrong, and condition worsened because of incorrect medication
in the ESI hospital.

He files a case before consumer forum for deficiency in services under the Consumer Protection
Act. A preliminary objection is filed at this point on the ground that since it is a government
dispensary, complainant cannot be treated as consumer. Also, facility of medical treatment in
government hospital cannot be regarded as service hired for consideration. Since services are
gratuitous, no complaint would lie.

Two imp questions which the Court addresses:

1. Whether the service rendered by the ESI hospital is gratuitous in nature?

2. Whether Consumer courts have jurisdiction in light of S. 75 of the ESI Act?

1. Court held that Service rendered in the hospital to the insured person or his family member for
medical treatment is not free, in the sense that the expense incurred for the service rendered in
the hospital would be borne from the contributions made to the insurance scheme by the
employer and the employee and, therefore, the principle enunciated in conclusion No. (11) in
para 55 in the case of Indian Medical Association (supra) will squarely apply to the facts of
the present case, where the appellant has availed the services under the insurance policy which
is compulsory under the statute. Wherever the charges for medical treatment are borne under
the insurance policy, it would be a service rendered within the ambit of Section 2(1)(o) of the
CP Act. It cannot be said to be a free service rendered by the ESI hospital/dispensary.

The service rendered by the medical practitioners of hospitals/nursing homes run by the ESI
Corporation cannot be regarded as a service rendered free of charge. The person availing of such
service under an insurance scheme of medical care, whereunder the charges for consultation,
diagnosis and medical treatment are borne by the insurer, such service would fall within the ambit
of `service' as defined in Section 2(1)(o) of the CP Act. We are of the opinion that the service
provided by the ESI hospital/dispensary falls within the ambit of `service' as defined in Section

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2(1)(o) of the CP Act. ESI scheme is an insurance scheme and it contributes for the service
rendered by the ESI hospitals/dispensaries, of medical care in its hospitals/dispensaries, and as
such service given in the ESI hospitals/dispensaries to a member of the Scheme or his family
cannot be treated as gratuitous.

2. A bare perusal of the provisions of clauses (a) to (g) of Section 75(1) clearly shows that it does
not include claim for damages for medical negligence, like the present case which we are
dealing with. Although the question does not directly arise before us, we shall consider what
in the ordinary course shall constitute negligence.

The claimant has to satisfy ingredients of medical negligence before he can claim damages for
medical negligence of the doctors and that could not be a question which could be adjudicated
upon by the Employees' Insurance Courts which have been given specific powers of the issues,
which they can adjudicate and decide. Claim for damages for negligence of the doctors or the
ESI hospital/dispensary is clearly beyond the jurisdictional power of the Employees' Insurance
Court. An Employees' Insurance Court has jurisdiction to decide certain claims which fall
under sub-section (2) of Section 75 of the ESI Act. A bare reading of Section 75(2) also does
not indicate, in any manner, that the claim for damages for negligence would fall within the
purview of the decisions being made by the Employees' Insurance Court.

Court was of the view that the appellant is a consumer within the ambit of Section 2(1)(d) of the
Consumer Protection Act, 1986 and the medical service rendered in the ESI hospital/dispensary
by the respondent Corporation falls within the ambit of Section 2(1)(o) of the Consumer Protection
Act and, therefore, the consumer forum has jurisdiction to adjudicate upon the case of the
appellant. We further hold that the jurisdiction of the consumer forum is not ousted by virtue of
sub-section (1) or (2) or (3) of Section 75 of the Employees' State Insurance Act, 1948.

31. IMA V. VP SHANTHA CASE

In IMA case, Court divided services into 3 parts – the main part, the inclusionary part and the
exclusionary part. Court then discussed distinction between contract of service and contract for
service. In case service is rendered at government hospital for no charge, it would not be a
service. If such service in government hospital is in exchange for fees, then it would be
considered service.

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If a patient or his relation availed of the service of a medical practitioner or hospital/nursing home
where the charges for consultation, diagnosis and medical treatment are borne by the insurance
company, then such service would fall within the ambit of service.

(IMP) Similarly, where as a part of the conditions of service the employer bears the expenses of
medical treatment of an employee and his family members dependent on him, then the service
rendered by a medical practitioner or a hospital/nursing home would not be treated to be free of
charge and would constitute service.

Court looks at Laxman Kotgiri v. GM Central Railway – an employee of railway filed complaint
that his wife was negligently treated. For family of railway employees, medical services are
provided free of charge, as burden is borne by the government.

Court observes that under section 38 of the ESI Act, contribution is required to be made
mandatorily. Corporation is required to establish and maintain hospitals as a service, and service
is not free of charge, as it is provided from the contributions made by employer and employees.
Therefore, conclusion 11 of IMA applies and this would be considered as charge borne by
insurance company.

Another argument is raised regarding jurisdiction. Section 74 discusses constitution of Employees

Insurance Court and 75 discusses matters to be decide by Employees Insurance Court. Question is
whether section 74 and 75 oust the jurisdiction of consumer forum. Court discusses section
75(1)(e) which gives power to the Employees Insurance Court to adjudicate upon the dispute of
the right of any person to any benefit and as to the amount and duration thereof. This is relied upon
by respondent to oust jurisdiction of Consumer Forum.

Court discusses various cases. Spring Meadows v. Harjot Ahluwalia – CPA creates a framework
for speedy disposal of consumer disputes and an attempt has been made to remove the existing
evils of the ordinary court system. The Act. being a beneficial legislation should receive a liberal
construction.

(IMP) Thus, unless an express prohibition ousting jurisdiction of Consumer Forum, its
jurisdiction would be there.

In section 75, only a right is given to the ESI Court. While here, the question is of negligence.
Court finds that such adjudication cannot be done by ESI Court, and it would be beyond its powers.
Therefore, Consumer forum would have jurisdiction.

Also, section 75(3) bars jurisdiction of civil court, and not consumer forum.

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Therefore, Court allowed the appeal holding the appellant as consumer and medical
treatment as service under CPA.

IMP Provisions of the ESI Act

Section 46 provides the benefits available under ESI Act.

In ECA, lump sum amount is given, while in ESI Act, periodic payments are given.

Difference between ECA and ESI as to Chapter IV social security code.

ESI is notified at district level. Therefore, there are various territories where the ESI Act is not
applicable. The Social Security Code seeks to do away with this district wise coverage, and to
ensure country wide coverage.

Difference in the scope of employment injury – because of deeming provisions in section 51A to
51E in ESI Act, thereby expanding scope of ESI Act.

However, even in the Social Security Code, instead of having one single social security scheme,
different categories are involved. Thus, the problem still remains. Also, the coverage is not
widened because the threshold of number of employees still exists. Also, the wage limit for
different Acts is different. For wage ceiling, there is ceiling of 21,000 in ESI Act as well as ECA,
but it is different in Employees Provident Fund Act (15,000).

Generally, sickness arising out of pregnancy is included within maternity benefits. However, in
case a person falls sick during pregnancy, and is entitled to claim both sickness and maternity
benefit, as per section 65, the person is entitled to choose which benefit she shall receive.

In the social security code, section 2(26) defines employee and the definition is same as the
Industrial Disputes Act. Definition is sought to be kept uniform for all Acts to ensure ease of doing
business and easing compliances. As otherwise, at least 15-20 Acts are applicable to a single
establishment.

(7) Notwithstanding anything contained in sub-section (4), where it appears to the Director General
of the Corporation, whether on an application made to him by the employer of an establishment or
otherwise, that the employer and majority of employees of that establishment have agreed that the
provisions of Chapter IV should be made applicable to that establishment, the Director General of
the Corporation, may, by notification, apply the provisions of the said Chapter to that establishment
on and from the date of such agreement or from any subsequent date specified in the agreement.

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Provided that where the employer of an establishment to which the provisions of Chapter IV
applied under this sub-section desires to come out of such applicability, he may make an
application to the Director General of the Corporation and Director General of the Corporation
shall, if satisfied that there is an agreement between the employer and majority of the employees
to this effect, make the provisions of that Chapter inapplicable to such establishment, in such
manner and subject to such conditions as may be prescribed by the Central Government.

In establishment under the Code, threshold of employees is reduced to 10.

Chapter IV of the Code is ESIC. Even if the establishment does not fulfil the numeric threshold,
the establishment can write to the Director and make the ESI applicable. Also, there is now an
option to opt out of the requirements of ESI Act.

Chapter VII is Employees Compensation. One change is in compensation in case of occupational

diseases. Earlier, there were three – first, when joining, second, within 6 months, and third, as
notified. Now, there are only two categories. Section 74(3) is relevant here.

Section 51E ESI Act deeming provision is brought in Employees Compensation Act as well.
Section 74(4) provides that an accident occurring to an employee while commuting from his
residence to the place of employment for duty or from the place of employment to his residence
after performing duty, shall be deemed to have arisen out of and in the course of employment if
nexus between the circumstances, time and place in which the accident occurred and his
employment is established.

Section 75 – a specific provision for compensation in case of collapse of houses of plantation

workers is provided. The standing committee report does not mention any reason for why this
provision was needed for plantation workers.

Changes from general perspective, and changes from due diligence perspective between ESI, ECA
and Social Security Code.

In the Schedule, provision has been made to include lift threatening industries within ambit of ESI,
even if they do not fulfil numeric threshold.

Grandparent has been added as dependant.

Also, in the waterfall mechanism, priority is given as per section 151(3).

In terms of arrears of land revenues, section 42. Notwithstanding anything contained in any other
law for the time being in force, any amount due under the Chapters referred to in sub-section (1)

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shall be the charge on the assets of the establishment to which it relates and shall be paid in priority
in accordance with the provisions of the Insolvency and Bankruptcy Code, 2016.

Section 76

Institution of proceedings, etc.

(1) Subject to the provisions of this Act and any rules made by the State Government,
all proceedings before the Employees' Insurance Court shall be instituted in the Court
appointed for the local area in which the insured person was working at the time the
question or dispute arose.
(2) If the Court is satisfied that any matter arising out of any proceeding, pending
before it can be more conveniently dealt with by any other Employees Insurance Court in
the same State, it may, subject to any rules made by the State Government in this behalf,
order such matter to be transferred to such other Court for disposal and shall forthwith
transmit to such other Court the records connected with that matter.
(3) The State Government may transfer any matter pending before any Employees'
Insurance Court in the State to any such Court in another State with the consent of the
State Government of that State.
(4) The Court to which any matter is transferred under sub-section(2) or sub-section (3) shall
continue the proceedings as if they had been originally instituted in it.
Section 77- Commencement of proceedings before the ESI Court.

Section 93A. Liability in case of transfer of establishment- V IMP for Due diligence in case
of mergers; not very important for a Banking and Financing Transaction
Where an employer, in relation to a factory or establishment transfers that factory or
establishment in whole or in part, by sale, gift, lease or licence or in any other manner
whatsoever, the employer and the person to whom the factory or establishment is so
transferred shall jointly and severally be liable to pay the amount due in respect of any
contribution or any other amount payable under this Act in respect of the periods up to
the date of such transfer:
PROVIDED that the liability of the transferee shall be limited to the value of the assets
obtained by him by such transfer.

Section 94. Contributions, etc., due to Corporation to have priority over other debts.

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 III. CODE OF SOCIAL SECURITY

The ESI Act now applies to establishments.

S. 28 of the Code- (1) Subject to the provisions of this Code, every employee in an establishment
to which this Chapter applies shall be insured in such manner whether electronically or
otherwise, as may be prescribed by the Central Government.

(2) An employee whether insured or insurable under sub-section (1) in respect of

whom contributions are or were payable and who is by reason thereof, entitled to any of
the benefits provided under this Chapter, shall be called "Insured Person".

1st Schedule of the Code provides the applicability of the ESI Legislation.

Every establishment in which ten or more persons are Corporation employed other than a
seasonal factory:
Provided that Chapter IV shall also be applicable to an establishment, which carries on such
hazardous or life-threatening occupation as notified by the Central Government, in which
even a single employee is employed (This broadens the scope of the ESI Act)

Provided further that an employer of a plantation, may opt the application of Chapter IV in
respect of the plantation by giving willingness to the corporation, where the benefits available to
the employees under that Chapter are better than what the employer is providing to them:

Provided also that the contribution from the employers and employees of an establishment shall
be payable under section 29 on and from the date on which any benefits under Chapter IV
relating to the Employees State Insurance Corporation are provided by the Corporation to the
employees of the establishment and such date shall be notified by the Central Government.

But under the Code, the definition of an “employee” for the purpose of the ESI Act gets further
narrowed down:
"employee" means any person (other than an apprentice engaged under the Apprentices Act,
1961) employed on wages by an establishment, either directly or through a contractor, to do any
skilled, semi-skilled or unskilled, manual, operational, supervisory managerial, administrative,
technical, clerical or any other work, whether the terms of employment be express or implied,
and also includes a person declared to be an employee by the appropriate Government, but does
not include any member of the Armed Forces of the Union:

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Provided for the purpose of Chapter IV, the term "employee" shall mean such employee
drawing wages less than or equal to the wage ceiling notified by the Central Government
and includes such other persons or class of persons as the Central Government may by
notification, specify to be employee, for the purposes of those Chapters:

Provided further that for the purposes of counting of employees for the coverage of
an establishment under Chapter III and Chapter IV, as the case may be, the employees,
whose wages are more than the wage ceiling so notified by the Central Government, shall
also be taken into account:

Whether the definition of “employee” under the Code of Social Security is narrower in comparison
to the definition given in the ESI Act- Find out.

Section 1(7) of the Code of Social Security- Notwithstanding anything contained in sub-section
(4), where it appears to the Director General of the Corporation, whether on an application
made to him by the employer of an establishment or otherwise, that the employer and
majority of employees of that establishment have agreed that the provisions of Chapter IV
should be made applicable to that establishment, the Director General of the Corporation,
may, by notification, apply the provisions of the said Chapter to that establishment on and
from the date of such agreement or from any subsequent date specified in the agreement:

Rule of thumb- 10 people minimum; must be there for the ESI Act must be applied.
However, S. 1(7) provides for a rule of voluntary coverage, whereby upon an agreement between
employer and majority of employees of that establishment, the ESI Act would apply even in case
less than 10 people are employed.

Project topic- Challenging the right to social security in Social Security in SC. Challenged by
taxi drivers. Challenging the government to provide social security benefits by informal
unorganised sector.

Under the Code of Social Security, the definition of “factories” has also been changed.
"factory" means any premises including the precincts thereof—
(a) whereon ten or more employees are working, or were working on any day
of the preceding twelve months, and in any part of which a manufacturing process is
being carried on with the aid of power, or is ordinarily so carried on, or
(b) whereon twenty or more employees are working, or were working on any

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day of the preceding twelve months, and in any part of which a manufacturing process
is being carried on without the aid of power, or is ordinarily so carried on,
but does not include a mine, or a mobile unit belonging to the Armed Forces of the Union,
railways running shed or a hotel, restaurant or eating place.
Most of the other provisions for the purposes of the ESI Act remain unchanged.

Further, the First Schedule provides that, Subject to the provisions of the Second Schedule, the
ECA Act applies to the employers and employees to whom Chapter IV (ESI Act) does not apply.

Sir’s observations: If your objective is to simplify the provisions and increase the ease of
business, why are you making it so complicated to determine who is covered and who is not
covered.
Sir- The provisions of the ECA itself are very complicated.

Section 74 of the Code of Social Security- Employer’s liability for compensation under the
ECA Act.
Section 74(2)- Deeming fiction applicable to a certain extent.
An accident or an occupational disease referred to in sub-section (1) shall be
deemed to arise out of and in the course of an employee's employment notwithstanding
that he is at the time of the accident or at the time of contracting the occupational disease,
referred to in that sub-section, acting in contravention of the provisions of any law applicable
to him, or of any orders given by or on behalf of his employer or that he is acting without
instructions from his employer, if—
(a) such accident or contracting of such occupational disease would have been
deemed so to have arisen had the act not been done in contravention as aforesaid or
without instructions from his employer, as the case may be; and
(b) the act is done for the purpose of, and in connection with, the employer's
trade or business.

However, the new provision seems to weaken the protection under the ECA Act. Better thing
would be to consolidate the scheme for protection both under the ECA and the ESI Act.
The problem is that it wanted to appease both the employer and employees and as a result, it
seems to have appeased no one.

Politics of Labour Reforms in India- lot of articles on this issue written by Professor KR Shyam
Sundar

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(Optional case)

32. ESIC V. C.C. SANTHAKUMAR, SC 2006

(S. 45- orders passed by ECI Corporation; S. 75 and 77(1A)- order passed by ESI Court; no
connecting link between Chapter IV and VI)

In the present case, the controversy centres on the proviso to Clause (b) of Section 77(1A). The
crucial question is, "Does the proviso to Clause (b) of Section 77(1A) fix the limit of time, in
which the Corporation can make a claim from the employer, on the basis of the orders passed
under Section 45?" Section 45A is a part of Chapter IV. Section 77(1A)(b) proviso is contained
in Chapter VI. The question is whether there is any connecting link between Chapter IV and
Chapter VI.

11. A reading of Chapter IV, as a whole, makes it clear that there is no limitation prescribed.
Section 38 imposes the obligation on the employer to pay contribution and, upon his failure, he is
liable to pay interest on a recurring basis until it is paid. Section 40 imposes an obligation to pay
on the principal employer in the first instance. This means, even if the employees were those of
the contractors, it is the principal employer who has to pay. Section 44 mandates the employer to
furnish proper returns so that the Corporation can scrutinize, assess and pass an order for a
claim. Section 44 does not provide for any limitation and, originally, it did not prescribe any mode
of recovery. Therefore, Act 44 of 1966 was introduced. this Act, Sections 45A and 45B were
brought into force. Thereafter Sections 45-C to 45-I were introduced, prescribing the mode of
recovery. The apparent purpose of introduction of these Sections is to curb default by the
employers and also to provide for an efficient method of recovery without any delay.

12. Section 45A provides for determination of contributions in certain cases. When the records are
not produced by the establishment before the Corporation and when there is no cooperation, the
Corporation has got the power to make assessment and determine the amount under Section 45A
and recover the said amount as arrears of land revenue under Section 45B of the Act.

When there is a failure in production of records and when there is no cooperation, the Corporation
can determine the amount and recover the same as arrears of land revenue under Section 45B. But,
on the other hand, if the records are produced and if there is cooperation, the assessment has to be
made and it can be used as a sufficient proof of the claim of the Corporation under Section 75
before the E.S.I. Court. So, the limitation of three years for filing an application before the Court,

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introduced by Act 44 of 1966, can only relate to the application under Section 75 read with 77(1A).
The order under Section 45A need not be executed by the Corporation before the E.S.I. Court
under Section 77. As such, the amendment to Section 77(1A)(b) proviso by Act 29 of 1989
providing five year limitation has no relevance so far as orders passed by the Corporation under
Section 45A are concerned.

14. Prior to the incorporation of Section 45A under Act 44 of 1966, the only resort available to the
Corporation was Section 75, for recovery of contribution through the Court. Since this procedure
was found to be impracticable and delayed process involved, a special provision was contemplated
whereunder adjudication is to be made by the Corporation itself. By reason of incorporation of
Section 45A with effect from 17.06.1967, it became possible for the Corporation to have
determination of the question, binding on the principal employer, without resorting to the E.S.I.
Court. In regard to the order under Section 45A, the same is enforced, as envisaged under Section
45B, which was similarly brought into the Act, by which the contribution may be recovered as
arrears of land revenue. With regard to the decision reached by the E.S.I. Court in the application
under Section 75, the said decision is enforced, as envisaged in Sub-section (4) of Section 75 as if
it is a Civil Court. The mode of recovery under Section 45B of the Corporation and the mode of
recovery as per Section 75(4) by the E.S.I. Court as the Civil Court are entirely different as both
Sections 45 and 75 operate in different spheres.

