Supreme Court: In a case where primary question for consideration was whether the accident which caused the death of the deceased while commuting for place of work could be said to have arisen out of and in the course of employment, the Division Bench of Manoj Misra and K.V. Viswanathan*, JJ., interpreted the phrase “accident arising out of and in the course of his employment” occurring in Section 3 of the Employees’ Compensation Act, 1923 (‘EC Act’) to include accident occurring to an employee while commuting from his residence to the place of employment for duty or vice versa, provided the nexus between the circumstances, time and place in which the accident occurred and the employment was established.
The Court stated that considering that the deceased was a night watchman and was dutifully proceeding to his workplace to be well on time, there was a clear nexus between the circumstances, time and place in which the accident occurred and his employment as watchman. The accident having clearly arose out of and in the course of employment, the was justified in ordering the claim under the EC Act.
Background
In the present case, the deceased was employed as a watchman in a Sugar Factory, and his duty hours were from early morning 3 am to 11 am. On 22-4-2003, the deceased left home on his motorcycle to report for duty. However, unfortunately, he never reached his workplace, as when he was 5 kms away from the factory, he was involved in a fatal accident. He left a widow, four children and his mother behind.
In a claim filed under the EC Act, the employer and the insurance company set up the defence that since the accident occurred outside the precincts of the factory, the accident had not arisen ‘out of’ or ‘in the course of his employment’. However, the Commissioner for Workmen’s Compensation and Civil Judge, Senior Division, Osmanabad (‘the Commissioner’) awarded Rs. 3,26,140 along with interest at the rate 12% per annum to the family members. Further, the Insurance Company was directed to deposit the amount since there was a valid Insurance Policy, and the employer was asked to pay 50% of the awarded amount as penalty.
Aggrieved by the aforesaid order, the Insurance Company filed an appeal before the Bombay High Court (‘High Court’). The High Court relied on ESI Corpn., v. Francis De Costa, (1996) 6 SCC 1 (‘Francis De Costa case’), and set aside the Commissioner’s order holding that since the deceased was on his way to his employment, the accident could not be said to have its origin in the employment.
Analysis, Law, and Decision
The Court stated that Section 51E of the Employees’ State Insurance Act, 1948 (‘ESI Act’), clearly neutralised the holding in Francis De Costa case (supra), when it provided that an accident occurring to an employee while commuting from his residence to the place of employment for duty or vice versa, shall be deemed to have arisen ‘out of’ and ‘in the course of employment’. The only condition was that nexus between the circumstances, the time and place in which the accident occurred, and the employment had to be established.
A. Beneficial nature of ESI Act and EC Act
The Court stated that the ESI Act was enacted to provide certain benefits to employees in case of sickness, maternity and employment injury and for making provisions for certain other matters in relation thereto. Further, the EC Act was enacted to provide for the payment by certain classes of employers to their employees of compensation for injury by accident. Section 3 of EC Act, provided 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 the Act.
B. Is Section 51E of ESI Act clarificatory?
The Court stated that a declaratory Act is one, which is enacted to remove doubts existing as to common law or the meaning or effect of any statute. In such an event, the said statute being declaratory and clarificatory in nature, could be given retrospective effect.
The Court applied the principle laid down in K. Govindan v. CIT, (2001) 1 SCC 460, to examine whether Section 51E of ESI Act was clarificatory in character. The Court clarified that the meaning of the phrase “accident arising out of and in the course of employment” insofar as accidents occurring to employees while proceeding to the workplace and vice versa, that Section 51E was enacted in the ESI Act. Thus, the Court stated that there is doubt that the said amendment was clarificatory in character and would have retrospective effect.
C. Statutes ‘In Pari Materia’
The Court stated that all that we were examining here was whether a meaning given to the phrase “arising out of and in the course of employment” insofar as it dealt with accidents happening while commuting to the place of work and vice versa in the ESI Act, could be said to be the same for the phrase “accident arising out of and in the course of employment” occurring in Section 3 of the EC Act.
The Court stated that the operative phraseology occurring in Section 3 of the EC Act was the same as the one that it occurred in Section 2(8) of the ESI Act which defines, ‘employment injury’. Further, both Acts are beneficial legislations intended as social security measures to ameliorate the conditions of employees. The Court stated that as rightly noticed by Chief Justice (Retd.) Ganjendragadkar in the 62nd Law Commission Report, the only difference between the two statutes was that while the ESI Act applied to factories and notified establishments, the EC Act applied to other employers, as defined.
The Court stated that it is well settled that where statutes in pari materia serve a common object in absence of any provision indicating to the contrary, it is permissible for a court of law to ascertain the meaning of the provision in the enactment by comparing its language with the other enactment relating to the same subject matter.
Thus, the Court interpreted the phrase “accident arising out of and in the course of his employment” occurring in Section 3 of the EC Act to include accident occurring to an employee while commuting from his residence to the place of employment for duty or vice versa, provided the nexus between the circumstances, time and place in which the accident occurred and the employment was established.
The Court stated that considering that the deceased was a night watchman and was dutifully proceeding to his workplace to be well on time, there was a clear nexus between the circumstances, time and place in which the accident occurred and his employment as watchman. The accident having clearly arose out of and in the course of employment, the was justified in ordering the claim under the EC Act.
Thus, the Court set aside the judgment passed by the Bombay High Court and judgment passed by the Commissioner was restored.
[Daivshala v. Oriental Insurance Co. Ltd., 2025 SCC OnLine SC 1534, decided on 28-7-2025]
*Judgment authored by- Justice K.V. Viswanathan
Advocates who appeared in this case:
For the Appellant: Atul Babasaheb Dakh, AOR; Diganta Gogoi, Adv.; Bitu Kumar Singh, Adv.; Praveen Kumar Pandey, Adv.
For the Respondent: Amrreeta Swaarup, AOR.
