citation ESI Act

Querist : Anonymous (Querist) 28 July 2011 This query is : Resolved
Respectd members
If the employee is insured/covered under the ESI Act. WCA(ECA) will not applicable. Law is settled in this regard
please give me any citation
of Hon'ble Apex court pls paste the citation Thanks in Advance

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V.Harikrishnan (Expert) 28 July 2011
Please se the following judgment
V.Harikrishnan
CASE NO.:
Appeal (civil) 8623 of 2002

PETITIONER:
BHARAGATH ENGINEERING

RESPONDENT:
R. RANGANAYAKI AND ANR.

DATE OF JUDGMENT: 20/12/2002

BENCH:
SYED SHAH MOHAMMED QUADRI & ARIJIT PASAYAT

JUDGMENT:
JUDGMENT

2002 Supp(5) SCR 642

The Judgment of the Court was delivered by PASAYAT, J. Leave granted.

The challenge in this appeal is to a Division Bench judgments of the High
Court at Madras. The point involved, though short, is interesting and
relates to the question as to who can be treated as an 'insured person'
under Section 2(14) of the Employees' State Insurance Act, 1948 in short,
'the Act'.

A brief reference to the factual position, which is almost undisputed,
would suffice.

One Balakrishnan [hereinater referred to as 'the deceased employee]' was
employed by the appellant [hereinafter referred to as 'the employer'] on
and from 20th May 1987. He lost his life in an accident which was claimed
to be arising out of and in the course of his employment with the employer.
Respondent No.1 [hereinafter referred to as 'the claimant'] filed an
application for compensation before the Commissioner for Workmen's
Compensation, Trichy, under Workmen's Compensation Act, 1923 hereinafter
referred to as 'the Compensation Act'. [The employer questioned the
maintainability of the proceeding on the ground that Section 53 of the Act
clearly barred entertainment of such an application. The stand was accepted
by the Deputy Commissioner of Labour and the Commissioner for Workmen
Compensation, who held that the deceased employee was covered by the Act
and was an 'insured person' as contemplated under Section 2(14) of the Act.
The matter was carried in appeal before the High Court by the claimant
which, by the impugned order, held that Section 53 of the Act had no
application. Consequent upon recording a finding that the deceased employee
cannot be treated to be an insured person. It was noticed by the High Court
that the registration for the purpose of insurance was granted subsequent
to the death of the employee. In fact, the application for registration was
submitted after the death of the employee and at the time the registration
was granted, the employee was dead. Registration with the Employees' State
Insurance Corporation [in short 'the Corporation'] was considered to be the
outcome of a contract between the employee and the Corporation. It was,
therefore, held that an employee could be covered by the benefits of the
Act only when the registration is granted and not at an anterior point of
time. Direction was given to the authorities under the Compensation Act to
deal with the application.

In support of the appeal, learned counsel appearing for the appellant
submitted that the High Court's approach was erroneous because the language
of Section 2(14) of the Act makes it clear that even before an employee is
registered for the purpose of insurance with the Corporation, the
obligation of the employer to pay contribution is not wiped out. Reference
was made to various provisions, more particularly to Rule 58(2)(b) of the
Employees' State Insurance (Central) Rules, 1950 (in short the Rules) and
Regulation (4) of the Employees' State Insurance (General) Regulations,
1950 [in short, 'the Regulations'.] Rule 58(2)(b) deals with a situation
where 'employment injuries' are sustained before the commencement of the
first benefit period. Merely because the contribution had not been paid by
the time the employee died, that does not affect the liability of the
Corporation. There is a statutory obligation to pay the contribution in
respect of every employee once the factory or establishment is covered by
the Act and the obligation to pay the contribution commences from the date
of the application of the Act to such factory or establishment. With
reference to Section 38 of the Act, it was submitted that there was a
statutory requirement for insurance in relation to all employees. The
scheme of the Act is conceptually different from other contracts of
insurance and the relationship of the contractor and the contractee is not
that of the employee and the Corporation, but that of the employer and the
Corporation.

Learned counsel appearing for the Corporation submitted that Section 2(14)
of the Act was wide enough to cover an employee who dies even before the
registration with the Corporation. According to him, the benefit under the
Act is more beneficial to the employee than the compensation that could be
awarded under the Compensation Act.