On a plain reading of Sections 45A and 45B in Chapter IV and 75 and 77 in Chapter VI of the Act,
as indicated above, there cannot be any doubt that the area and the scope and ambit of Sections
45A and 75 are quite different.

19. If the period of limitation, prescribed under proviso (b) of Section 77(1A) is read into the
provisions of Section 45A, it would defeat the very purpose of enacting Sections 45A and 45B.
The prescription of limitation under Section 77(IA)(b) of the Act has not been made applicable to
the adjudication proceedings under Section 45A by the legislature, since such a restriction would
restrict the right of the Corporation to determine the claims under Section 45A and the right of
recovery under Section 45B and, further, it would give a benefit to an unscrupulous employer. The
period of five years, fixed under Regulation 32(2) of the Regulations, is with regard to maintenance
of registers of workmen and the same cannot take away the right of the Corporation to adjudicate,
determine and fix the liability of the employer under Section 45A of the Act, in respect of the claim
other than those found in the register of workmen, maintained and filed in terms of the Regulations.

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Suppose, the employer fires me, and subsequently, after I leave the job, I develop an illness which
is attributable to the occupational hazards, can I claim benefits?

(Optional case) Consumer Education and Research Centre v. Union of India, SC 1995 (Right to
health, medical aid to protect health of works is FR under Art. 21)

Even of you leave the service, there should be some element of benefit which should be given to
you. Workers have a Fundamental right to health, safety in the workplace. So, for employments
which are hazardous like chemicals and sewage, you can claim compensation even if the service
is terminated.

Case concerns asbestos industry and health and safety issues associated with it for the workers.
Court holds right to heath, medical aid to protect the health and vigour of workers as a fundamental
right under Article 21. But it is a fundamental right only for workers. Thus, the Court imposes
some limitations on the right as well.

26. The right to health to a worker is an integral facet of meaningful right to life to have not only
a meaningful existence but also robust health and vigour without which worker would lead life
of misery. Lack of health denudes his livelihood. Compelling economic necessity to work in an
industry exposed to health hazards due to indigence to bread-winning for himself and his
dependents, should not be at the cost of the health and vigour of the workman. Facilities and
opportunities, as enjoined in Article 38, should be provided to protect the health of the workman.
Provision for medical test and treatment invigorates the health of the worker for higher
production or efficient service. Continued treatment, while in service or after retirement is a
moral, legal and constitutional concomitant duty of the employer and the State. Therefore, it
must be held that the right to health and medical care is a fundamental
right under Article 21 read with Articles 39(c), 41 and 43 of the Constitution and make the life of
the workman meaningful and purposeful with dignity of person.

The State, be Union or State government or an industry, public or private, is enjoined to take all
such action which will promote health, strength and vigour of the workman during the period of
employment and leisure and health even after retirement as basic essentials to live the life with
health and happiness. The health and strength of the worker is an integral facet of right, to life.
Denial thereof denudes the workman the finer facets of life violating Article 21.

Medical facilities to protect the health of the workers are, therefore, the fundamental and
human rights to the workmen.

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(Optional case)

33. OCCUPATIONAL HEALTH AND SAFETY ASSOCIATION V. UOI, SC, 2014.

The Petitioner represents about 130 Coal Fired Thermal Power Plants (CFTPPs) in India spread
over different States in the country, but no proper occupational health services with adequate
facilities for health delivery system or guidelines with respect to occupational safety are in place.

Refers to the judgement in the case of Consumer education and research centre, wherein it was
held that right to health of workers is a FR under Art. 21.

19. Report of National Institute of Occupational Health (NIOH) titled Environment, Health and
Safety Issues in Coal Fired Thermal Power Plants of the year 2011 may also be made available
by the Secretary General of the Supreme Court to the Registrar Generals of the High Courts of
the aforesaid States. We make it clear that the Report is not at all comprehensive in certain
aspects and the respective High Courts can examine the issues projected in this judgment
independently after calling for the reports about the CFTPPs functioning in their respective
States. The Registrar Generals of High Courts of the aforesaid States should place this judgment
before the Chief Justices of the respective States so as to initiate suo moto proceedings in the
larger interest of the workers working in CFTPPs in the respective States.

(Optional case)

34. PRAVEEN RASHTRAPAL V. CHIEF OFFICER, KADI MUNICIPALITY AND ORS.,

GUJARAT HC, 2004.

Case concerned the hazardous working conditions that sewerage workers work in and the
health threats faced by them. Several PILs were filed which were clubbed together. The working
conditions are inhuman and caste system is also prevailing. The workers work without any
protective gear, equipment or training. There are reports of sewerage workers dying as a
result. Even when injuries or death results in, limited to no compensation is given.

Also, most of such workers are recruited through contractrors, thus, benefits available are not
provided to them.

Therefore, petition is filed to – give them machines and relevant equipment, insurance and
adequate training.

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Court notes the extension of Article 21 to include right to health, right to safe environment,
right to live with human dignity, and right to have adequate compensation for injuries
suffered. Court also emphasizes the obligation on the employer to provide safety measures
to the workers.

Court then gives directions to relevant authorities. Court asks the employers not to rely on
manual work and hire machines. Secondly, compulsory insurance of Rs 1 lakhs. Thirdly,
discontinuing the practice of engaging contractors. Also, when a person is required to
manually work in sewerage, he should be wearing adequate safety gear.

Thus, the Court held that the practice should be completely discontinued.

Practically, the work is such that machines cannot do everything and manual work is
required. Also, sometimes injuries are not reported.

Wage limit for application of ESI Act – proviso to section 2(9), provides that if wages exceed
21,000, then the Act would not be applicable, as it is assumed that employee can make provisions
for himself.

Wages are defined differently for each sector, defined by the notifications.

Short recap of EPF:

ECA or ESI do not tell you what will happen once you leave the job. EPF is like a savings account
wherein the employer and employee contribute, and once you reach the age of superannuation,
you can withdraw the amount. Now it became even more popular because of the tax benefits.

But the Act has become fairly confusing. 3 schemes:

1. Provident fund scheme

2. Pension Scheme
3. deposit linked insurance scheme.

Problems with EPF Act

1. First, provides you pension as well now. Also provides you insurance. So overlaps with the
objective of ECA and ESI

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2. Also allows you to withdraw money before you reach the age of superannuation in certain
instances like marriage or building a house. Problem is that this does not allow you to have a
large corpus of savings. Objective becomes very confusing.

Issues with respect to definition of “establishment”- At least 20 employees. The definition of

“employee” is different from what was provided under ESI. Under EPF, “supervision” or “control”
is not mandatorily required to be present.

Definition of the word “wages”- Most of the litigation has been on this issue. Whatever incremental
in nature is called bonuses. Has to be commensurate with the extra effort that you provided. 2
cases on Basic Wages- IMP

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 IV. PROVIDENT FUND

ESI Act and ECA Act are only focusing on health in a way and not employment injuries. There
are other uncertainties which a person will face. The answer to that has come through the Provident
funds. State will say that employer and employees will contribute to a provident savings account
and you cannot withdraw from that account unless you reach a certain age. And the savings will
be used to meet the contingencies that may arise especially during your old age.

Here, a separate account for each employee is maintained, with the intent that after retirement, it
can be used. A separate account is created where amount is accrued monthly, interest is given
annually, and EPFO maintains this account. This EPF money is invested in various modes by the
government also. Thus, it is an important source of revenue.

How is Provident funds different from State insurance Act? Here every single employee has a
separate account which is maintained. But in State insurance, everything is pooled together. Under
State insurance Act, you get benefits in case of death, disablement, injury, etc. You cannot
withdraw in case of ESI. But in provident funds, you can withdraw when you reach a certain age.

Basic fundamental- You can withdraw from Provident fund only when you reach a certain age.

Pension scheme, deposit insurance scheme.

The scheme has been widened to ensure that even in case of disablement, death or unemployment,
benefits can be claimed. Scheme also allows withdrawal of money as advance – for marriage,
education, injury, etc.

Thus, it is not just triggered upon reaching the age of retirement, but on other conditions also.

The Act also provides relief from income tax.

Also, threshold is 15,000 – if salary is above it, employer would not be liable to contribute.

Preamble of the Act states to provide for the Institution of Provident Funds, Pension Fund, and
Deposit-Linked Insurance Fund for Employees in Factories and other Establishments.

In India, EPF Act seems to be a very confused legislation.

Under the EPF, three schemes- provident fund scheme, pension scheme, and the deposit
linked insurance scheme.

Problems with the legislation-

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Section 1(3) provides that the Act applies:

(a) to every establishment which is a factory engaged in any industry specified in Schedule I
and in which twenty or more persons are employed, and

(b) to any other establishment employing twenty or more persons or class of such
establishments which the Central Government may, by notification in the Official Gazette,
specify in this behalf.

Provided that the Central Government may, after giving not less than two months’ notice of its
intention so to do, by notification in the Official Gazette, apply the provisions of this Act to any
establishment employing such number of persons less than twenty as may be specified in the
notification.

Lots of scholars have commented that there should be a uniform rule of numerical threshold
for applicability of the social security enactments. They have questioned that why should a
person who is covered by ESI not be protected by the EPF Act. There is no logical reason why
there is a peculiar rule. Peculiarity of Indian social security legislation.

Section 2(g) of the Act defines factory here, unlike other Acts. It means any premises, including
the precincts thereof, in any part of which a manufacturing process is being carried on or is
ordinarily so carried on, whether with the aid of power or without the aid of power.

Under the ESI Act, “manufacturing process” is linked to the Factories Act. The definition of
“manufacturing process” under the Factories Act is much broader in comparison to the definition
under the EPF Act, thereby, narrowing the scope. But the Code of Social security resolves this
issue by providing a common definition of “manufacturing process”.

Here, for establishment, a list is given and if the establishment is listed, it is considered within the
Act.

Section 1(5): An establishment to which this Act applies shall continue to be governed by this Act
notwithstanding that the number of persons employed therein at any time falls below twenty.

Section 1(4): Where it appears to the Central Provident Fund Commissioner, whether on an
application made to him in this behalf or otherwise, that the employer and the majority of
employees in relation to any establishment have agreed that the provisions of this Act should be
made applicable to the establishment, he may, by notification in the Official Gazette, apply the

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provisions of this Act to that establishment on and from the date of such agreement or from any
subsequent date specified in such agreement.

So, even if the numerical threshold is not established, even then by virtual of an agreement
between the employer and majority of the employees, the EPF Act can be made applicable.
This was not present in the ESI Act)

Industry is defined under section 2(i) and refers to an inclusive list in Schedule I.

Section 2A also provides that where an establishment consists of different departments or has
branches, whether situate in the same place or in different places, all such departments or branches
shall be treated as parts of the same establishment.

35. ANDHRA UNIVERSITY V. REGIONAL PROVIDENT FUND COMMISSIONER OF

ANDHRA PRADESH, 1985 SC

(Interpretation of S. 2A- A wing of the establishment can be taken)

A printing press is being run as industry. A number of persons are engaged in the press. EPF
commissioner issues notices to the university to make PF contributions on behalf of persons.

University has taken two pleas – first, it is a purely educational institutional and the press only
caters to the members of university. So university cannot be considered industry, as it doesn’t carry
out any manufacturing process. Second, there is already a PF scheme which is similar to EPF Act.

Also, determining applicability of this legislation, the entire university should be treated as
establishment, which cannot be treated as an industry. This is from interpretation of section 2A.
As for an establishment to be made, all the branches of the university should be considered and
the overall purpose of the establishment should be seen, which is not to run a printing press, but to
impart education.

Court observed that the intention of the section 2A is not to lay down that an establishment will
not be liable for coverage under the Act merely because it is part of a larger organization carrying
on some other activities also which may not fall within the scope of the Act.

Court observes that the wing by itself can be considered for the purpose of applicability of the Act.
The different wings and departments are separable. Here, the press is engaged in a manufacturing
process, and has the requisite number of persons engaged. Therefore, Act is applicable. Secondly,
it is a beneficial piece of legislation.

Court also overrules the case of Visva Bharti where Court said that some agricultural farms run
were not considered industry.

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 36. THE ASSOCIATED CEMENT COMPANIES LIMITED, CHAIBASSA CEMENT WORKS,
JHINKPANI V. THEIR WORKMEN, 1959 SC

There was a strike in limestone quarry as a result of which workmen had to be laid off in cement
works factory. Management contended application of section 25E (iii) claiming that both were part
of the same establishment, and therefore layoff compensation was not required to be paid. Court
found that there was unity of ownership, control, management and employment, along with
geographical proximity and functional integrity.

(IMP) Court observed that although no single absolute test can be laid down to determine
what is ‘one establishment’ as the true relation between the parts has to be found out.
However, in this case, all tests are fulfilled. Hence, the quarry and factory form one establishment,
and therefore the disqualification of section 25E (iii) was attracted. Appeal allowed.

37. MANAGEMENT OF PRATAP PRESS, NEW DELHI V. SECRETARY, DELHI PRESS

WORKERS’ UNION AND ITS WORKMEN, SC 1960.

A person runs 7 businesses and 3 are of concern. One is Pratap press with newspaper Daily Pratap.
Veer Arjun is another newspaper. Person is sole proprietor in these 2. But for other 1, it is
partnership. Workers demand all establishments to be considered part of same establishment. As
seen individually, organizations are running into losses, therefore low bonus would be paid owing
to the losses. While employer claimed that they shouldn’t be clubbed together.

Court says that there is difference in ownership with respect to one newspaper, therefore it is not
part of same establishment.

Now the question comes as to printing press. Court said that in certain cases, it is easy to
identity – as same workers, same management. But if conditions are complex, we have to see
whether workers and management are same, how accounts are maintained, etc.

Court looks at Hindi Prachar case where question was whether one department formed part of
larger establishment or not. Organization had different wings such as library, etc. There was no
distinction in finances, etc.

GG Industries – person had number of factories. Question was whether chocolate and tin factory
was part of single establishment. Here, profit and loss account, sources of financing, separate
accounts, separate balance sheets. This showed that owner is treating as different establishment,
so it cannot be treated as the same establishment.

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 38. PIPE MILL MAZDOOR UNION

Whether Lucknow office part of establishment. Court said no as separate accounts, and BS.

Associated Cements – court looked into a number of tests. Unity of ownership, unity of
management and control, unity of finance and unity of labour, unity of employment and
unity of functional "integrality" were the tests which the Court applied in that case. It is
obvious there is an essential difference between the question whether the two units form part of
one establishment for the purposes of Section 25E(iii) and the question whether they form part of
one single industry for the purposes of calculation of the surplus profits for distribution of bonus
to Workmen in one of the units. Some assistance can still nevertheless be obtained from the
enumeration of the tests in that case.

With regards to Daily Pratap, Court says that the ownership is different. So, they cannot be
considered to be a part of the same establishment. This was quite different in comparison to the
Court’s holding in the Associated Cement Companies case.

After this, court moves on to the discussion of whether the printing press forms part of the same
establishment. In this context, it applies two tests: “functional integrality” and “unity of finance
and employment”.

(IMP) Of all these tests the most important appears to us to be that of functional "integrality" and
the question of unity of finance and employment and of labour. Unity of ownership exists ex
hypothesi. Where two units belong to a proprietor there is almost always likelihood also of unity
of management.

(IMP) In all such cases therefore the Court has to consider with care how far there is "functional
integrality" meaning thereby such functional interdependence that one unit cannot exist
conveniently and reasonably without the other and on the further question whether in matters of
finance and employment the employer has actually kept the two units distinct or integrated.

Court looks at question of functional interdependence. A printing press can exist without a
newspaper, and newspaper can exist without owner having printing press. Therefore, there is no
functional integrity. On this point, in Sir’s opinion, the application of “functional integrality” by
the Court is very peculiar owing to the high threshold set by the Court. The Court may have
adopted such a test because of the bonus involved.

Sources of finances were kept separate, profit and loss account, BS were separate. Therefore, there
cannot be treated as part of the same establishment.

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 39. NOOR NIWAS NURSERY PUBLIC SCHOOL V. REGIONAL PROVIDENT FUND
COMMISSIONER, 2000 SC.

Two establishments – Francis Girls Higher Secondary School and Noor Niwas Nursery Public
School are established by the same society, Baptist Union North India. The appellant school only
has 4 employees. They are contending that the employees are different – 1 headmistress, 1 teacher,
1 peon and 1 aaya.

(IMP) The respondents contended that the head clerk, when inspector came to visit, gave
particulars of the Noor school also. Moreover, the organization runs 30 schools, so why would it
run a school with only 4 employees separately.

Moreover, this school was for nursery, and the Francis school was for higher classes, which points
towards functional integrity, as schools were located at the same place.

Court referred various tests.

(IMP) It highlights functional integrity – whether one unit can reasonably and conveniently exist
without another, and whether unity in terms of finance and employment is present. This is slightly
different in comparison to the “functional integrity” test applied by the Court in the Pratap Press
case.

Here, both the tests are satisfied – as parents would want their children to go to the same location
where they went to nursery school. Regarding finance, court didn’t delve into it, but regarding
employment, when the organization runs 30 schools, why would it run a school separately with
only 4 persons. Secondly, how did the headmistress of Francis school become privy to information
about Noor school if the intention was to keep the establishments separate.

Hence, Court holds that both schools are part of the same establishment and PF contributions
would have to be made.

Applied few imp factors- geographical proximity, unity of ownership and functional integrity.

Section 2(e) “employer” means—

(i) in relation to an establishment which is a factory, the owner or occupier of the factory,
including the agent of such owner or occupier, the legal representative of a deceased owner or
occupier and, where a person has been named as a manager of the factory under clause (f) of sub-
section (1) of section 7 of the Factories Act, 1948 (63 of 1948), the person so named; and

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(ii) in relation to any other establishment, the person who, or the authority which, has the
ultimate control over the affairs of the establishment, and where the said affairs are entrusted to a
manager, managing director or managing agent, such manager, managing director or managing
agent;]

Section 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 6[an establishment], and who gets his
wages directly or indirectly from the employer, 7[and includes any person—
(i) employed by or through a contractor in or in connection with the work of the establishment;
(ii) engaged as an apprentice, not being an apprentice engaged under the Apprentices Act, 1961
(52 of 1961), or under the standing orders of the establishment.

40. SAHELI MARBELS PRIVATE LIMITED, UDAIPUR V. ASSISTANT PROVIDENT FUND

COMMISSIONER, UDAIPUR, 2015 DELHI HC

(Directors can also be considered employees if they work in a dual capacity)

An inspection was carried out by the EPFO in the appellant’s establishment and a list of employees
was prepared, wherein names of 21 persons were recorded as employees. This list included
names of 3 directors as well. The EPFO asked the establishment to comply with provision of
EPF Act.

Saheli Marbels submitted that as per the definition of “employer” under the EPF Act,
directors fall within the scope of “employer”.

The Commissioner, Appellate Tribunal and Single Judge held that directors are employees
and hence the establishment is covered under EPF Act.

Court relied on case of ESIC v. Apex Engineering and held that directors, if they receive
wages, can be employees as they work in a dual capacity. The Court observed the following
characteristics for a person to be an employee:

1. He should be employed for wages.

2. Such employment must be in connection with the work of the factory or establishment to
which the Act applies.
3. He must be directly employed by the principal employer on any work of, or incidental or
preliminary to or connected with work of, the factory or establishment.

