Dual Compensation: From Employer and under ESI Act

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A. Issue 

Western Indian Plywood Judgment

The sole question which arises for consideration in this appeal is whether the respondent, who is an employee of the appellant, can claim damages from the appellant on account of the injury suffered by him during the course of employment when he was already received the benefit under the provision of the Employees State Insurance Act 1948 (hereinafter referred to as the ‘ESI Act’.

B. Relevant Provisions

There are only three provisions of the ESI which are relevant for the present case.

Section 2 (8): Employment injury means perennial injury to an occupational disease arising out of and in the course of his Employment, being an insurable employment whether the accident occurs or the occupational diseases are contracted within or outside the territorial limits of India.

Section 53: Bar against receiving or recovery of compensation for damages under any other law:– An insured person or his dependents shall not be entitled to receive or recover whether from the employer of the insured person or from any other person, any compensation or damages under the Workmen’s Compensation Act, 1923 (8 of 1923) of 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.

Section 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.

C. The Apex Court Verdict

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  • The position with regard to the claim of an employee against his employer on his suffering an employment injury now stands settled with the decision of this Court in Trehan Vs. Associated Electrical Agencies and Anr. [(1996) 4 SCC 255]. In that case, Trehan, who was an employee of the Respondent, received injuries on his face while he was carrying out repairs of a television in the course of his employment as a result of which he lost vision in the left eye. After receiving the benefit from the Employees’ State Insurance Corporation under the ESI Act he served a notice to the respondent demanding Rs. 7 lacs as compensation of Rs. 1,06,785/-. The employer objected to the maintainable of the same and relied upon Section 53 of the ESI Act. The Commissioner overruled the employer’s objection and followed the judgment of the Full Bench of the Kerala High Court in the present case and observed that ESI being a welfare legislation, the Parliament could not have intended to create a bar against the workmen claiming more advantageous benefit under the Workmen’s Compensation Act. The single judge of the High Court dismissed the writ petition filed by the employer but the Division Bench, in appeal, held that in view of the bar created by Section 53, the application for compensation filed by Trehan was not maintainable. The Court analyzed the provisions of Section 53 of the Act and observed at page 260 as follows:

In the background and context, we have to consider the effect of the bar created by Section 53 of the ESI Act. The bar is against receiving or recovering any compensation or damages under the Workmen’s Compensation Act or any other law for the time being in force or otherwise in respect of an employment injury. The bar is absolute as can be seen from the use of the word’s shall not be entitled to receive or recover, “whether from the employer of the insured person or from other person”, “any compensation or damages” and “under the Workmen’s Compensation Act, 1923 (8 of 1923) or, any other law for the time being in force or otherwise”. The words “employed by the legislature” are clear and unequivocal. When such a bar is created in clear and express terms it would neither be permissible nor proper to enter 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 constructing it as not taking away the right of the workman who is an insured person and an employee under the ESI Act to claim compensation under the Workmen’s Compensation Act. We are of the opinion that the High Court was right in holding that the view of the bar created by Section 53 of the application for compensation filed by the appellant under the Workmen’s Compensation Act was not maintainable.”

  • In view of the aforesaid observations in Trehan’s case, with which the court agreed, it is clear that the respondent could not make a claim for damages. Section 53 disentitles an employee who has suffered an employment injury from receiving compensation or damages under the Workmen’s Compensation Act or any other law for the time being in force or otherwise. The use of the expression “or Otherwise” would clearly indicate that this section is not limited to ousting the relief claimed only under any status but the workings 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 ESI Act. Even though the ESI Act is a beneficial legislation the Legislature had through 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 sustain by him is an employment injury.
  • The ESI Act has been enacted to provide certain benefits to the case of sickness, maternity and employment injury and make provisions in respect thereof. Under this Act, the contribution is made not only by the employee but also by the employer. The claim by the employer against the employer where the relationship of the employer and employee exists was meant to be governed by the ESI Act alone. It is precisely for this reason that the Madras High Court in Mangalamma’s case had observed that the object of Section 53 of the ESI Act was to save the employer from facing more than one claim in relation to the same accident. This, in the apex court opinion, is the correct reading of the said provision. This being so the claim of the ESI Act, the trial court was right in dismissing the application under Order 33 Rule 1 of the Code Of Civil Procedure.

D. Update on Trehan Case 

The settled position in Trehan Case supra was also relied upon in 2015 judgment Dhrupad Bai & Ors. vs. M/s Technocraft [Civil Appeal 8155 of 2014].

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