Learned counsel appearing for the claimant, on the other hand, submitted
that only when the person is registered for the purpose of insurance with
the Corporation, the Act has application and it is not that all the
employees are automatically insured. What is contemplated under Section 38
of the Act, which is a statutory requirement, is to insure all the
employees.

Section 2(14) of the Act, which is the povotal provision, reads as follows:

" 'Insured person' means a person who is or was an employee in respect of
whom contributions are or were payable under this Act and who is, by reason
thereof, entitled to any of the benefits provided by this Act."

It is to be noted that the crucial expression in Section 2(14) of the Act
is 'are or were payable'. It is the obligation of the employer to pay the
contribution from the date the Act applies to the factory or the
establishment. In .5.7. v. Harrisson Malayalam Pvt. Ltd., [1993] 4 S.C.C.
361, the stand of the employer that employees are not traceable or that
there is dispute about their whereabouts does not do away with the
employer's obligation to pay the contribution. In .5.7. Corporation v.
Hotel Kalpaka International, [1993] 2 SCC 9, it was held that the employer
cannot be heard to contend that since he had not deducted the employee's
contribution on the wages of the employees or that the business had been
closed, he could not be made liable. Said view was reiterated in Employees'
State Insurance Corporation v. Harrisons Malayalam Limited, [1998] 9 SCC
74. That being the position, the date of payment of contribution is really
not very material. In fact, Section 38 of the Act casts a statutory
obligation on the employer to insure its employees. That being a statutory
obligation, the date of commencement has to be from the date of employment
of the concerned employee.

The scheme of the Act, the Rules and the Regulations clearly spell out that
the insurance covered under the Act is distinct and different from the
contract of insurance in general. Under the Act, the contributions go into
a Fund under Section 26 for disbursal of benefits in case of accident,
disablement, sickness, maternity, etc. The contribution required to be made
is not paid back even if an employee does not avail any benefit. It is to
be noted that under Regulation 17-A, if medical care is needed before the
issuance of temporary identification certificate, the employer is required
to issue a certificate of employment so that the employee can avail the
facilities available. 'Wage period', 'benefit period' and 'contribution
period' are defined in Section 2(23) of the Act, Rule 2(lC) are Rule 2(2-A)
of the Rules. Rule 58(2)(b) is a very significant provision. For a person
who becomes an employee for the first time within the meaning of the Act,
the contribution period under Regulation (4) commences from the date of
such employment from the contribution period current on that day and
corresponding benefit period shall commence on the expiry of the period of
nine months from the date of such employment. In cases where employment
injuries results in death before the commencement of the first benefit
period. Rule 58(2Xb)(ii) provides the method of computation of dependent
benefit. It provides for computation of dependent benefits in the case of
an employee dying as a result of employment injuries sustained before the
first benefit period and before the expiry of the first wage period.

Rule 58(2)(b)(ii), insofar as it is relevant, reads as follows: Dependants'
s benefits.

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

(i) xxx xxx
xxx

(ii) Where a person sustained employment injury before the expiry of the
first wage period in the contribution period in which the injury occurs,
the rate, forty per cent more than the standard benefit rate, rounded off
to the next higher multiple of five paise corresponding to the group in
which wages actually earned or which would have been earned had he worked
for a full day on the date of accident/ fall."

When considered in the background of statutory provisions, noted above, the
payment of non-payment of contributions and action or non-action prior to
or subsequent to the date of accident is really inconsequential. The
deceased employee was clearly an 'insured person', as defined in the Act.
As the deceased employee has suffered an employment injury as defined under
Section 2(8) of the Act and there is no dispute that he was in employment
of the employer, by operation of Section 53 of the Act, proceedings under
the Compensation Act were excluded statutorily. The High Court was not
justified in holding otherwise. We find that the Corporation has filed an
affidavit indicating that the benefits under the Act shall be extended to
the persons entitled under the Act. The benefits shall be worked out by the
Corporation and shall be extended to the eligible persons.

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

Querist : Anonymous (Querist) 28 July 2011

Thank you V.Harikrishnan sir for Important citation

Kirti Kar Tripathi (Expert) 28 July 2011
Thanks V.Harikrishnan for latest citation. I have already informed that law is settled in this regard. Find another citation