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 4. In the alternative he should be employed by or through an immediate employer on the
premises of the factory or establishment or under supervision of the principal employer or
his agent.
5. He should be employed for wages on any work connected with the administration of the
factory or establishment or any part, department or branch thereof.
6. This is subject to the further condition that the wages of the person so employed excluding
remuneration for overtime should not exceed such wages as prescribed by the Central
Government.

However, a partner cannot be an employee as there is no separate legal entity in the form of
partnership.

Thus, where a person is employed for wages, an employer-employee relationship is pre-supposed

and to discharge the said burden material should be produced by the person seeking exemption to
show that there was no employer-employee relationship, rather the person was controlling and
managing the affairs of the establishment. This burden was not fulfilled by the directors in the
present case.

Hence, directors were held to be employees and establishment was covered under EPF Act.

41. CALCUTTA CONSTRUCTIONS COMPANY V. REGIONAL PROVIDENT FUND

COMMISSIONER AND ORS., 2015 PUNJAB & HARYANA HC

(Principal and immediate employer)

A contractor entered into contract with Punjab State Electricity for power supply and supply of
manpower. The PF commissioner asked payment of PF contributions for the persons engaged. PF
commissioner passed order for contributions.

Question is whether contribution is to be paid by the contractor or the establishment.

Contractor claims 3 grounds:

i. As per section 2(e), employer means that person who has ultimate control over affairs
of establishment. And employee in section 2(f) includes any person employed by or
through contractor. The ultimate control rests with the establishment.
ii. Rule 30 – the ultimate employer has to make contribution in the first instance, which
can be recovered later on.

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 iii. Ropar thermal plant – the plant was required to pay contribution for workers engaged
through contractors.

Regarding para 30, Court said that it is in a different context. It is only in circumstances when the
code number has not been allocated to the contractor, to ensure that employee does not suffer. But
here, the code number has been allotted. If a code number has been allocated, it shows that the
person is an “employee”. Every single employee needs to be registered and given a code under the
EPF Act.

In case, the principal employer pays, it can still be compensated by the immediate employer.

Secondly, all that the contractor is required to do is to manage the establishment and
machinery therein. Therefore, the ultimate control lies with the contractor and not the
establishment.

Court seems to have taken a different stance – the definition of employer and employees is being
read together. Also, the definition of employer states that ultimate control should be regarding the
place of work and not the persons working. But Court is shaping the definition of employer from
what is the definition of an employee.

42. PM PATEL AND SONS V. UNION OF INDIA, 1985 SC.

Three categories of workers were engaged for manufacturing beedis and they used to work
from their homes.

First category was workers directly engaged by manufacturers,

Second was workers engaged through contractors, but there being direct relationship with
manufacturers,

Third was workers engaged by independent contractors who treated the workers as their own
employees.

Facts: The home workers have to present themselves in specific hours to collect the raw
materials, and a register is also maintained, where how much raw material is given to each
home worker is noted. Moreover, the rejection/acceptance of the final product also takes
place in front of them.

Question was whether these home workers were employees under EPF Act and whether
home workers were entitled to benefits under the EPF Act.

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Here, the Court observed the test of control and supervision, and observed that since there was
right to reject the inadequate products, which amounted to sufficient supervision and control.

The Court also notes that the definition of “employee” under the EPF Act is very wide, and
intended to cover a large number of persons for the purpose of this Act.

The Court refers to Silver Jubilee and also refers to the case of Mangalore Ganesh Bidi workers,
where it was held that the right to rejection of bidis was the basic test for rejecting bidis. In such a
case, control and supervision is not required to be shown. Since right to reject bidis was there, so
there was an “employer-employee” relationship. Right to rejection remains the test. Personal
service is not a criteria for an employer-employee relationship under the EPF Act.

An objection raised in this case- What is the point of Provident Fund in a beedi workers case?

The fundamental objective of provide for benefits after retirement. Regarding retirement or
superannuation, Court observed that there is no retirement age as such for a bidi worker and noted
that mere cessation of service can be retirement. Also, the amount can be withdrawn early also.
Thus, relation is not with the age of the workers.

Hence, beedi workers were held to be employees under EPF Act.

Employer and employee are defined under section 2(e) and 2(f) of the EPF Act.

43. THE OFFICER IN-CHARGE, SUB-REGIONAL PROVIDENT FUND OFFICE V.

GODAVARI GARMENTS LIMITED, 2019 SC

(Right to reject is sufficient for an indirect employee like PN Patel)

Facts- The company is a subsidiary of the corporation and covered under EPF Act. Persons stitch
the cloth at home by taking materials home. The materials are provided by company. But the
persons stitching cloth at home have their own machinery. These persons do not need to show up
at specific hours for collecting the raw materials. Some piece-rate wages are provided.

Question is whether these persons who stich the cloth by taking materials home are employees and
if the EPF Act is applicable. Company argues that they are not workers as the company does not
exercise any supervision and does not pay any wages. PF commissioner states that employer has
right to reject, and wages are provided by the person.

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Test of control and supervision has shifted. There are cases where the ultimate control and
integration test were seen.

HC said there is no direct or indirect control. There is no supervision or element of personal service
involved.

Before SC, Court noted that definition is an inclusive one. All that is required is direct or
indirect work in connection to the establishment. Here, all raw materials were provided,
there was right to reject the product. Although their own tools were provided, it was not
relevant.

Court applies the same test they applied in PM Patel. Personal service is not important.
Court held that right to reject the final product is an appropriate test for determining the
existence of an employer-employee relationship.

Also, persons are paid of piece rate basis. This relates to Shankar Balaji Wage – all that has
to be seen is whether there is employer and employee relationship, and it does not matter
how the wages are paid.

Court refers to PM Patel and Pratap Press wherein home-based workers were considered
as employees. Also, since it is a beneficial legislation, wide interpretation should be there.

Court also referred to CESC Ltd. v. Subhash Chandra Bose. The CESC decision was given in
the specific context of section 2(9) of ESI Act in the definition of employee and observed a very
strict test of supervision, wherein the workers must be supervised on a constant basis. The question
raised was if the test of control and supervision is present in ESI cases, then why shouldn’t the
same test be applied in this case also.

The Court in the Godavari case held that the definition of “employee” in the ESI Act
specifically mentions about “supervision”. But this is not applicable here as section 2(f) of
EPF Act does not mention supervision. Thus, the Court essentially held that the person may
be considered to be an employee for the purpose of the EPF Act but not for the ESI Act.

Definition of “basic wages”

Section 2(b): “basic wages” means all emoluments which are earned by an employee while on
duty or 3[ on leave or on holidays with wages in either case] in accordance with the terms of the
contract of employment and which are paid or payable in cash to him, but does not include—

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(i) the cash value of any food concession;
(ii) any dearness allowance (that is to say, all cash payments by whatever name called paid to an
employee on account of a rise in the cost of living), house-rent allowance, overtime allowance,
bonus commission or any other similar allowance payable to the employee in respect of his
employment or of work done in such employment;
(iii) any presents made by the employer;

EPF Contributions are made on the basis of “basic wages”. Question which has come before the
court in the Bridge and Roof case is whether production bonuses are to be considered a part of
basic wages or not.

44. BRIDGE AND ROOF CO. (INDIA) LTD. V. UNION OF INDIA, 1962 SC

(Production bonus excluded from ambit of “basic wages”)

Issue is whether production bonus should be considered part of basic wages. Section 2(b)
defines basic wages as all emoluments earned by an employee while on duty or on leave or on
holidays with wages in either case] in accordance with the terms of the contract of employment
and which are paid or payable in cash to him, but does not include:

(i) the cash value of any food concession;

(ii) any dearness allowance (that is to say, all cash payments by whatever named called paid
to an employee on account of a rise in the cost of living), house-rent allowance, overtime
allowance, bonus, commission or any other similar allowance payable to the employee in
respect of his employment or of work done in such employment;
(iii) any presents made by the employer.

Section 6 – dearness allowance is included in basic wages.

If bonus has been excluded from definition, production bonus should also be excluded. But this
cannot be the case as even dearness allowance was excluded from section 2(b) and later included
in section 6.

Under section 19A, government has issued a notification saying that production bonus should be
included in basic wages. But problem is that it goes against the wordings of the legislature.

Employer argues that legislature used ‘bonus’ without any qualification. Thus, all kinds of bonus
are excluded, therefore production bonus should not be included in basic wages. The Union of
India argues that if we look at cases before 1962, only profit bonus was sought to be excluded from
the definition. Production bonus can therefore be included.

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Also, intention of legislature was to exclude things which are not arising out of a contract. And
production bonus is always mentioned in a contract.

Court says that exclusions in basic wages are very peculiar and the intention is not clear. However,
it cannot be said that they are not arising out of contract. Dearness allowance, house rent allowance,
etc. are mentioned in the contract. Therefore, inclusion is not on the basis of mention in contract.

Court observed that basis is that what is payable in all concerns to all employees of that concern
is included (such as dearness allowance), and what is not payable in all concerns to all employees
of that concern is excluded.

Regarding bonus, Court says that there were bonuses other than profit bonus which existed before
1962, and intention of legislature could not have been to limit its meaning to profit bonus. Also, if
intention was to only exclude profit bonus, they would have said profits for the particular year, or
simply profit bonus.

Thus, intention is to exclude only those things which are not payable to all employees of
establishments or not payable by all establishments.

Court held that production bonus is excluded from the ambit of “basic wages”.

45. JAY ENGINEERING WORKS LIMITED V. UNION OF INDIA, 1962 SC.

As per Bridge and Roof company case, production bonus is excluded from basic wages.

But in this case, there were two bases set – quota and norm. Employers were mandatorily
required to produce the quota. Norm was much higher than quota and production under the norm
would invoke disciplinary action and be considered as go-slow tactics. Court held that the piece
rate payments made for production between the quota and norm would be considered as part of
basic wages, and only the payment for production above norm would be considered as production
bonus and excluded from basic wages.

Till production up to quota, some minimum wages and dearness allowance is given to workers,
and after that, they are given production bonus. However, it was argued that this is not production
bonus, as workers were not only required to meet the quota, but were obligated to produce the
norm, as otherwise it would be considered go-slow and disciplinary action would be taken.

Therefore, it was considered as part of basic wages only. Basic wages cannot be hidden under the
garb of production bonus.

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 46. PAWAN HANS LIMITED V. AVIATION KARMACHARI SANGHATANA, 2020 SC.

A company is owned 51% by central government and 49% by ONGC. It provides helicopter
services for tourism and offshore excavation. 840 employees – 570 regular and 270 contractual.

Question is whether contractual employees should also get benefit of PF contribution. This
is relevant because section 16 of EPF Act excludes enterprises belonging to or under the
control of central or state government from the purview of the Act. There is also a
notification which provides that airline companies, other than companies owned or
controlled by central government, are to be included within the ambit of EPF Act.

Here, there is no contractor in between. They are direct workers, except they are hired on a
contractual basis. They are paid salary by the company only.

Section 2(f) of EPF Act gives a wide definition as even if getting wages directly or indirectly, or
engaged through contractor, is included.

While in PF Trust Regulations, the persons getting wages directly or indirectly are included, but
persons engaged through contractors are excluded from the ambit.

Company argues that notification is inapplicable to company as it is a company owned and

controlled by central government. secondly, since it is government company, it is excluded from
ambit of EPF Act by virtue of section 16. An exemption is clearly carved out.

Court looks at Sanatan Dharam Girls Secondary School and considers important principles to be
satisfied before section 16 is applied:

i. It must be a company owned and controlled by central government.

ii. The employees of such an establishment should be entitled to the benefit of
contributory provident fund or old age pension in accordance with any scheme or Rule
framed by the Central Government or the State Government governing such benefits.

Regarding the first issue, court observes that it is a government company. But on second issue, the
scheme is not applicable to all employees, and scheme is not framed by central government. Since
second criteria is not triggered, EPF Act is applicable.

Court notes that persons are working since more than 20 years, and they are not engaged through
contractors. Therefore, the same provisions applicable to regular employees should also be
applicable to them.

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If the scheme is not applicable at all, then company should be governed by EPF Act. But Court
still didn’t apply the EPF Act but the scheme to ensure the uniformity in the conditions of service
of all employees.

47. MANIPAL ACADEMY OF HIGHER EDUCATION V. PROVIDENT FUND

COMMISSIONER, 2008 SC

(Test of universality is applicable for determining if something is a part of basic wages)

Question is whether the amount received by encashing the earned leave is part of basic wages
under section 2(b) of EPF Act. Appellant contended that Bridge and Roof Company case provides
the settled position in this regard.

Commissioner asked the appellants to pay PF on these encashments, as they form part of basic
wages. Appellants argued that this does not form part of basic wages, as it is uncertain how much
has to be paid and deposited, and it would differ from employee to employee.

Court observed that Bridge Roof case held that basis for exclusion in basic wages is that whatever
is payable in all concerns and is earned by all permanent employees is included, and whatever is
not payable by all concerns or may not be earned by all employees of a concern is excluded.

(IMP) Court noted the principles laid down in Bridge Roof case:

1. Where the wage is universally, necessarily and ordinarily paid to all across the board such
emoluments are basic wages.

2. Where the payment is available to be specially paid to those who avail of the opportunity
is not basic wages. For instance, overtime allowance, though it is generally in force in all
concerns is not earned by all employees of a concern. It is also earned in accordance with
the terms of the contract of employment but because it may not be earned by all employees
of a concern, it is excluded from basic wages.
3. Conversely, any payment by way of a special incentive or work is not basic wages.

Court also observed TI Cycles of India, Ambattur v. M.K. Gurumani and Ors. where it was held
that incentive wages paid in respect of extra work done is to be excluded from the basic wage as
they have a direct nexus and linkage with the amount of extra output. It is to be noted that any
amount of contribution cannot be based on different contingencies and uncertainties. The
test is one of universality. In the case of encashment of leave the option may be available to
all the employees but some may avail and some may not avail. That does not satisfy the test
of universality.

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Thus, the test is one of universality and applying this test, basic wage was never intended to
include amounts received for leave encashment. This is because this would not be availed of
by all the employees.

48. SHREE CHANGDEO SUGAR MILLS V. UNION OF INDIA, 2001 SC

(Statutory liabilities under EPF Act cannot be contracted out by a settlement agreement)

Facts: Management was running into losses, and they decided to shut down business. Dues of
around 1.23 crores were there, which were decided to be settled at 1.1 crores as full and final
amount by employers to employees. It was decided that no other payments would be made apart
from this. Basic wages, seasonal wages, retrenchment compensation and gratuity were provided
for in this final payment.

Once amount is agreed, EPF commissioner sends a letter saying that EPF amount needs to be
deposited on these wages. Employer opposes this claiming that this was supposed to be full and
final settlement, so he cannot be asked to pay PF on the same. Also, basic wage is there when an
employee was on duty, while the work was closed for a number of years. Therefore, since these
are not basic wages, no PF should be payable on the payments.

(IMP) Court said that even if employees were not working, they were on deemed duty. This
situation is similar to that of a lockout. It is not the fault of the employee and he is supposed
to get wages for the period. If business was not running smoothly, it was not fault of
employees, as they were still in the books of the employers. Thus, the payments received by
them would be wages.

Also, liabilities under the EPF Act are not something that can be contracted out, as these are
statutory liabilities. Hence, employers are liable to make PF contribution.

49. MANAGEMENT OF REYNOLDS PENS V. REGIONAL PROVIDENT FUND

COMMISSIONER, 2011 MADRAS HC

A common question that arises for consideration in all the 10 writ petitions is that
Whether various allowances paid by the Petitioners to their employees under different
heads, such as conveyance, educational allowances, food concessions, medical, special

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holidays, night shift incentives, city compensatory allowances were amounting to wages within
the meaning of the term 'basic wage' as per Section 2(b) of the PF Act covered for deductions
towards the Provident Fund.

The fundamental question was with respect to the true meaning of “basic wage” as per S. 2(b) of
the EPF Act.

What is required is treating certain amounts as basic wage should be only on the basis of a
combined reading of Section 2(b) and Section 6. Therefore, it can be safely held that merely
because parties have come to an arrangement to exclude certain amounts, calling it outside the
term "basic wage", that by itself will not make the amount excluded from the definition of 'basic
wage'. In essence, there cannot be contracting out of the statute at the whims of the parties.

Once there is statutory definition of basic wages and if certain amounts which are otherwise
liable to be included in the term 'basic wages', but nevertheless kept outside by the employer,
such contracting out of statute can never be permitted and there cannot be any private
arrangement in respect of such transaction. In essence there cannot be an stopple against the
statute.

50. THE REGIONAL PROVIDENT FUND COMMISSIONER (II), WEST BENGAL V.

VIVEKANANDA VIDYAMANDIR AND ORS., 2019 SC

(Test of whether an allowance forms a part of basic wages is that it should be paid to all
establishments and paid across the board to all employees in the particular category of employees)

Question is whether special allowances paid to employees over and above the basic wages and
other allowances form part of basic wages.

Lower courts have held it would form part of basic wages, as it is paid to all employees of the
establishment. And it is nothing but a form of wage only. Court has to look at a number of things.

EPF argues that it is nothing but hidden dearness allowances. DA is defined as all cash payments
paid on account of rise in cost of living. The company just wants to escape PF.

Bridge and Roof is referred – this is not an incentive wage where extra work has to be put in to
claim the amount. Rather, it is being paid to every employee.

Employer argues that it is a special allowance, and is an exemption carved out of basic wages.
Since it is not included in section 6, it would not be covered.

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If there is any link to extra amount of work put in, it would not be included, but here, there is no
linkage to extra work, or claim by some employees. It is paid to all employees.

Court notes that the test is that it should be paid to all establishments, and to all employees
in the particular category of employees. Thus, narrowing down of test is done but the
reasoning is not provided.

Question is whether all employees in the particular category are provided these allowances.

If the payment depends on availing some opportunity, or varies from employees, or not earned by
all employees equally, it would not be included (such as overtime wages or leave allowances).

Court observed that no material has been placed by the establishments to demonstrate that the
allowances in question being paid to its employees were either variable or were linked to any
incentive for production resulting in greater output by an employee and that the allowances in
question were not paid across the board to all employees in a particular category or were being
paid especially to those who avail the opportunity.

In order that the amount goes beyond the basic wages, it has to be shown that the workman
concerned had become eligible to get this extra amount beyond the normal work which he was
otherwise required to put in. There is no data available on record to show what were the norms of
work prescribed for those workmen during the relevant period. It is therefore not possible to
ascertain whether extra amounts paid to the workmen were in fact paid for the extra work which
had exceeded the normal output prescribed for the workmen. The wage structure and the
components of salary have been examined on facts, both by the authority and the appellate
authority under the Act, who have arrived at a factual conclusion that the allowances in question
were essentially a part of the basic wage camouflaged as part of an allowance so as to avoid
deduction and contribution accordingly to the provident fund account of the employees.

Therefore, the special allowance is part of basic wages.

In the Code on Social Security, a major change has been made. Rather than all employees of all
concerns, a numerical threshold test has been laid down in section 2(88) in definition of wages.
The proviso states that total amount of wages is calculated, and if payment made from (a) to (i)
exceeds 50% of all remuneration, the amount exceeding shall be deemed as remuneration and
added in wages under this clause.

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Apart from this, there have been no major changes in the EPF. In EPF as well, the employees and
employers, even if they do not fulfil the threshold, can, upon application to commissioner, opt for
EPF, or opt out of the Act.

Court has held that there is no need to show mens rea for the payment of damages on arrears under
EPF Act (horticulture case).

In section 17B – not just the transferor, but the transferee of the establishment can also become
liable.

Schemes under the Act – Deposit Linked Insurance Scheme – 1% is to be deposited.

Section 6A and 6B

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 V. MINIMUM WAGES ACT, 1948

Use the provisions of the act as well as the judgements while answering.

In a question on Minimum Wages, always use the Express Newspapers case.

Wages- Fixed in return of any kind of work.

Minimum Wages Act- A very stringent labour standard. If this is not followed, criminal liability
is imposed unlike other social security legislations, which will result in civil liability if the
mandates under the other legislations are not complied with.

Three types of wages – minimum wages, fair wages, living wages.

Which legislation deals with living wages- Article 43 of the Constitution.

Difference between the 3 types of wages:

Fair Wages- dependent upon the work being done, capability or economic capacity of the
employer, cost of living (food, place to stay, accommodation, healthcare, entertainment, education)

When it goes beyond sustenance, it forms a part of “fair wages”. Starvation wages is the bare
minimum that you get to live.

We cannot eradicate child labour but an effort can be made to provide minimum support to the
child labour.

The ILO 1928 Convention recommended minimum wages. Various ILO conventions and
recommendations govern the concept of wages.

The minimum wages were provided for in certain specific sectors. Bedrock of labour movement
is collective bargaining. Intention was that workers in certain sectors didn’t have the power to
organize themselves, and even if they did, they didn’t have adequate bargaining power. In certain
sectors, collective bargaining power was very low. So in these sectors, concept of minimum wages
first evolved.

“Sweated labour”- work for which the payment is very minimal.

But the concept of “minimum wages” was not widespread uniformly across Europe. For instance,
in Germany, the minimum wage legislation is lacking; laissez faire is the rule. In such countries
where the government does not intervene, trade unions try to lobby for minimum wages.

Philippines- Country which has one of the best minimum wage systems.

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Direct government intervention is in developing countries.

Concept of living wages came from the ILO Constitution which provided workers must be govern
living wages. It is accepted that living wages cannot be provided to the workers at some points of
time, it was stated as an objective in the constitution. Article 39 and 43 of our constitution also
discusses living wages.

In Indian express case, a quotation has been made from the harvestor’s case, where living wages
were defined as one appropriate for the normal needs of the average employee, regarded asx a
human being living in a civilized community.

This was later defined to mean that it must be able to provide for food, clothing, shelter and
measures of comfort. Also, it must be able to provide for days of misfortune – such as death,
illness, and also child’s marriage and education. Living wages should be able to provide for these.

Wages which do not merely provide for bare sustenance, but also the efficiency of the worker. It
should provide some level of comfort, education and medical emergencies.

The MWA, 1948 provides for fixing minimum rates of wages in certain employments. Thus, it is
not applicable for all works. MWA in India followed the “wage board” system, which was used in
Britain. India follows minimum wage system with respect to specific industries.

IMP Provisions of the MWA:

What is an “appropriate government” depends upon the industry. For instance, mines will come
under the direct ambit of the Central Government. Agriculture and Textiles will fall within the
ambit of the State Government.

S. 2 (b) “appropriate Government” means –

(i) in relation to any scheduled employment carried on by or under the authority of the 4[Central
Government or a railway administration] or in relation to a mine, oil field or major port, or any
corporation established by 5[a Central Act], the Central Government; and
(ii) in relation to any other scheduled employment the 6[State Government;

Section 2(i) defines employee as 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; and includes an out-worker to whom any articles or materials are
given out by another person to be made up, cleaned, washed, altered, ornamented, finished,
repaired, adapted or otherwise processed for sale for the purposes of the trade or business of that
other person where the process is to be carried out either in the home of the out-worker or in some

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other premises not being premises under the control and management of that other person; and
also includes an employee declared to be an employee by the appropriate Government; but does
not include any member of the Armed Forces of the 2 Union.

S. 2(e) defines “employer”- means any person who employs, whether directly or through
another person, or whether on behalf of himself or any other person, one or more employees in
any scheduled employment in respect of which minimum rates of wages have been fixed under
this Act, and includes, except in sub-section (3) of section 26.
“Manager” has also been deemed to be an “employer” for the purpose of the MWA. Further, if
there is no manager, then the occupier will also be held responsibility. This helps in shifting of
the criminal liability. Corporate Veil is lifted by the legislature itself.
Understanding of “employer” is important because of the determination of liability, i.e., who
must be held accountable.

S. 2(h) "wages" means all remuneration, capable of being expressed in terms of money, which
would, if the terms of the contract of employment, express or implied, were fulfilled, be payable to a
person employed in respect of his employment or of work done in such employment, [7] [and
includes house rent allowance] but does not include
(i) the value of - (a) any house- accommodation, supply of light, water, medical attendance, or
(b) any other amenity or any service excluded by general or special order of the appropriate
Government;
(ii) any contribution paid by the employer to any Pension Fund or Provident Fund or under any
scheme of social insurance;
(iv) any travc1ling allowance or the value of any traveling concession;
(v) any sum paid to the person employed to defray special expenses entailed on him by the nature of
his employment; or
(vi) any gratuity payable on discharge
Section 3- Fixation of Minimum Wages
1.(b) review at such intervals as it may think fit, such intervals not exceeding five years, the
minimum rates of wages so fixed and revise the minimum rates:

(2) The appropriate Government may fix, - (a) a minimum rate of wages for time work (hereinafter
referred to as "a minimum time rate");

(b) a minimum rate of wages for piece work (hereinafter referred to as "a minimum piece rate");

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(c) a minimum rate of remuneration to apply in the case of employees employed on piece work for
the purpose of securing to such employees a minimum rate of wages on a time work basis
(hereinafter referred to as "a guaranteed time rate");

(d) a minimum rate (whether a time rate or a piece rate) to apply in substitution for the minimum rate
which would otherwise be applicable, in respect of overtime work done by employees (hereinafter
referred to as "overtime rate").

(3) In fixing or revising minimum rates of wages under this section, -

(a) different minimum rates of wages may be fixed for-
(i) different scheduled employments;
(ii) different classes of work in the same scheduled employment;
(iii) adults, adolescents, children and apprentices;
(iv) different localities;

(b) minimum rates of wages may be fixed by any one or more of the following wage periods,
namely: -
(i) by the hour,
(ii) by the day,
(iii)by the month, or
(iv) by such other larger wage period as may be prescribed; and where such rates are fixed by the day
or by the month ' the manner of calculating wages for a month or for a day, as the case may be, may
be indicated:]

Section 4: Minimum rate of wages.

(1) Any minimum rate of wages fixed or revised by the appropriate Government in respect of
scheduled employments under section 3 may consist of-
(i) a basic rate of wages and a special allowance at a rate to be adjusted, at such intervals and in such
manner as the appropriate Government may direct, to accord as nearly as practicable with the
variation in the cost of living index number applicable to such workers (hereinafter referred to as the
"cost of living allowance"); or
(ii) a basic rate of wages with or without the cost of living allowance, and the cash value of the
concessions in respect of supplies of essential commodities at concessional rates, where so
authorized; or
(iii) an all-inclusive rate allowing for the basic rate, the cost of living allowance and the cash value of
the concessions, if any.

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(2) The cost-of-living allowance and the cash value of the concessions in respect of supplies of
essential commodities at concessional rates shall be computed by the competent authority at such
intervals and in accordance with such directions as may be specified or given by the appropriate
Government.

Section 5: Procedure for fixing and revising minimum wages- Committee method and by way of
notification.

Section 6: Advisory committees and sub-committees.

Section 7: Advisory Board.

Section 8: Central Advisory Board.

Section 12: Payment of minimum rates of wages is mandatory.

Section 13: Fixing hours for a normal working day, etc- This provision is important in
determining whether to pay overtime.

Section 14: Overtime.

Section 20: Claims.

(V IMP) Section 23: Exemption of employer from liability in certain cases.

Where an employer is charged with an offence against this Act, he shall be entitled, upon complaint
duly made by him, to have any other person whom he charges as the actual offender, brought before
the Court at the time appointed for hearing the charge; and if, after the commission of the offence has
been proved, the employer proves to the Satisfaction of the Court –
(a) that he has used due diligence to enforce the execution of this Act, and
(b) that the said other person committed the offence in question without his knowledge, consent or
connivance, that other person shall be convicted of the offence and shall be liable to, the like
punishment as if he were the employer and the employer shall be discharged:

Provided that in seeking to prove, as aforesaid, the employer may be examined on oath, and the
evidence of the employer or his witness, if any, shall be subject to cross-examination by or on behalf
of the person whom the employer charges as the actual offender and by the prosecution.
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“Control and Supervision test”, “hire and reward test”- IMP for the purpose of this
legislation.

Minimum Wages not applicable for every kind of establishment. Applicable only for scheduled
establishments.

The intention is to include every kind of worker, as long as it is a scheduled employment. The aim
is to ensure that liability cannot eb evaded in case of outsourcing of work. The person benefitting
from the work should be liable to pay minimum wages.

Skill factor will not be a factor for determination of minimum wages.

Minimum wages are calculated on the basis of the Cost-of-Living index. Minimum wages are a
statutory mandate. Need to pay minimum wages irrespective of whether the company gets profit
or loss.

Starvation Wages; fair wages; minimum wages; floor wage.

The Act does not define minimum wages, but states how minimum wages are paid. The first is
company method, and the second is notification method.

In notification method, if appropriate government has adequate information about the industry and
employment, it notifies the minimum wages for that employment. Based on that, government fixes
minimum wages.

In company method, if adequate information about the sector is not there, then a committee of
employers, employees, etc. is constituted and it determines the minimum wages.

The minimum wages, once fixed, cannot be changed. They are revised every 5 years. The
minimum wages have to be paid not only for time work (say 8 hours a day), but also for piece
work (for completing a particular piece of work).

Different wages can be fixed for different types of employees, and different classes of employees,
and for children, adolescents, and adults.

Sustenance plus= Fair Wage approach

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 51. UNICHOI V. STATE OF KERALA, SC

Argument that minimum wage was a form of fair wage (Sustenance plus) and was a violation of
their right to occupation. Court held that economic capacity does not matter and looked into the
methodology of how to arrive.

Edward Mills case referred to in the Unichoi judgement- Court goes into the discussion why is
minimum wages so important; the requirement of Minimum Wages.

Court categorically stated that it will not go into the merits of the recommendation relating
to the quantum of minimum wage on the part of the Advisory Body. Constitution of the
Advisory Body specified in S. 7, 8, 9 of the Minimum Wages Act.

52. KAMANI METALS V. THEIR WORKMEN, SC 1967

(What kind of ingredients or factors affect the fairness of a wage)

Case of revision of wages and dearness allowance.

IMP Pointers-

1. Quantum of Minimum Wage cannot be changed because it is statutorily fixed.

2. Company argues that if not minimum wage, they are paying fair wages. They are not
challenging the quantum of minimum wages.
3. One important thing which was discussed was how is fairness of a wage determined.
4. When the argument is that the minimum wages follow a subsistence plus approach, Court can
go into this argument and discuss that. But it will not go into the numerical quantum of the
wages involved.
5. Judiciary will take into consideration the region/location of the industry while determining the
fairness of a wage. When will the industry be a factor; when will the region be a factor?
For industry- Kind of industry, kind of work, kind of production, competition between the
industries- some of the factors which will be taken into consideration.
For Region- Cost of Living.
The moment we are talking about the industry, region, we are essentially discussing about the
capacity of the industry when the fairness of a wage is discussed.
6. The wage should not only provide for subsistence but also preservation of efficiency of the
workers.
7. Another point is that the wages should not sink below “human value” or humanity.

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8. Also, with regard to calculation of fair wages, Court mentioned some of the factors that must
be considered- food, shelter, clothing, medical care and education of children.
9. Living wage is over fair wages.

The Company states that its financial capacity does not bear the revision either of the wages and
pays on the one hand or the dearness allowance on the other. It submits that the Tribunal in revising
the wages, pays and the dearness allowance has followed wrong principles and ignored those laid
down by this Court.

IMP Principles regarding the wage structure mentioned in the judgement:

It is first desirable to consider what amount is necessary to maintain and even improve the workers'
standard of living, how wages of the workers concerned compare with those paid to workers of
similar grade and skill by other employers in similar or other industries in the region and what
wages the establishment or industry can afford to pay.

Fixation of a wage-structure is always a delicate task because a balance has to be struck between
the demands of social justice which requires that the workmen should receive their proper share
of the national income which they help to produce with a view to improving their standard of
living, and the depletion which every increase in wages makes in the profits as this tends to divert
capital from industry into other channels thought to be more profitable.

First principle- There is a minimum wage which, in any event, must be paid, irrespective of the
extent of profits, the financial condition of the establishment or the availability of workmen on
lower wages.

Second principle- Wages must be fair, that is to say, sufficiently high to provide a standard family
with food, shelter, clothing, medical care and education of children appropriate to the workman
but not at a rate exceeding his wage-earning capacity in the class of establishment to which he
belongs. A fair wage is thus related to the earning capacity and the workload. It must, however, be
realised that 'fair wage' is not 'living wage' by which is meant a wage which is sufficient to provide
not only the essentials above-mentioned but a fair measure of frugal comfort with an ability to
provide for old age and evil days. Fair wage lies between the minimum wage, which must be paid
in any event, and the living wage, which is the goal.

IMP Principle- This principle is that fixation or revision of scales of wages, pays or dearness
allowance must not be out of tune with the wages etc. prevalent in the industry or the region.

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Court held that the annual increment is not unduly high and, in these circumstances, it cannot
be said that the Tribunal was in error in departing from a point-to-point adjustment to grant
one or two increments based on the length of service. The discretion was exercised on sound
judicial lines.

S. 3(1)(b)- The Appropriate government will review at such intervals as it may think fit, such
intervals not exceeding five years, the minimum rates of wages so fixed and revise the minimum rates,
if necessary.
Minimum wages to be reviewed every 5 years.

53. WORKMEN REPRESENTED BY SECRETARY V. REPTAKOS BRETT, SC 1991

Appeal filed against company for introduction of dearness allowance scheme by the company.

Facts- The Company on its own provided slab system of Dearness Allowance (DA) which
means the DA paid to the workmen was linked to cost-of-living index as well as the basic
wage. The said double-linked DA Scheme was included in various settlements between the
Company and the workmen and remained operative for about thirty years. In the new system of
DA, the link to basic wages was removed. The question for our consideration is whether the
Company is entitled to re-structure the DA scheme by abolishing the slab system and substituting
the same by the Scheme-prejudicial to the workmen-on the ground that the slab system has resulted
in over-neutralisation thereby landing the workmen in the high-wage island.

Court again holds that not only subsistence must be considered but also preservation of efficiency
in the worker.

Broadly, the wage structure can be divided into three categories-the basic "minimum wage"
which provides bare subsistence and is at poverty-line level, a little above is the "fair wage" and
finally the "living wage" which comes at a comfort level.

"Living wage" defined as under: The living wage should enable the male earner to provide for
himself and his family not merely the bare essentials of food, clothing and shelter but a measure
of frugal comfort including education for the children, protection against ill health , requirements
of essential social needs, and a measure of insurance against the more important misfortunes
including old age.

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The Committee's view regarding "minimum wage” was as under: The minimum wage must
provide not merely for the bare sustenance of life but for the preservation of the efficiency of the
worker. For this purpose, the minimum wage must also provide for some measure of education,
medical requirements and amenities.

5 IMP Principles for fixation of “Minimum Wages”:

(i) In calculating the minimum wage, the standard working-class family should be taken to consist
of 3 consumption units for one earner; the earnings of women, children and adolescents should be
disregarded.

(ii) Minimum food requirement should be calculated on the basis of a net intake of calories,
as recommended by Dr. Akroyd for an average Indian adult of moderate activity.

(iii) Clothing requirements should be estimated at per capita consumption of 18 yards per annum
which would give for the average workers' family of four, a total of 72 yards.

(iv) In respect of housing, the rent corresponding to the minimum area provided for under
Government's Industrial Housing Scheme should be taken into consideration in fixing the
minimum wage.

(v) Fuel, lighting and other 'miscellaneous' items of expenditure should constitute 20% of the total
minimum wage.

(vi) children education, medical requirement, minimum recreation including

festivals/ceremonies and provision for old age, marriages etc. should further constitute 25%
of the total minimum wage.

Court also took into consideration the recommendation of the Fair Wages Committee, whose
recommendation was also included in Express Newspapers judgement.

The wage structure which approximately answers the above six components is nothing more than
a minimum wage at subsistence level. The employees are entitled to the minimum wage at all
times and under all circumstances. An employer who cannot pay the minimum wage has no right
to engage labour and no justification to run the industry.

Court held that the management can revise the wage structure to the prejudice of the workmen in
a case where due to financial stringency it is unable to bear the burden of the existing-wage. But
in an industry or employment where the wage structure is at the level of minimum wage, no such
revision at all, is permissible - not even on the ground of financial stringency.

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(IMP) It is, therefore, for the management, which is seeking restructuring of DA scheme to
the disadvantage of the workmen to prove to the satisfaction of the tribunal that the wage
structure in the industry concerned is well above minimum level, and the management is
financially not in a position to bear the burden of the existing wage structure.

35. It has been pleaded by the company that its workmen are in a high wage island and

as such the revision of DA scheme was justified. The Company also produced evidence

before the Tribunal to show that comparable concerns in the region were paying lesser

DA to its workmen. On the basis of the material produced before the Tribunal all that

the Company has been able to show is that the DA paid by the Company is somewhat

higher than what is being paid by the other similar industries in the region. There is,

however, no material on the record to show that what is being paid by the company is

higher than what would be required by the concept of need based minimum wage. In

any case there is a very long way between the need based wage and the living wage.

Living Wages- What does the Constitution say, what does the SC say (Refer to Express
Newspaper, Bijay Cotton Mills, Kamini Metals), components that go into living wages

54. EXPRESS NEWSPAPER V UNION OF INDIA

(One of the first cases which discussed the point of minimum wages)- Read the Express
Newspapers judgement- Part where the Court has focused on DPSPs and Minimum Wages.

Further also go through the components that go into living wages, what factors does ILO consider
for living wages, consideration of Fair wages committee report.

The judgement comes to the conclusion that subsistence plus is not just a fair wage. It can be
considered minimum wage as well.

Let’s say in a family of workers, if the husband and wife both are getting minimum wages,
do you think that the husband’s wage can be reduced because wife is there as a support?

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Minimum wage is a statutory requirement. Socio-economic conditions do not affect the reduction
or increase in minimum wages. Just because they have spousal support, it cannot be a matter of
consideration.

What are the components of minimum wages- Provided by SC in Express Newspapers?

A minimum wage is that wage which is sufficient to cover the bare physical needs of a worker and
his family." Many others,'; however.......... consider that a minimum wage should also provide for
some other essential requirements such as a minimum of education, medical facilities and other
amenities. We consider that a minimum wage must provide not merely for the bare
sustenance of life but for the preservation of the efficiency of the worker. For this purpose, the
minimum wage must also provide for some measure of education, medical requirements, and
amenities.

Minimum wage represents a slightly higher level than that of subsistence, providing not only for
the material needs of food, shelter, and body covering but also for certain comforts, such as
clothing sufficient for bodily comfort, and to maintain the wearer's instinct of self-respect and
decency, some insurance against the more important misfortunes-death, disability and fire--good
education for the children, some amusement, and some expenditure for self- development.

Express Newspapers was one of the oldest judgements that recognised “expenditure for self-
development” as one of the components of minimum wage.

Living Wage

The Minimum Wage-Fixing Machinery published by the ILO has summarised these views
as follows:

" In different countries estimates have been made of the amount of a living wage, but the estimates
vary according to the point of view of the investigator. Estimates may be classified into at least
three groups:

(1) the amount necessary for mere subsistence, (2) the amount necessary for health and
decency, and (3) the amount necessary to provide a standard of comfort." It will be seen
from this summary of the concepts of the living wage held in various parts of the world that
there is general argument that the living wage should enable the male earlier to provide for
himself and his family not merely the bare essentials of food, clothing and shelter but a measure
of frugal comfort including education for the children, protection against ill-health,
requirements of essential social needs, and a measure of insurance against the more important
misfortunes including old age. " (1) Article 43 of our Constitution has also adopted as one of

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 the Directive Principles of State Policy that: The State shall endeavour to secure, by suitable
legislation or economic Organisation or in any other way, to all workers, agricultural, industrial
or otherwise, work, a living wage, conditions of work ensuring a decent standard of life and
full enjoyment of leisure and social and cultural opportunities................"

Wage Boards- What is the criteria on basis of which you can question a wage board’s
decision

The wage boards appointed by the amended Bombay Industrial- Relations Act, 1946, are subject
to the appellate jurisdiction as well as supervisory jurisdiction of the industrial courts in the State
and parties affected by their decisions are entitled to file appeals against the same in the industrial
courts.

If these safeguards are provided against the determinations of the wage boards, it will be really
immaterial what procedure they adopt in the course of the proceedings before them. They would
normally be expected to adopt all procedure necessary to gather sufficient data and collect
sufficient materials to enable them to come to a proper conclusion in regard to the matters
submitted to them for their determination'. If however at any time they flouted the regulations
prescribed in regard to the procedure to be followed by them or in the absence of any such
regulations adopted a procedure -which was contrary to the principles of natural justice their
decision would be vitiated and liable to be set aside by the appropriate authority.

Minimum Wage- Something which provides for basic needs of an individuals but also preserves
the efficiency of the worker.

Talk about the jurisprudential development of minimum wages- Express Newspapers, Kamini
Metals and Reptakos cases.

55. BIJAY COTTON MILLS V. STATE OF AJMER, 1954 SC.

Workers demanded enhancement of wages which was refused by the industrial tribunal. While
appeal was pending before appellate tribunal, a committee was formed which submitted its report
and recommended increment in minimum wages to Rs 56. While the appellate tribunal remanded
the matter back to industrial tribunal, and the tribunal recommended wages of Rs. 35.

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The company argued that the minimum wages fixed by the state government through the
commission was not possible to be fixed because of the present economic capacity of the company.
As a result, the mill had to be closed down.

In MWA, if minimum wages cannot be paid by the employer, the operations of business should
be shut down.

It was argued that parties have the right to freedom of contract. Thus, the parties can decide to
work at lower wages than the minimum wages determined. On this ground, the constitutional
validity of provisions of MWA was challenged.

However, the Court didn’t agree with this. It said that the intention of employer does not matter.
It is in the general interest of public that minimum wages should be paid. And if employer does
not have the capacity to pay, he should discontinue the operations. When fixing minimum wages,
all factors such as the capacity of employer to pay would be taken into account. However, once
wages are fixed, it cannot be claimed that employer does not have the resources to pay the
minimum wages fixed.

The Court in Bijay Cotton Mills also discuss the role of the Advisory Board- How the advisory
body is formed, whether the recommendations of the advisory body can be appealed; mechanism
of feedback provided for:

As regards the procedure for the fixing of minimum wages, the "appropriate Government" has
undoubtedly been given very large powers. But it has to take into consideration, before fixing
wages, the advice of the committee if one is appointed, or the representations on his proposals
made by persons who are likely to be affected thereby. Consultation with advisory bodies has been
made obligatory on all occasions of revision of minimum wages, and section 8 of the Act provides
for the appointment of a Central Advisory Board for the purpose of advising the Central as well as
the State Government both in the matter of fixing and revision of minimum wages. Such Central
Advisory body is to act also as a coordinating agent for coordinating the work of the different
advisory bodies. In the committees or the advisory bodies the employers and the employees have
an equal number of representatives and there are certain independent members besides them who
are expected to take a fair and impartial view of the matter. These provisions in our opinion,
constitute an adequate safeguard against any hasty or capricious decision by the "appropriate
Government." In suitable cases the "appropriate Government" has also been given the power of
granting exemptions from the operation of the provisions of this Act. There is no provision
undoubtedly for a further review of the decision of the "appropriate Government", but we do not
think that by itself would make the provisions of the Act unreasonable.

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 56. KARTIKERE GRAM PANCHAYAT V. LABOUR OFFICER, BANGALORE HC 2022

Role of the contract between the employer and employee; time period of work and does it bear a
factor on the quantum of the minimum wages.

Facts- There was an employee employed in the Gram Panchayat. He worked for only 1 hr day.
Now the question arose whether minimum wage need to be paid to him since he works for only 1
hr. Claim was that minimum wages were not paid as per the Government notification. He asked
for payment of the balance wages as well as compensation.

You have to see whether the person is in a scheduled employment. The primary dispute was
whether he needs to be paid minimum wages because he works for just 1 hr.

Court- The Court first addressed the issue whether the person is an employee.

The next question was when can one raise a claim.

The point was that when this case was brought before the adjudicatory forum, the person was no
longer an employee. So, the question was whether he can bring the case.

Court held that it does not matter under S. 20 of the Act. It has to be simply a just cause of action.
Person need not be employed at the specific facility when he brings the case before the adjudicatory
forum. If he was denied minimum wages during his period of employment, then he can definitely
pursue the case.

Limited Financial capacity of the facility is not a tenable argument.

Further, Court held that as long as he is an employee, he is entitled to minimum wages.

57. FCI V. PRIME SECURITIES, CUTTACK HC 2022

Role of Appropriate government in fixing minimum wages, Duty to pay minimum wages.

There was one minimum wage notified by the Centre and another minimum wage notified by the
State government. Now the question is when two notifications are made, then which one should
be followed. Employer is going to stick by the lower minimum wage.

Court referred to the provisions of Section-2(b) of the Minimum Wages Act, 1948, which defines
appropriate Government in the following manner:

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"2(b) "appropriate Government" means, -

(i) in relation to any scheduled employment carried on by or under the authority of the [Central
Government or a railway administration], or in relation to a mine, oilfield or major port, or any
corporation established by [a Central Act], the Central Government, and

(ii) in relation to any other scheduled employment, the [State Government];"

11. There cannot be any confusion. Above all, even the petitioner did not raise any controversy as
regards who shall be treated as the employer. Under the agreement, the contractor is the employer,
not the Food Corporation of India for any purpose. Hence, whatever the liability arises under the
Statute or under the agreement, are to be solely borne by the contractor, as engaged by the Food
Corporation of India.

12. On keen reading of Section-2(b) of the Minimum Wages Act, 1948, it surfaces unambiguously
that the minimum wages as determined by the Central Government Board will be applicable in the
case of the workmen working under the Food Corporation of India in as much as the petitioner is
a Corporation established by a Central Act and by the Central Government.”

So, when the question is which notification will apply, the Court held that one must look at who
is the principal employer. Since the workers are working primarily under the FCI, which is a
Central government entity, so the notification by the Central government will apply.

Problem: There were multiple number of workers who are working in a municipal corporation.
The primary work was providing water for the officers of the different departments. One such
worker was X. X was also a chain smoker and used to take frequent break outside the premises of
his employment. He was also a part of the local political party. One day, this worker was trying to
quit smoking. He was in a foul mood because of his withdrawal mode. At the moment, an officer
asked Worker X to provide him with water. Worker X denied the same. This officer was the head
of many departments in the Municipal Corporation. He issued a Memo against the worker X
terminating his service stating:

1. The time or nature of work of Mr. X was so erratic in nature that he could not be called an
employee.
2. Because he could not satisfy the tests of employment, he was denied minimum wages.

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The worker complaint against the municipal commissioner. The commissioner was imprisoned
following the Minimum Wage Act provisions. Write a judgement based on the facts provided and
use any cases which have been discussed in the class. Use the Surya Rau and Sanjit Roy cases
for sure when writing the answer on this question.

58. SURYA RAU V SURENDRA RAMAKRISHNA TENDULKAR

Courts held that there cannot be 2 employers for the purpose of a social security legislation.

The question of employer comes into place. On whom will the liability be imposed?

Facts- There were labourers and labourers were not being paid wages. Under contract labour
regulation act (CLRA), independent contractors have the obligation of paying wages. At the same
time, under CLRA, there is a duty imposed on the principal employer. Where the IC fails to pay
the amount, the principal employer has to make sure it is paid.

Principal employer ought to have a representative present when remuneration is paid by the
independent contractor to the labourer.

Court made out the differences between the CLRA and the Minimum Wages Act. CLRA imposes
an obligation on the principal employer to make sure that the labourers get the amount.

In this case, the IC did not pay the wages. The Court held that if the IC does not pay the minimum
wages, then the principal employer has the liability to pay the minimum wages. Liability wrt
minimum wages falls on both the principal employer as well as the IC. With regard to minimum
wages, there are two employers defined.

1. Who is primarily liable to pay minimum wages- Not only IC but also principal employer.
2. In this case, the liability arose with regard to minimum wages. What kind of safeguards are
maintained in relation to minimum wages?
Duty of maintaining registers regarding payment of minimum wages lies on both the employer
as well as the IC. Other due diligence measures must also be discharged effectively by them.
Two types of overtime wages- piece wise and time wise. Must be noted down in the register.
The Inspector verifies whether all the due diligence measures has been effectively discharged.
The inspector has the power to go and speak to the workers. Look at the provisions of the
MWA relating to power of Inspector. Inspector can also take help of designated government
officials in carrying out due diligence obligations.

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In the instant case prima facie the Contractors have employed persons to do work in the
establishment. In other words employees are engaged by the Contractor to do the work in
connection with the establishment. It is true that they are engaged by the contractor, but in so far
as the definition of employer under the Minimum wages Act is concerned, it includes any person
who employs whether directly or through another person or whether on behalf of himself or any
other person, one or more employees in any scheduled employment in respect of which minimum
rates of wages have been fixed under this Act. By virtue of the definition of employee., workers
working outside the establishment., either at home or even in some other premises not under the
control and management of the other persons are included within the definition of employees. The
objective is whether he directly employs or through another as along as the employment is
scheduled and the work has connection with the establishment/factory etc., the employer is
required to pay minimum wages fixed by law, fix the days and hours of work, intervals of work,
day of rest for every seven days, payment for rest day, over time wages, etc, so as to provide
uniformity in the establishment or work connected with the establishment.

A conjoint reading of the definition of employer and employee under the Minimum Wages Act,
therefore, makes it clear that every employer, including a contractor who engages labourers for
others who owns the establishment/factory etc. is bound by the provisions of the Act, to complay
with the requirement of maintaining Registers, etc. No other view is possible.

Even otherwise it would be difficult to accept the proposition canvassed on behalf of the petitioner
based on the Contract Labour Act. A duty is cast on the principal employer under the Contract
Labour (Regulation and Abolition) Act. In case the Contractor fails to pay wages etc. how would
the principal employer without having the records and registers discharge the obligations of the
Contractor. The argument sought to be advanced is that Rule 29 of the Contract Labour Rules
gives an indication that the contractor has to maintain Registers/Records under the Minimum
Wages Act.

59. SANJIT ROY V STATE OF RAJASTHAN

There was a famine and drought scarcity situation in state of Rajasthan. One rule was set for the
project which was undertaken. The rule was that payment is to be made as per the work which is
done.

There was a famine act for which employment was being given in the construction of the Umaid
Bhawan in Jodhpur.
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Mainly the female workers were getting disadvantaged. Court held that any labour done and
payments below the minimum wages if given for the labour will be deemed to be “forced labour”.
The fact that there is a drought/famine will not have any bearing on the quantum of minimum
wages. Minimum wage is a statutory mandate which has to be followed by all scheduled
establishments.

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 VI. PAYMENT OF WAGES ACT

There is a mandate on the employer to ensure complete payment of wages.

S. 2(vi) “wages” means all remuneration, capable of being expressed in terms of money, which
would, if the terms of the contract of employment, express or implied, were fulfilled, be payable,
whether conditionally upon the regular attendance, good work or conduct or other behaviour of
the person employed, or otherwise, to a person employed in respect of his employment or of
work done in such employment, and includes any bonus or other additional remuneration of the
nature aforesaid which would be so payable and any sum payable to such person by reason of the
termination of his employment, but does not include—
(a) the value of any house-accommodation, supply of light, water, medical attendance or other
amenity, or of any service excluded by general or special order of the 19[***] 20[Government];
21[(b) * * * * * * * * * ** * * * ]
(c) any travelling allowance or the value of any travelling concession;
(d) any sum paid to the person employed to defray special expenses entailed on him by the
nature of his employment; or
22[(e) * * * * * * * * * * * * ]

Any gratuity is not a part of wages.

What is to be included in the “Wages” and what is to be not included as a part of “wages” are
important considerations.

Any contribution made by the employer does not constitute part of “wages”.

S. 2(ii) "industrial establishment" means any—

(a) tramway or motor omnibus service;
(b) dock, wharf or jetty;
(c) inland steam-vessel;
(d) mine, quarry or oil-field;
(e) plantation;
(f) workshop or other establishment in which articles are produced, adapted or
manufactured, with a view to their use, transport or sale;
16[(g) establishment of a contractor who, directly or indirectly, employs persons

17[* ****] to do any skilled or unskilled, manual or clerical labour for hire or

reward in connection with the execution of a contract to which he is a

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party, and includes the premises in which, or the site at which, any
process connected with such execution is carried on;

Whether Retrenchment compensation/HRA/Maternity benefit/unemployment compensation can

form a part of wages?

No more than 50,000 deductions can be made.

What is the problem that can arise from lesser deductions?

Potential Wage- Can “Potential Wage” be considered a part of wages?

60. AVD COSTA

The case is with respect to right to wages. We have to first see where is he employed. Employed
in Central Railways. He contended that he has the right to wages under PWA. His contention
was that because of promotions, certain people were getting higher wages. He submitted that
because he has the requisite qualifications, he should get those quantum of wages. There
was no deduction.

(IMP) If a question comes with respect to the object of the PWA Act, use this case. The Act does
not give you a right to claim potential wages.

Facts- The applicant is working as a carpenter-mason with the opposite party under I.
O. W., Byculla. According to the orders on introduction of the prescribed scales,
the Railway Administration has to make the staff working under I.O.W. on
permanent monthly wages scheme under the rules of the prescribed scales. The
applicant along with others was up till now under daily wages scheme. About
20 posts under I.O.W. where the applicant is working were to be made
permanent. The opposite party in supersession of claim of the applicant has confirmed his juniors
on the permanent scales as a skilled workman in the scale
of 55-3-85-4-125-5- 130, whereas the opposite party continued to pay the
applicant on daily wages scheme thus depriving him of his legitimate wages
under the prescribed scale, which resulted in the monetary loss to the applicant
of Rs. 40-13-4 per month. Notice on behalf of the applicant was served on this
count on the opposite party but of no avail and hence this application. The

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juniors have been paid under the prescribed scales from April, 1949, from
which date the applicant was also entitled to the prescribed scale 55-130 (scale
for skilled workman).

There is no difficulty in accepting that proposition. If the parties entered into the
contract of service, say by correspondence and the contract is to be determined with
reference to the letters that passed between them, it may be open to the authority to
decide the controversy and find out what the terms of the contract with reference to
those letters were. But if an employee were to say that his wages were Rs. 100 per
month which he actually received as and when they fell due but that he would be
entitled to higher wages if his claims to be placed on the higher wages scheme had
been recognized and given effect to, that would not, in our opinion, be a matter within
the ambit of his jurisdiction.

Contention- The respondent's main grievance, therefore,

appears to be that he had not been paid wages on the scale to which he would have
been entitled if he had been placed on the monthly wages scheme.

“But it is said that the Tribunal has no authority to determine the question of
"Potential wages". Undoubtedly a claim to a higher potential wage cannot be brought in
under the category of "claim arising out of deduction from the wages or delay in
payment of the wages" if that wage depended on the determination by a superior
departmental or other authority as to whether or not a particular employee is entitled to
the higher wage - a determination which involves the exercise of administrative
judgment or discretion or certification, and which would, in such a situation, be a
condition of the payability of the wage.

But where the higher wage does not depend upon such determination but depends on
the application of, and giving effect to, certain rules and orders which, for this purpose,
must be deemed to be incorporated in the contract of employment, such a wage is, in
my view, not a prospective wage, merely because the paying authority concerned makes
default or commits error in working out the application of the rules. In this context it is
relevant to notice that the definition of "wages" in the Act is "all remuneration which
would if the terms of the contract, express or implied, were fulfilled, be payable". The
word "was" in this definition which I have underlined, seems to indicate that even a
"Prospective wage" which would be payable on the proper application of the rules in the

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sense which I have explained above may well fall within its scope. The wage under the
Act is not, necessarily, the immediately pre-existing wage but the presently-payable
Wage.”

The rightful thing that he needed to contend was why he was not considered for promotion. He
had no right to claim for potential wages.

IMP Points:
1. Petitioner has no right over potential wages1; only claim in case of wrongful deductions.
2. PWA Authority does not have jurisdiction over such matters; only jurisdiction over matters
relating to illegal deductions.

61. INDIAN STATISTICAL INSTITUTE V. STATE OF WB, 1992 CAL HC

TU brought the case. Contended that ISI is an industrial establishment because for something to
fall within PWA, it must be an “industrial establishment”. Production activity going on and
significant number of labourers employed. The activity was nature of work similar to the work
under PWA.

Referred to the Osmania University case- there was a department which was involved with
publication; consisting of a lot of printing presses; premises and manufacturing process involved;
Court held that it is a “factory”. Court undertook a comparative analysis with Osmania case.

Court did not declare ISI as a factory but due to similarities, court held that production activity
was going on and significant number of labourers involved. So, it was held to be an “industrial
establishment”.

62. RUPENDRA SWAIN V. CALCUTTA DOCK LABOUR BOARD, 1968 CAL HC

The case came because there was a deduction made against Rupendra Swain. Deduction was made
on account of welfare activities, but not in the nature of services. Calcutta Dock Labour Board
said that it is not the employer and is not paying in the nature of remuneration.

Labourers registered at the Calcutta Dock Labour Board. The board registers the labourers, pays
some remuneration to them. The petitioner was unwell for a month. A large chunk of money was
deducted from his wages.

Court held that he has come to the right forum. Court looked into the activities of the Calcutta
Dock Labour Board.

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Secondly, court looked into whether an employer-employee relationship existed between the
Labour Board and the Labourers. Labour Board argued that they were not the employers
because they did not hire them. They said that they just took care of the welfare activities of the
labourers and they said they just acted as a facilitator between the company availing the services
of the labourers and the labourers.

Court held that employer-employee relationship existed between the dock worker and the
registered employer.

IMP- “I shall now come to the question as to whether the Board is an industrial

establishment within the meaning of the Payment of Wages Act. Industrial

establishments under Section 2(ii). Clause (b) refers to 'dock wharf and jetty'. Dock

Labour Board does not itself carry on any work of the nature referred to in the Payment

of Wages Act or in the notification in connection therewith. It is merely a body for

regulating certain matters between the registered employer and the registered employee

and one of the functions of which is to see that the registered employees get some

allowance or some payment while out of employment and under certain other conditions

as provided in the Scheme itself. Hence, I am of opinion that a Dock Labour Board is

not a notified industrial establishment within the meaning of Section 3 and, therefore,

whatever other rights the Petitioner may have against the Board, the Petitioner has no

right under the Payment of Wages Act. It is sufficient for me to say that the Petitioner

has no remedy under the Payment of Wages Act against the opposite party”.

63. QASIM LARRY V. MD. SAMSUDDIN, 1965 SC

1st issue- Any new wage structure dictated or declared by an award or settlement- Will it be
considered a part of Wages?

There was a 1958 amendment, which states that it will be considered a part of Wages. Court held
that this will be considered, and court looked into the object of PWA.

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When an award is made and it prescribes a new wage structure, in law the old contractual wage
structure becomes inoperative and its place is taken by the wage structure prescribed by the award.
In a sense, the latter wage structure must be deemed to be a contract between the parties, because
that, in substance, is the effect of industrial adjudication. That being so, it is difficult to accede to
the argument that the wages prescribed by the award cannot be treated as wages under s. 2(vi) of
the Act before it was amended. The amendment has merely clarified what, in our opinion, was
included in the unamended definition itself.

2nd issue- whether bonus forms a part of “wages”.

Court held that it will depend on the terms of employment.

64. MANAGER, GENERAL MOTOR OWNER’S ASSOCIATION, WASHIM V. MAHMOOD

KHAN VASIR KHAN, 1966 BOM HC

Payment of wages to dismissed worker under S. 15?

15. Section 15 of the Payment of Wages Act gives jurisdiction to the Authority under

the Payment of Wages Act to hear and decide claims arising out of deductions from

wages or delay in payment of wages of persons employed. "Wages" is defined in

Section 2(vi) to mean "all remuneration (whether by way of salary, allowances or

otherwise) expressed in terms of money or capable of being so expressed which would,

if the terms of employment, express or implied, were fulfilled, be payable to a person

employed in respect of his employment or of work done in such employment or of work

done in such employment, and includes. . . . . . .". We are not concerned herewith the

clauses of inclusion. It is clear from Ss. 15 and 2(vi) of the Payment of Wages Act that

in order that an amount should be granted by the Authority under the Payment of Wages

Act, it must first of all fall within the definition of "wages" and that means that there

must be an employer and it must be an amount payable to a person employed in

respect of his employment or of work done in such employment. Now, when the

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employee is dismissed and the dismissal is merely declared to be an illegal change, the

utmost that that order can imply is that the dismissal was wrong, it cannot imply that

the employee is once again in the service of his employer.

16. So far as the jurisdiction of the Payment of Wages Authority is concerned, the mere

declaration that the dismissal is wrongful cannot give it jurisdiction to decree a claim

for wages for that period. There must be an order of reinstatement, and admittedly

65. STATE OF WB V. BACHU MONDAL

When will a remuneration for overtime be considered a part of “Wages”?

Overtime- When you are going beyond your normal working hours. Can overtime be included as
a part of “wages”.

Facts- Bachu Mondal was a security guard. He worked overtime. Can he claim overtime wages?

Court held that you can claim the same provided that the employer asks for the overtime. Any
overtime done as a part of the employment towards the production in the establishment done
towards implicit/explicit terms of employment.

Depends essentially on the terms of employment, express and implied.

66. GANPATLAL MOOLCHANDJI JOSHI V. FIRST CIVIL JUDGE, NAGPUR

Whether maternity benefit forms a part of “Wages”?

Maternity benefit is nothing but the paid leave.

Court held that it is in the nature of compensation. Maternity benefit is given at a point when
no work is being done by the person. If it is in the nature of compensation, it cannot form a
part of wages, so you cannot come before the Payment of Wages Authority.

Remuneration forming a part of “Wages” must be necessarily against some work done by
you. No claim for maternity benefit under PWA. Can be claimed under the Maternity Benefit
Act.

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Only the part where the judgement talks about the issue whether maternity benefit will be a part
of wages or not is relevant.

67. DIVISIONAL ENGINEER V. MAHADEO RAGHU

Facts- A ganman who was working in the Railways was given a Housing Accommodation
Allowance. Within a short period of time, Railways had constructed some buildings for
accommodation of employees. Railways asked its employees to come and stay in the budlings.
The ganman said he will not stay in the accommodation. Rather, he asked the Railways to giving
him the HAA.

HAA is an allowance which they give you. They charge you a subsidised version of rent. If he is
not staying in the accommodation given by the place of employment, then he has no right over
the same.

Holding
If any additional remuneration is being made, it must be recorded in the terms of employment.
Housing accommodation amount is not a right under Payment of Wages Act. But HRA is often
considered.
Difference between HRA and Housing accommodation allowance.
You have a claim for HRA under PWA provided HRA is given in the terms of employment. But
You have no right to claim housing accommodation allowance under PWA.

HAA (Housing accommodation Allowance)- you are deducted certain amount if you are given
accommodation in the place of employment. You have no claim towards the same.
Court held that HRA depends on the terms of employment. HHA is specifically excluded from
the ambit of “wages”.
Purpose of HRA is for providing you an allowance to go and find a place outside and pay the
rent using the HRA.
Purpose of HHA is when you are given accommodation in the place of employment.

Definition of “wages” under PWA does not include “Housing Accommodation Allowance”
(HHA).

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Read the Difference between HRA and HAA well.

68. HINDUSTAN STEEL LTD., BHILAI V. PRESIDING OFFICER

Facts- Very poor conditions of accommodation in the premises where labourers were staying.

Tribunal held that the rent was too high because the conditions of accommodation were very poor.

Court’s holding- Payment of Wages Authority cannot go into the merits of the quantum of rent
charged by the employer.

69. BN ELIAS V. PAYMENT OF WAGES AUTHORITY

Retrenchment compensation forms a part of “Wages”

Facts- Bone Mill. Because of Partition, there was lack of raw material. Retrenchment happened.
In case of retrenchment, you have to pay compensation. Issue was whether when these persons
were retrenched, all wages due were paid off or retrenchment compensation was paid.

Holding

Court held that retrenchment compensation was a statutory compulsion, that had to be paid.
Since retrenchment compensation is a compulsion, it forms a part of wages, and thus, you can
approach the Payment of Wages Authority. Moreover, you can also approach the ID Tribunal.

70. ANUSUYA VITHAL V. JH MEHTA

In case of layoff, Court went into the description of what happens in case of layoff and whether a
master-servant relationship persist in case of layoff. Court held that there is no master-servant
relationship in case of layoff and if the person is not present in the premises, the employer is not
obligated to pay any compensation to the employee. So, the Court held that layoff compensation
does not form a part of “wages” because it is simply in the nature of compensation. There is
no statutory compulsion to pay layoff compensation. Thus, he cannot approach the PWA for
claiming layoff as a part of “wages”.

If layoff is illegal, then the compensation which you get will be a part of “wages”.

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 71. BALMER LAWRIE WORKERS’ UNION CASE

There has been a quantum of deduction mentioned in the statute. Deductions mentioned in the
statute are exhaustive. A percent of deduction is provided for the TU. It is considered to be a part
of the wages.

You might not concur with the views of the majority TU. Minority TU might not agree with the
deductions by the majority union. Balmer Lawrie court settled this; held that if the majority TU
has come to a conclusion that minority TU may not agree; but if deduction has been agreed by
majority TU, then it is a rightful deduction.

With respect to strikes, a percentage of deduction from wages may take place. If the strike is legal
and justified, you have a claim for wages. If a strike is going on and your absence from place of
employment is involuntary, then no wages can be deducted. But if a strike is going on and your
absence from place of employment is voluntary, then wages are liable to be deducted.

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 VII. MATERNITY BENEFIT ACT

Our law is one of the better legislations in this regard. But the problem is of implementation. There
are indirect issues linked, such as discrimination against women in ground reality.

It is one of the first types of social security that the ILO talks about. Women should be provided
leave before and after child birth. It is also important for development of child.

The Act applies to mines, factories and plantations in first instance, along with places of equestrian,
acrobatic and other performances.

In the second instance, with the power of state governments, it would be applicable only if more
than 10 employees are engaged.

The legislation clearly states that the Act is not applicable to establishments where ESI Act is
applicable, as ESI Act also deals with maternity benefits.

The aspect of gender is something that the Act needs to work on. Need to see how is a “woman”
defined under the Maternity Benefit Act. Also, what does “child” under MTP Act means.

Role of “appropriate government”.

Lot of procedural aspects with respect to the legislation that we must understanding. Act will be
looked at from a Cis-hetero perspective.

Expected time of delivery becomes important.

Does the Maternity benefit act provide leave only when you give birth to a child? No, it also gives
leave to surrogate mother, adopted mothers. There is also provision for the expected mother to ask
for light work under S. 4.

If you have to seek leave, then a doctor’s certificate and notifying the employer becomes very
important. You have to notify to the employer the expected time of delivery.
Maternity leave is also provided for abortion, miscarriage, tubectomy. But the period of maternity
leave for these cases are much lesser compared to maternity benefit for giving birth.

S. 3(b) provides the definition of “child”. It throws light on the objective of the Act.

3. (b) “child” includes a still-born child; “Child” includes a child, who dies at birth.

S. 3 (d) “employer” means –

(i) in relation to an establishment which is under the control of the Government, a

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person or authority appointed by the Government for the supervision and

control of employees or where no person or authority is so appointed, the

head of the department;

(ii) in relation to an establishment which is under any local authority, the person

appointed by such authority for the supervision and control of employees or

where no person is so appointed, the chief executive officer of the local

authority;

(iii) in any other case, the person who are the authority which has the ultimate

control over the affairs of the establishment and where the said affairs are

entrusted to any other person whether called a manager, managing director,

managing agent, or by any other name, such person;

Identification of the employer also becomes important.

Test- Supervision and control; if he has ultimate control;

S. 3(e) “establishment” means –

(i) a factory;
(ii) a mine;
(iii) a plantation;
(iv) an establishment wherein persons are employed for the exhibition of
equestrian, acrobatics and other performances; or

(v) an establishment to which the provisions of this Act have been declared under
sub-section (4) of section 2 to be applicable;]

S. 3(j) “miscarriage” means expulsion of the contents of a pregnant uterus at ay period

prior to or during the twenty-sixth week of pregnancy but does not include any
miscarriage the causing of which is punishable under the Indian Penal Code (45
of 1860);

Miscarriage does not imply a still-born child. It will be a foetus, that has been expelled.

S. 3(n) “wages” means all remuneration paid or payable in cash to a woman, if the terms

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of the contract of employment, express or implied, were fulfilled and includes –

(1) such cash allowances (including dearness allowance and house rent

allowance) as a woman is for the time being entitled to;

(2) incentive bonus; and

(3) the money value of the concessional supply of foodgrains and other

articles,

but does not include –

(i) any bonus other than incentive bonus;

(ii) overtime earnings and any deduction or payment made on account of

fines;

(iii) any contribution paid or payable by the employer to any pension fund

or provident fund or for the benefit of the woman under any law for

the time being in force; and

(iv) any gratuity payable on the termination of service;

S. 3(o) “woman” means a woman employed, whether directly or through any agency, for
wages in any establishment.

Section 4 provides that women are not to be asked to work during 6 weeks immediately
following the date of delivery or miscarriage. And on the request of the woman, she would not
be required to do any arduous work during the period of 1 month immediately preceding
the date of expected delivery.

Thus, it is a choice of woman to work or not during her pregnancy. But after pregnancy, there is
mandatory leave for 6 weeks.

In the amendment, there is a possibility by way of mutual discussion whereby she can work from
home depending on the nature of work.

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Section 5 provides right to payment of maternity benefit. Woman shall be entitled for average
daily wage for the period of absence for the period of her actual absence immediately preceding
and including the day of her delivery and for the six weeks immediately following that day.

“Period of her actual absence”- This will also take into consideration even if she works
remotely. The period from which she was not contributing to work at all.

“Average daily wage” – IMP

Explanation. – For the purpose of this sub-section, the average daily wage means the
average of the woman’s wages payable to her for the days on which she has worked
during the period of three calendar months immediately preceding the date from which
she absents herself on account of maternity, or one rupee a day, whichever is higher.

S. 5. (2) No woman shall be entitled to maternity benefit unless she has actually worked in
an establishment of the employer from whom she claims maternity benefit, for a period of
not less than 160 days in the twelve months immediately preceding the date of her expected
delivery. Exception has been carved out for the State of Assam.

Maximum amount of time for which maternity benefit can be claimed - twenty-six weeks of which
not more than eight weeks shall precede the date of her expected delivery.

For woman with two or more children – maternity benefit of 12 weeks maximum.

A woman who legally adopts a child below the age of three months or a commissioning mother
shall be entitled to maternity benefit for a period of twelve weeks from the date the child is handed
over to the adopting mother or the commissioning mother, as the case may be.

Section 5A provides for continuance of payment of maternity benefit in certain cases – every
woman entitled to maternity benefit under MBA shall be entitled to do so until she is qualified to
claim maternity benefit under section 50 of ESI Act.

Section 5B discusses when wage limit of ESI Act (21,000) is exceeded. If it is exceeded, MBA
will grant protection.

(IMP) S. 7. Payment of maternity benefit in case of death of a woman. —If a woman entitled
to maternity benefit or any other amount under this Act, dies before receiving such maternity
benefit or amount, or where the employer is liable for maternity benefit under the second proviso
to sub-section (3) of section 5, the employer shall pay such benefit or amount to the person
nominated by the woman in the notice given under section 6 and in case there is no such
nominee, to her legal representative.

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In section 9, maternity benefit for 6 weeks can be claimed in case of miscarriage or medical
termination of pregnancy.

In section 9A, in case of tubectomy operation, she is entitled to benefits for 2 weeks.

Actual leave of absence starts from 6 weeks before birth.

Section 11 provides for nursing breaks – two breaks for nursing the child when the woman
returns to work.

S. 11A. Crèche facility. — (1) Every establishment having fifty or more employees shall have the
facility of créche within such distance as may be prescribed, either separately or along with common
facilities:
Provided that the employer shall allow four visits a day to the creche by the woman, which shall also
include the interval for rest allowed to her.

Section 12, 13 and 27.

In section 12 – woman cannot be dismissed during the period of pregnancy. But she can be
dismissed for gross misconduct.

(V IMP) S. 12. Dismissal during absence of pregnancy. — (1) When a woman absents herself
from work in accordance with the provisions of this Act, it shall be unlawful for her employer to
discharge or dismiss her during or on account of such absence or to give notice of discharge or
dismissal on such a day that the notice will expire during such absence, or to vary to her
disadvantage any of the conditions of her service.

(2) (a) The discharge or dismissal of a woman at any time during her pregnancy, if the woman but
for such discharge or dismissal would have been entitled to maternity benefit or medical bonus
referred to in section 8, shall not have the effect of depriving her of the maternity benefit or
medical bonus.

Provided that where the dismissal is for any prescribed gross misconduct, the employer may, by
order in writing communicated to the woman, deprive her of the maternity benefit or medical
bonus or both.

72. B. SHAH V. PRESIDING OFFICER, LABOUR COURT, 1977 SC.

A week includes 7 days in a week, and entitlement would be for all 7 days, irrespective of Sunday
being a holiday.

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 73. ARULIN AJITHA RANI V. PRINCIPAL AND FILM AND TELEVISION INSTITUTE OF
TAMIL NADU, 2008 MADRAS HC

(Whether maternity benefit can be extended to educational institutions)

She was a student and question was regarding attendance. There was attendance requirement of
80%, which she claimed that she failed to meet because of pregnancy. Only 5% attendance
could be given as a leeway in exceptional circumstances. University denies her exemption of 5%.
She argues that she is entitled to maternity benefit and should be allowed to given end-sem
exams. She also cites some cases where benefit has been allowed. University argues that this is
not an exceptional case, hence exemption is not given.

She also says she has rights under international conventions. Court says that these provisions
cannot be extended ipso facto by the Court. Court cannot extend the provisions of MBA to
these educational institutions. This is an exercise the legislature has to undertake. Regarding
international treaties and conventions, the Court does not apply them. Amicus cureau also cites
Vishakha case.

Court says that looking at the cases cited before it, in all these cases, there was a legislative gap or
lacunae. But when legislature has already legislated in the form of MBA, the Court cannot extend
the scope. The Court would not enter into judicial law-making and any such exercise is not
warranted.

Also, even if the benefit does apply, she was absent for 18 days. Even if leeway of 5% was given,
her attendance would reach 76% only.

Thus, Court denied her benefit.

74. RUKSANA V. STATE OF HARYANA, 2011 PUNJAB AND HARYANA HC

(Discussion on the ambit of maternity benefit act)

She had 2 children out of first marriage. Then she had a divorce. She joined the government service
and had first child out of second marriage. She wanted maternity leave but was denied because
of Note 4 to the Rule 8 of Punjab Civil Services Rules, which stated that maternity leave shall
not be admissible to a female government employee having more than two living children.

In this regard, MBA proviso to section 5(3) provides that the maximum period entitled to maternity
benefit by a woman having two or more than two surviving children shall be twelve weeks of
which not more than six weeks shall precede the date of her expected delivery.

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Government argues that this is part of family planning and government can make rules in this
regard. Also, nothing in the Rules prohibits the government from doing so. This power is derived
from section 28(2)(k) of MBA. Also, what matters is two children, and it doesn’t matter which
marriage they are born out of.

Section 27 is relevant here. 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, whether made before or after the coming into force of this Act.

Provided that where under any such award, agreement, contract of service or otherwise, a woman
is entitled to benefits in respect of any matter which are more favourable to her than those to which
she would be entitled under this Act, the woman shall continue to be entitled to the more favourable
benefits in respect of that matter, notwithstanding that she is entitled to receive benefits in respect
of other matters under this Act.

Thus, there cannot be Rules which grant lesser benefits.

Discussion on the ambit of maternity benefit act- Court argues that the Act nowhere provides
any specific threshold that if there are 2 children, then the woman in case of a 3 rd child will
be denied maternity benefit.

Court upholds the reasonable classification, referring Javed v. State of Haryana. However, the
Act does not allow to provide lesser benefits than the MBA. At that time, MBA didn’t have any
distinction between women having two or more children or less than two children.

Thus, provision cannot be upheld and woman would be entitled to maternity leave in the same
manner as any woman having less than two children. Although the Rules are valid as per Article
14, but the Rules cannot restrict or provide lesser benefits than those provided under MBA.

75. P. GEETHA V. THE KERALA LIVESTOCK DEVELOPMENT

Court acknowledged the phenomenon of surrogacy, for which maternity benefit can be given. For
the first time, the word “genetic mother” was used.

The Act talks about “commissioning mother”. The case talks about “genetic mother”.
Genetic mothers are allowed to get maternity benefit provided the legislation takes account of the
same.

Subsequently, the 2017 Amendment provided for maternity leave for genetic mothers. “Genetic
mothers” and “commissioning mothers” are the same persons.

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Other relevant concepts regarding surrogacy (Not discussed in the aforesaid case)

Here, “commissioning mother” under the Act is the mother who provides the egg for surrogacy.

However, if the woman who is not viable to provide her egg, the surrogate mother provides her
egg. Then, the mother who actually wants the child becomes the “adoptive mother” for the purpose
of the Maternity Benefit Act.

Commissioning Mother and Adoptive Mother are the only two mothers who are not entitled to the
complete period of maternity benefit.

76. SAUMYA TIWARI V. STATE OF UP, ALLAHABAD HC, 2021.

A student failed an exam and had to appear for repeat exam. She couldn’t attend repeat because of
childbirth and resulting complications. University says we have rules with regards to leave, and
UGC doesn’t require us to have maternity benefit provisions.

Court here frames 3 questions, and looks at it from perspective of Article 21. Whether woman has
the autonomy to take maternity decisions, and if yes, what are its implications.

Should maternity benefit be allowed, and what are the international regulations in this regard.

Court looks at university regulations which are silent on maternity. There are no rules providing
any maternity benefits. Court therefore says this is a legislative gap, and university has not stepped
in accordance with the society.

Court looks at Cambridge which provides maternity leave to students, and joining process post
that. Oxford also has well developed maternity provisions. Maternity leave would be separate from
illness leaves. Also, for rejoining, special assistance would be provided to cope up with classes.

For Indian universities, rules are there, but they mostly pertain to post-graduate students.

Thus, Court notes a legislative gap with respect to under graduate students. Then to see whether
UG students have autonomy to take maternity decisions, Court refers various judgments.

Court refers Suchitra Srivastava where it is held that right to choose whether to have a child is
inherent to right to privacy and bodily integrity, and right to liberty and dignity. The fact that she
chooses to have a child is important, and nobody should be allowed to decided for the woman

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when to have a child. There should be an institutional support system for women who decide to
have children – Mini Bedi.

Court also looks at UDHR Article 25(2), ICESR Article 10(2).

Then Court moves to Article 42 which provides for just and humane conditions of work. Since we
have undertaken these international obligations, we need to apply them.

Court refers Ajita Rani case and says that case cannot be applied as there, the Court didn’t refer to
the international obligations.

Court here said that right to privacy and bodily autonomy are Article 21 rights. Therefore, we
cannot hide behind the fact that legislature has not legislated in this regard. Legislature is always
going to lag behind. Therefore, Courts have to undertake a gap-filling right. Since this is a
fundamental right, discrimination cannot be justified on the ground that there is no legislation. In
para 65, 66 and 66, various directions are provided.

14, 15(3) and 21 are violated by not providing maternity benefit. Also, maternity benefit only being
provided to PG students is a violation of article 14 and 15(3). UGC is asked to frame regulations
in regard to UG and PG students.

Court said that the student should be allowed to appear for exams. She cannot be denied benefits
on the ground that university does not have any rules in this regard.

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 VIII. POSH ACT

How is the ICC Committee formed?

What is the definition of “Sexual harassment”?

77. NISHA BHARTI V. UOI

Top RAW official involved. She tried to set herself alive in the PMO’s office to bring attention.
She was an agent. Action was taken against her. She was relegated to a junior position and she was
asked to lighten up and find her pleasure outside her marital realm. There were disciplinary
proceedings initiated. Proceedings were not rightfully conducted. When she came up in the HC in
this regard, the HC looked at the sensitive nature of the case. Ultimately, the SC noted that the
ambit of discrimination has to be broader having regard to the facts and circumstances of
the case; objective of the Act has to be looked into; reason and philosophy of enacting the
law has to be understood; no matter whatever action takes place in a workplace- anything
which is hostile or detrimental to her being.

78. VISHAKHA V. RAJASTHAN

Vishakha establishes the guideline and recognises that there are international laws which aim at
elimination of all forms of discrimination against women, to which India is a signatory.

79. APPAREL EXPORT PROMOTION COUNCIL

Sexual advances made against the niece. Imbalance in workplace between a female worker and
male superior. Here there is a disparity specifically due to gender. And the Court held that the
objective of the Act is to eradicate the gender imbalances.

Arvind case- Accused said that a very light thing was done not amounting to sexual harassment.

Preamble of the Act provides that it is to provide protection against sexual harassment of women
at workplace and for the prevention and redressal of complaints of sexual harassment and for
matters connected therewith or incidental thereto.

Thus, it is linking itself with fundamental rights and CEDAW.

There is no numerical threshold carved out.

Section 2(a) defines “aggrieved woman” means—

(i) in relation to a workplace, a woman, of any age whether employed or not, who alleges
to have been subjected to any act of sexual harassment by the respondent;

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 (ii) in relation to dwelling place or house, a woman of any age who is employed in such a
dwelling place or house;

Thus, the relationship between the person who suffered the harm is not relevant. What is important
is relationship between the person who caused the harm and his employer. The definition given is
wide. Also, it is not necessary that woman should be visiting such workplace in an official capacity.

Thus, aim is to include almost all places and cases.

However, this Act only applies to women. This is one of the criticisms of POSH as well. A man
cannot claim to have been sexually harassed.

Section 2(b)- Appropriate government. Determined by understanding from which government

is the institution receiving funds.

S. 2(e) “domestic worker” means a woman who is employed to do the household work in any
household for remuneration whether in cash or kind, either directly or through any agency on a
temporary, permanent, part time or full time basis, but does not include any member of the family
of the employer;

S. 2 (f) “employee” means a person employed at a workplace for any work on regular, temporary,
ad hoc or daily wage basis, either directly or through an agent, including a contractor, with or,
without the knowledge of the principal employer, whether for remuneration or not, or working on
a voluntary basis or otherwise, whether the terms of employment are express or implied and
includes a co-worker, a contract worker, probationer, trainee, apprentice or called by any other
such name;

S. 2 (g) “employer” means—

(i) in relation to any department, organisation, undertaking, establishment, enterprise, institution,

office, branch or unit of the appropriate Government or a local authority, the head of that
department, organisation, undertaking, establishment, enterprise, institution, office, branch or unit
or such other officer as the appropriate Government or the local authority, as the case may be, may
by an order specify in this behalf;

(ii) in any workplace not covered under sub-clause (i), any person responsible for the management,
supervision and control of the workplace.
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Explanation. —For the purposes of this sub-clause “management” includes the person or board or
committee responsible for formulation and administration of polices for such organisation;

(iii) in relation to workplace covered under sub-clauses (i) and (ii), the person discharging
contractual obligations with respect to his or her employees;

(iv) in relation to a dwelling place or house, a person or a household who employs or benefits from
the employment of domestic worker, irrespective of the number, time period or type of such worker
employed, or the nature of the employment or activities performed by the domestic worker;

Section 2(o) defines workplace to include:

(i) any department, organisation, undertaking, establishment, enterprise, institution,

office, branch or unit which is established, owned, controlled or wholly or substantially
financed by funds provided directly or indirectly by the appropriate Government or the
local authority or a Government company or a corporation or a co-operative society;
(ii) any private sector organisation or a private venture, undertaking, enterprise, institution,
establishment, society, trust, non-governmental organisation, unit or service provider
carrying on commercial, professional, vocational, educational, entertainmental,
industrial, health services or financial activities including production, supply, sale,
distribution or service;
(iii) hospitals or nursing homes;
(iv) any sports institute, stadium, sports complex or competition or games venue, whether
residential or not used for training, sports or other activities relating thereto;
(v) any place visited by the employee arising out of or during the course of employment
including transportation by the employer for undertaking such journey;
(vi) a dwelling place or a house.

Thus, it is drafted as wide as possible to include all places in it. Secondly, the Act is sought to be
applied in all the places a woman might visit. Women in the unorganized sector face a lot of
harassment when they work in houses. In order to provide them redressal, even houses are
included. Care work is an important element of work. Thus, if house is not included in workplace,
then unpaid care work would be excluded and woman would not be able to get protection there.

Section 2(n) defines sexual harassment to include any one or more of the following unwelcome
acts or behavior (whether directly or by implication) namely: — (i) physical contact and advances;

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or (ii) a demand or request for sexual favours; or (iii) making sexually coloured remarks; or (iv)
showing pornography; or (v) any other unwelcome physical, verbal or non-verbal conduct of
sexual nature.

Section 3 also provides some circumstances which can be considered sexual harassment
depending on facts and circumstances.

(i) implied or explicit promise of preferential treatment in her employment; or

(ii) implied or explicit threat of detrimental treatment in her employment; or
(iii) implied or explicit threat about her present or future employment status;
(iv) interference with her work or creating an intimidating or offensive or hostile work
environment for her; or
(v) humiliating treatment likely to affect her health or safety.

S. 4. Constitution of Internal Complaints Committee

Any employer who has 10 or more employees is required to constitute an internal complaints
committee. It has 4 members – a woman who is a senior employee, if not, a woman under different
employee. Then two persons, preferably women, and committed to the cause of women or who
have had experience in social work or have legal knowledge. Then 1 NGO member committed to
the cause of women.

This committee has to be there in every office of the company.

If household is there, then a local complaints committee is constituted to receive complaints of

sexual harassment from establishments where the Internal Committee has not been constituted due
to having less than ten workers or if the complaint is against the employer himself.

In case of physical or mental inability or death, complaint can be filed by others on her behalf as
well.

Second, complaint has to be filed within 3 months of the incident. And the same can be extended
by 3 month depending on circumstances.

If person harassed so requires, conciliation proceedings can take place. It can be in form of
apology, transfer of person to another department or office, etc.

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For POSH inquiry, there cannot be anonymous complaint.

After inquiry, as per service rules, recommendation is given by the committee as to what action
has to be taken against the person. If employer does not take recommended action, reasons have
to be recorded.

Critical analysis of woman being a chair of the ICC- will this necessarily mete out justice? Is
it enough?

Woman is also entitled to compensation as per section 13(3).

During the pendency of proceedings, the employee can ask and ICC can recommend certain things
under section 11 and 12. The aggrieved person or the person being inquired can ask for transfer to
other office, or aggrieved can get paid leave up to 3 months.

Section 14 provides punishment for false or malicious complaint and false evidence. This can be
in form of apology, transfer, etc.

Section 15 talks about considerations to be taken into account while deciding compensation.

Section 16 requires that name and address of complainant, respondent, and witnesses are to be kept
confidential.

Section 19 imposes some duties on employers.

In some states such as AP and Telangana, the POSH committee has to be registered with the
appropriate local authority. This is an additional duty on the employer.

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 IX. FACTORIES ACT, 1948

Healthy, safety, regularisation of working conditions of workers. Essential to maintain toilets in

the factories.

You have to come within the definition of a “factory”.

Section 2(m) of the Factories Act. Definition stresses on 3 parts:

1. There ought to be premises or precinct. A precinct will be a closed area. A premise will be a
larger area. But what will be a premise will depend on the facts and circumstances of the case.
2. Whether a manufacturing process is conducted.
3. The number of workers employed by the factory.

State of Bombay v. Ardeshir Hormosji Bhiwandiwala (Saltworks case)- Difference between

Premise and Precinct. Manufacturing process shall be with an intention to sell; Purpose of the
Factories Act.

Here, the establishment was quite big. But the owner’s contention was that it was just a large piece
of land; so, it should not fall within the scope of “factory”. Court held that for falling within the
scope of “premises”, a building need not be mandatorily present. Further, the Court focused on
“manufacturing process”. Court held that manufacturing process involved:

1. Significant number of workers employed in this facility.

2. Salt was being adapted for sale.

There was a commercial nature to it. Court held that that it was a manufacturing process.

80. VP GOPALA RAO V. PUBLIC PROSECUTOR:

Court looked into the specific nature of the manufacturing process that takes place in a tobacco
factory. Further, the court gave a very wide interpretation to the definition of “factory”, “workers”,
and “manufacturing process” under the Act.

In order to gauge the manufacturing process, all peculiar facts must be noted.

Factories Act imposes criminal liability in the nature of penalties.

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 81. LAL MOHAMMAD V. INDIAN RAILWAYS

A set of workers were employed for a particular project. They wanted to be the permanent
workmen of the Indian Railways. The Court held that no matter the treatment of the employees
was at par with the regular employees, the project could not have been described as a “factory”
and these employees were not regular employees of the establishment and the relationship of the
employees with the establishments ends as soon as the project ends.

Further, they could not qualify to permanent employees.

82. PARIMAL CHANDRA RAHA V. LIC

There was a statutory canteen involved in the case. What will be the nature of workers working in
the statutory canteen?

Whether employees of the same can be regularised as part of the establishment- Court held yes,
because the establishment had an administrative control over the canteen.

Court laid down a set of guidelines which stated that if the canteen workers satisfy the requirements
of proper age, qualifications. If yes, then employee of the establishment.

83. INDIAN PETROCHEMICALS CORPORATION LTD. V. SHRAMIK SENA

Independent contractor involved. Court held that person involved in canteens were there since
inception of the institution. All remuneration, administration controlled by the institution itself.
Court held that they will be employees of the establishment only for the purposes of the Factories
Act.

84. HS SHARMA V. ARTIFICIAL LIMBS MANUFACTURING CORPORATION

The independent contractor was controlling everything. The facts and circumstances of the case
become important to discern the relationship. The Court held that nature of relationship of the
independent contractor and employees becomes important; who has the administrative control- the
establishment or the independent contractor.

85. STATE OF GUJARAT V. JETHALAL CHELABHAI PATEL

A worker’s hands were chopped off. Court said no knowledge, consent or connivance of the
occupier or manager is not a defence. Court imposed strict liability. And held that the employer is
responsible if safety conditions are not followed.

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 86. JOHN DOUGLAS KEITH BROWN V. STATE OF WB

Both the manager and the occupier were liable for the violation of the provisions as the occupier
has full knowledge of the conduct of the manager. Any due diligence not followed will be imposed
on both the manager and occupier.

87. CLOTHING FACTORY, NATIONAL WORKERS V. UOI- PAYMENT OF OVERTIME

WAGES

S. 59(1) of the Factories Act- You get overtime wages if you work more than 9 hrs per day or 48
hrs per week.

88. SM DUTTA V. STATE OF GUJARAT

Inspector came and took notice of the due diligences in the factory whether they were followed in
a proper manner. Inspector lodged an FIR. Because of the faulty FIR, it was disregarded. Court
held that nature of the FIR is not to be looked into; intent of the maker of the report is to be looked
into. Proper working conditions, safety conditions- court has to see whether the report looks into
the same. Objective has to be seen; not the procedure.

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 X. EQUAL REMUNERATION ACT, 1976

Fundamental principle- Look into the facts of the case; equal pay for equal kind of work

The Act incorporates article 39 which provides for equal work for equal pay, and prevention of
discrimination on grounds of sex.

Here, the Act silent on the numerical threshold for the applicability of the Act. This is different
from other Acts. This widens the applicability of the Act.

S. 3, 4, 5 of the Act- V IMP

Section 3 provides for overriding effect of the Act.

Also, section 4 provides for equal remuneration for either gender. Thus, it is gender neutral. No
employer shall pay to any worker, employed by him in an establishment or employment,
remuneration, whether payable in cash or in kind, at rates less favourable than those at which
remuneration is paid by him to the workers of the opposite sex in such establishment or
employment for performing the same work or work of a similar nature.

First, remuneration has to be paid. Section 2(g) defines it as basic wage or salary, and any
additional emoluments whatsoever payable, either in cash or in kind, to a person employed in
respect of employment or work done in such employment, if the terms of the contract of
employment, express or implied, were fulfilled.

It is a wider definition than EPF Act. There should be nothing which should be excluded. Thus,
bonuses, etc. are also included in remuneration.

Section 2(h) defines same work or work of a similar nature as work in respect of which the skill,
effort and responsibility required are the same, when performed under similar working conditions,
by a man or a woman and the differences, if any, between the skill, effort and responsibility
required of a man and those required of a woman are not of practical importance in relation to the
terms and conditions of employment.

Thus, similar work is important, and designation of the position is not important.

Section 4(2) provides no employer shall, for the purpose of complying with the provisions of sub-
section (1), reduce the rate of remuneration of any worker.

Section 4(3) provides that where, in an establishment or employment, the rates of remuneration
payable before the commencement of this Act for men and women workers for the same work or
work of a similar nature are different only on the ground of sex, then the higher (in cases where

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there are only two rates), or, as the case may be, the highest (in cases where there are more than
two rates), of such rates shall be the rate at which remuneration shall be payable, on and from such
commencement, to such men and women workers: Provided that nothing in this sub-section shall
be deemed to entitle a worker to the revision of the rate of remuneration payable to him or her with
reference to the service rendered by him or her before the commencement of this Act.

Section 5 provides for an ongoing provision. While recruiting, promotion, transfer, etc., no
discrimination should be made between men and women except where employment of women is
prohibited.

89. MACKINNON MACKENZIE & CO. LTD V. AUDREY D’COSTA, 1987 SC.

IMP- Further, a settlement was entered into. Court held that the statute shall override the
settlement agreement; the applicability of the Act does not depend upon the financial ability
of the management to pay equal remuneration as provided by it.

Establishment where there were male and female stenographers. Female stenographers were
working as confidential stenographers, while male stenographers were working in the general pool.
A female stenographer filed case because they were paid remuneration on less favourable terms
than male stenographers. She filed case to recover the difference in remuneration between male
and female workers.

She had a role no less than the male stenographers. But there were some other jobs which the males
could do at night without giving opportunity to the female stenographers.

Respondent argued that it is in violation of section 4 of ERA. While company argues that nature
of work is different. Court said that there are some kinds of works that only men can do.

But in this case, it was the same work, and the work was not something that women were incapable
of doing. Thus, action of company was in violation of ERA.

Court starts by looking at ILO Convention. Article 2 requires States to enact a law for equal
remuneration. Court looks at England where there is Equal Wage Act. And EEC

It must be established that remuneration to female is less favourable than the male counterparts.
Work should be of same or similar nature.

In deciding whether the work is the same or broadly similar, the Authority should take a broad
view; next, in ascertaining whether any differences are of practical importance, the Authority
should take an equally broad approach for the very concept of similar work implies differences in

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details, but these should not defeat a claim for equality on trivial grounds. It should look at the
duties actually performed not those theoretically possible. In making comparison the Authority
should look at the duties generally performed by men and women. Where however both men and
women work at inconvenient times, there is no requirement that all those who work e.g. at night
shall be paid the same basic rate as all those who work normal day shifts. Thus, a woman who
works days cannot claim equality with a man on higher basic rate for working nights if in fact there
are women working nights on that rate too, and the applicant herself would be entitled to that rate
if she changed shifts.

Thus, three tests:

i. Broadly.
ii. Actual performance of duties.
iii. General performance by men and women should be looked at.

Exception: it is not the case that there can be no discrimination at all between men and women in
the matter of remuneration. There are some kinds of work which women may not be able to
undertake. Men do work like loading, unloading, carrying and lifting heavier things which women
cannot do. in such cases there cannot be any discrimination on the ground of sex. Discrimination
arises only where men and women doing the same or similar kind of work are paid differently.
Wherever sex discrimination is alleged, there should be a proper job evaluation before any further
enquiry is made. If the two jobs in an establishment are accorded an equal value by the application
of those criteria which are themselves non-discriminatory (i.e., those criteria which look directly
to the nature and extent of the demands made by the job) as distinct from criteria which set out
different values for men and women on the same demand and it is found that a man and a woman
employed on these two jobs are paid differently, then sex discrimination clearly arises.

Here, Court applies the tests and finds that there was no difference between the works performed
by male and female stenographers. Also, it was found that remuneration paid is different.

Company argued that since place of work is different for women (not in the general pool), the
work is different. But Court disallows this argument. Same remuneration has to be paid
irrespective of the place of work unless it is shown that women are not fit to do the work of the
male stenographers.

Court then discusses the effect of section 4(3) of ERA.

Court held that equal remuneration has to be paid to men and women.

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 90. AIR INDIA V. NERGESH MEERZA, 1981 SC.

IMP- The provision of retirement of Air hostesses on first pregnancy was struck down as
arbitrary and violative of Article 14 of the Constitution. The regulation, which provided for
extension of service of the air hostesses beyond 35 years and up to the age of 45 years at the
sole discretion of Managing Director, was also found to be arbitrary without any guidelines.

Para 7 is relevant. Management contended that women who are young and attractive are able to
deal with people better. The Court does not accept this.

There are two different categories of employees being created – air hostesses, which are female,
and assistant flight personnel, which are males.

Contractual conditions – within the first 4 years of services, air hostesses cannot marry.
While air flight personnel do not have any such requirement. They also have different ages
of retirement. Also, the moment air hostess has a child, she has to leave the service. But there
is no such condition for air flight personnel.

Air India extended the retirement age, but it was still lower than the air flight personnel.

Argument on behalf of AHs is that both AHs and AFCs form part of same class and perform similar
duties, therefore any discrimination is violative of article 14. Also, there is difference between
AHs posted in UK and in other Air India flights. It is also violation of article 15(1) and 16.

Air India argues that AHs form a separate class. With regard to their recruitment, promotional
avenues, different work, they form a different category. The AI and Indian Airline Regulations
themselves create a distinction.

However, it is not argued that they perform different work. Also, how is social condition a ground
for denying fundamental rights. Also, high expenditures made for substitutes cannot be a ground
for denying FRs.

Court observed that at the time of recruitment, air hostesses only require assessment certificate,
and being unmarried. While AFCs require to pass a test, and require a degree and 3 years course.
Also, there is no requirement of them being unmarried.

With regard to promotional avenues, men have greater avenues available than women. There was
one avenue available to women for promotion, but it was scrapped, because the male colleagues
alleged it to be unfair.

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With regard to retirement benefits, women were getting lesser benefits. This was sought to be
justified on the ground that men were putting in more number of years of service. Based on this,
Court said AHs and AFPs didn’t fall in the same category.

Thus, they can be treated differently and distinction between them can be allowed. However, they
are performing the same kind of functions. Thus, based on this, some benefits can be given. But
Court does not tell what would be the consequence of this. Also, Court does not invoke ERA.

This is problematic because when the Court recognized that nature of work is similar, it still
doesn’t give benefits.

Court then notes the conditions of service. For prohibition of marriage in the first 4 years of service,
Court tries to justify it by focussing on family planning programmes, age of marriage, etc. As
legislature has decided that women can get married at 18, the legislature’s wisdom cannot be
questioned. This is discriminatory as same restrictions are not imposed on men. But Court does
not delve into this.

Regarding leaving duty in case of conceiving a child, Court says that it is unjustified as it would
affect their ability to carry on their jobs. Also, burden of childcare is only placed on women, and
not on men.

Court removes the bar in case of first pregnancy. Court discusses section 16 of ERA which states
that if the government is satisfied that discrimination in remuneration is based on a factor other
than sex, it can make a declaration in this regard, and such different treatment would be allowed.

However, here, the discrimination was based on sex only, but the Court didn’t consider it.

Court said since AHs and AFPs form a different class, Article 14 is not attracted.

91. AIR INDIA CABIN CREW ASSOCIATION V. YESHAWINEE MERCHANT, 2003 SC.

Post Nergesh Meerza case, for recruits after 1997, there was a negotiation, and AHs were allowed
to fly till the age of 50. They would not be cabin crew anymore. But they would be ground
crew and they entered into a settlement agreement for lesser pay.

Whether any of the settlement agreements do not abrogate any of the rights provided by the
Statute.

This was challenged as discriminatory. Also, it was argued that Nergesh Meerza case was no
longer binding, as constitution of AI had changed. All promotions had to be put on hold till AHs

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catch up with seniority of AFPs. The case is decided by Bombay HC and Bombay HC upheld this
contention.

This was challenged in SC. It was argued that majority of workmen negotiated for these conditions,
and it was considered discriminatory only by minority. Court said that for pre-1997 recruits,
Nergesh holds the field, and cannot be nullified. Working till age of 58 is only applicable for post-
1997 recruits. Any discrimination between pre 1997 recruits cannot be allowed.

Court said that the notice which said that women cannot fly after age of 50 is not discriminatory
as it is a glamour industry.

Section 5 says that in matters of promotion after recruitment, there cannot be any discrimination.

Subsequent to this decision, conditions of service have changed. AHs can fly till age of 58, and
are entitled to same promotional avenues as women.

(IMP) Court looked into S. 15 of the Equal Remuneration of the Act. Allows beneficial
changes to be made which can override the Act. Can dilute the provisions of the statute only
if beneficial treatment is given.

(IMP) Age of Retirement from flying duties of Air hostesses at the age of 50 years with option
to them to accept post for ground duties after 50 and upto the age of 58 years; Early age
retirement policy of air hostesses in Air India does not contravene S. 5 of the Equal
Remuneration Act and otherwise, it is saved by S. 15(a) and 15(b)(ii) of the ER Act.

Also, Nergesh Mirza is overruled by Navtej Singh Johar. Court says that discrimination based on
sex+other factors being permissible is incorrect. Also, stereotypical distinctions between men and
women which are sought to be justified are incorrect, and cannot be considered as a reasonable
classification.

Thus, despite ERA, the distinction between men and women is not decreasing. This is because of

ILO, in Equal Remuneration Convention, provides for a different test – not equal pay for same or
similar value, but equal pay for work of equal value. Whether the work is of equal value to society
has to be seen. Even if the work is of different kinds, it does not matter. For this, the skill, efforts,
responsibilities and working conditions have to be taken into account. Australia, Canada, etc. have
adopted this method.

Code on Wages and difference between few terms that have been changed which broaden/narrow
the scope.

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 92. JANTA SHIKSHAN PRASARAK MANDAL V. THE INDUSTRIAL COURT, 2010 SC.

Two women sweepers were employed in girls hostel after the death of their husbands on
compassionate grounds. They claimed that they were being provided lesser remuneration than their
husbands. Employer claimed that appointment of women was temporary. Also, the employer for
them was different.

Employees argued that their work was similar to their male counterparts. Also, there were no fixed
hours, and since there were no other sweepers, they were doing all the work. Also, section 3 comes
into picture which gives overriding effect to ERA.

Court finds there is a violation of the Act. Work of male workers was similar to that of female
workers. Also, their appointment as temporary workers was irrelevant. Thus, court held that
payment ought to be same. Question was not with respect to the benefits but the remuneration
which was being paid.

Court held that even temporary appointments on compassionate grounds are liable to be
compensated on equal terms as those of men, if nature of work is similar.

93. THE COOPERATIVE STORE LTD. SUPER BAZAR V. BIMLA DEVI, 2005 DELHI HC.

There was different in positions, but the job was similar. Women were appointed as packing
cleaners, while men were appointed as packers. They were paid different wages.

The argument was that the designation and position was different. Since male and female workers
were working at different positions, different wages were to be paid. But the Court held that
designation does not matter. If nature of work is similar, designation is irrelevant. Court also
observed that gendered distinction between employees is not permissible.

Court held that designation would be immaterial and irrelevant if it is proved that both the
categories are doing the similar kind of work.

Exception:

Section 16-

Power to make declaration. -- Where the appropriate Government is, on a consideration of all
the circumstances of the case, satisfied that the differences in regard to the remuneration, or a
particular species of remuneration, or men and women workers in any establishment or
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employment is based on a factor other than sex, it may, by notification, make a declaration to that
effect, and any act of the employer attributable to such a difference shall not be deemed to be
contravention of any provision of this Act.

Definition given in S. 2(h)- “same work or work of a similar nature” means work in respect of
which the skill, effort and responsibility required are the same, when performed under similar

working conditions, by a man or a woman and the differences, if any, between the

skill, effort and responsibility required of a man and those required of a woman

are not of practical importance in relation to the terms and conditions of employment;

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 XI. PAYMENT OF GRATUITY ACT

Gratuity- Retirement Benefit.

3 Retirement Benefits:

1. Provident Fund
2. Pension
3. Gratuity

Pension is periodical till your death.

Gratuity is a one-time lump sum payment made immediately on retirement. Why is the lump sum
amount being paid? Because of the social security angle. Financial support safeguarding you from
the emergencies of your post-retirement life/old age when you would not be able to work anymore.

Provident Fund- employer and employee will contribute towards the provident fund equally.

Read S. 4, 7, 8- IMP

Section: 4 Payment of gratuity.

(1) Gratuity shall be payable to an employee on the termination of his employment after he has rendered
continuous service for not less than five years, -
(a) on his superannuation, or
(b) on his retirement or resignation, or
(c) on his death or disablement due to accident or disease.

If the employees and employer enter into a settlement that, rather than 15 days of wages give under
S. 4(2) of the Payment of Gratuity Act, a lesser number of days of wages will be entered into, will
that settlement stand?
No, because that will be to the detriment to the worker.

If there is a deferred payment of gratuity, an interest will also be applicable.

But if criminal proceedings are initiated against the employees, st

94. BEED STRICT CENTRAL COOPERATIVE BANK V. STATE OF MAHARASHTRA

In the event the amount of gratuity is calculated at the rate of 26 days’ salary for completed year
of service vis-à-vis 15 days of salary therefore, the tenure of an employee similarly situated will
vary. Whereas in the former case, an employee shall receive the entire amount of gratuity while

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worker for a lesser period, in the latter case, an employee drawing the same salary will have to
work for a longer period.

95. YK SINGLA V. PUNJAB NATIONAL BANK

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 XII. CONTRACT LABOUR REGULATION ACT

An Act to regulate the employment of contract labour in certain establishments and to provide for
its abolition in certain circumstances and for matters connected therewith.

There was practice of serangs. Practice developed that employees were not hired directly. Rather,
a contractor was hired who hired workers. Once India was colonized, this practice continued. Also,
employers used to outsource the work. This meant that there would be no permanency in jobs, no
benefits in terms of IDA, Payment of Wages Act, etc.

To prevent such activities, the first method was to expand the scope of employees under the Acts
themselves, such as the EPF or ESIC Acts. However, question regarding permanency, seniority
and wages payment remained. As a result, CLRA came and permitted contract labour in some
cases, while prohibited them in some. Also, security, permanency, etc. provisions were made for
contract labour.

In first instance, as per section 1(4), Act applies to establishments with 20 or more workers in the
last 12 months and to every contractor who employs 20 or more workers in the last 12 months. As
per section 1(5), it does not apply to establishments in which work only of an intermittent or casual
nature is performed.

Explanation to section 1(5)(b) states that work performed in an establishment shall not be deemed
to be of an intermittent nature— (i) if it was performed for more than one hundred and twenty days
in the preceding twelve months, or (ii) if it is of a seasonal character and is performed for more
than sixty days in a year.

In various cases, arguments are made that since nature of work is seasonal, Act should cover it.
Thus, what is important is that work should be the primary source of business.

Workman is defined under section 2(i) as any person employed in or in connection with the work
of any establishment to do any skilled, semi-skilled or un-skilled manual, supervisory, technical
or clerical work for hire or reward, whether the terms of employment be express or implied.

Thus, Act is based on definition of IDA.

For definition of appropriate government, reference has been made to IDA by the Court in Air
India case.

Contract labour is defined in section 2(b). A workman shall be deemed to be employed as “contract
labour” in or in connection with the work of an establishment when he is hired in or in connection

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with such work by or through a contractor, with or without the knowledge of the principal
employer.

Thus, principal employer need not know who has been hired. Here, the element of control and
supervision is not required. All that is required is person is doing work in connection with the
establishment.

Section 2(c) defines contractor as a person who undertakes to produce a given result for the
establishment, other than a mere supply of goods of articles of manufacture to such establishment,
through contract labour or who supplies contract labour for any work of the establishment and
includes a sub-contractor.

Licenses are required to be taken as per section 7 by establishments employing contract labour.
Thus, it needs to be seen whether license has been taken by the principal employer if the
establishment engages contract labour.

For contractors supplying contract labour, section 12 requires contractors to obtain license in this
regard.

Section 10 discusses prohibition of employment of contract labour.

(1) Notwithstanding anything contained in this Act, the appropriate Government may, after
consultation with the Central Board or, as the case may be, a State Board, prohibit, by notification
in the Official Gazette, employment of contract labour in any process, operation or other work in
any establishment.

(2) Before issuing any notification under sub-section (1) in relation to an establishment, the
appropriate Government shall have regard to the conditions of work and benefits provided for the
contract labour in that establishment and other relevant factors, such as— (a) whether the process,
operation or other work is incidental to, or necessary for the industry, trade, business, manufacture
or occupation that is carried on in the establishment; (b) whether it is of perennial nature, that is to
say, it is of sufficient duration having regard to the nature of industry, trade, business, manufacture
or occupation carried on in that establishment; (c) whether it is done ordinarily through, regular
workmen in that establishment or an establishment similar thereto; (d) whether it is sufficient to
employ considerable number of wholetime workmen.

Explanation—If a question arises whether any process or operation or other work is of perennial
nature, the decision of the appropriate Government thereon shall be final.

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A lot of establishments engage contractual employees. Here, permanency is becoming less
prevalent, and contractual employees are becoming reality. Question arises regarding perennial
nature of work.

96. AIR INDIA STATUTORY CORPORATION V. UNITED LABOUR UNION, 1996 SC.
(OVERRULED)

S. 10 of the Act- request from the appellant that discretion should be left with management for
absorption of contract labourers cannot be accepted.

Two theories are propounded – first, these persons are required to go to employees. They can raise
industrial dispute if contract subsists, but contract is only between contractors and workmen.

As per second theory, if notification for abolition is made, the relationship between contractor and
workers is abolished, and relation between principal employer and workmen is established.

In Air India case, Court looks at Article 19, 21, etc., and right to health, livelihood, etc. Intention
of legislators couldn’t have been to deprive workers of rights. If intention is to better the working
conditions, then relationship between the parties cannot be terminated and other persons cannot be
hired as new.

Secondly, looking at language of section 10, no provision discusses that workers have to be
regularized. Court says the key to understanding is the preamble, which is to regulate the
employment of contract labour. Consequence of abolition and regularization is a connected matter,
and although the legislature does not say it explicitly, the intention of legislature is clearly to
regularize.

Court also discusses that all sections subsequent to section 12 provides for clean drinking water,
restrooms, canteens, etc. which is for benefit and betterment of contract labour. If this is the case
when they are contract labour, it cannot be the intention that relationship would be terminated after
abolition notification is made.

Also, if notification is issued, then it is better to regularize contract labour as otherwise work would
come at standstill till other employees are hired.

After this, SAIL case comes. Here, the Court noted that employer will have to incur additional
burden to hire new worker, but this has to be done. Second, the committee didn’t talk about
regularization at all.

Third, the precedent is divided into three:

i. Where there was no regularization at all.

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 ii. Regularization was there when there was a sham contract and labour were actually
workers of principal employer only.
iii. Case of statutory canteens – if such canteens are given to contractors, such workers
would be considered employees of the principal employer only as a statutory obligation
is being fulfilled.

Regularization was not the norm even before the statute came into picture. Thus, when it is clear
that legislature didn’t intend to speak about regularization, this is imposing words on the
legislature, which cannot be permitted.

Contract labour have contract with contractor. Thus, if notification is issued, contract labour can
raise industrial dispute with contractor, and not principal employer.

Two other points are raised. First, in regard to government services, many aspects such as
permanency, reservations, seniority, etc. have to be taken into account. If regularization is allowed,
these considerations wouldn’t be fulfilled.

Second, if earlier there was a contractor for 5 years. His tenure ends, new contractor comes for 2
months and then notification is issued. In such case, it would be unjust to regularize workers who
worked only for 2 months.

Thus, automatic regularization of contract labour is not the norm. There have been cases when
contract labour have been given primacy in regularization over others, but this cannot be
considered as a norm or a requirement.

The CLRA also provides for some other things. Section 16 discusses providing canteens. When
there are 100 persons or more, canteens have to be provided by the contractor. Similarly,
washrooms and restrooms have to be provided.

If the contractor does not provide for this, the principal employer needs to provide for these.

Contractor has the responsibility to pay wages. If he doesn’t do so, burden falls on principal
employer, who can later recover such amount from contractor.

97. STEEL AUTHORITY OF INDIA V. NATIONAL UNION OF WATER FRONT WORKERS

S. 10 of the Act was intended to work as permanent solution to problem rather than to provide one-
time measures.

Write the holding- from the Slides.

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Control between principal employer and contract labourers- through the ambit of supervision,
management and control. If these 3 factors are shown, then the contract labourers have the right to
be regularised.

98. AP STATE ROAD TRANSPORT CORPORATION V. SRINIVAS REDDY- READ FROM

THE SLIDES

99. GAMMON INDIA V. UOI

V IMP- Constitutionality of the Contract Labourers Act. CLRA provides safeguards against unfair
labour practices.

100. BALWANT RAI SALUJA V. AIR OF INDIA

Relationship to be proved. Who was paying the remuneration, who had supervision or control?

Durgapur Casual Workers’ Union v. FCI- Not IMP

101. SECRETARY, STATE OF KARNATAKA V. UMA DEVI- READ FROM SLIDES

Informal Organised Sector

Very Large workforce. 90 percent of the workforce falls within the informal sector, which is not
recognised or regulated by the public authorities.

Coined in the 1970s.

Persons working in the agriculture or other informal sectors like women working in households or
domestic workers. All of this combined form what is essentially known as the informal sector.

The word “informal sector” is however not used in India. Rather, it is known as the Unorganised
workers Act. We used the term “unorganised” for the informal sector. Used interchangeably.

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How ILO has tried to define these persons?

These persons are not defined or regulated under any social security law.

Objective of ensuring that these informal unorganised workers get some social security:

1. Labour Market security

2. Employment security
3. Job security
4. Work security- get some training for being able to work efficiently
5. Skill
6. Income security. Income security as understood in ESI, ECA, EPF
7. Representation. Representation as understood in TU and ID Act

ILO thought that the informal sector is not something which would last, and as a bubble, it would
burst. But it had continued.

People are realising that labour law actually needs an expansion and it is to fit these persons who
do not fit within the numerical threshold or other threshold, that protection for informal sector is
important.

2008 Act- Main topic in this field.

Problems:

1. Timeline in question. The Act does not provide a timeline of what is to be done and when is it
to be done.
2. Central body to be constituted. No Central body has been set up as of now.
3. The Act does nothing for the workers. It simply takes away the existing things which were
there with respect to workers and simply says that these were the social security measures
available.
4. A lot of these things are available to people below the poverty line. What this implies is that
people who are above the poverty line are not covered within the ambit of the social security
legislations. But the problem is that this legislation does not recognise the intersectionality
inherent in the informal security. It is not necessary that an informal sector worker will always
be a worker below the poverty line.

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Code for Social security recognises protection for gig and platform workers. A lot of cases like PN
patel have already recognised “atypical work” as important work, that requires social security
protection.

In the context of CLRA, there is no right of absorption any more. No right to be absorbed
any more. Test that has been applied by the Umadevi case is that no right of absorption
under the legislation. But the problem is that the legislation ignores what can the contract
labourers do once they are retrenched.

These legislations like CLRA or the Code of Social security as well as the Migrant Workers
Act take some reasonable efforts but do not do enough.

Migrant workers act- Only because of the Intervention of the SC in In re Public Miseries, that
the e-shram portals were set up, and the SC explicitly recognised that all migrant workers do not
have a cell phone; but the progress is in fact slow. The problem is that we do not know the extent
of the informal sector or who do we classify as informal labour. The definition becomes a large
problem; progress has been made but at the same time, it does not do enough.

Most of the legislations are not enforced properly and are just there.

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