Supreme Court of India
Daivshala vs The Oriental Insurance Co. Ltd on 29 July, 2025
2025 INSC 904 REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 6986 OF 2015
(@ SPECIAL LEAVE PETITION (C) NO. 16573 OF 2012)
DAIVSHALA & ORS. APPELLANT (s)
VERSUS
ORIENTAL INSURANCE
COMPANY LTD. & ANR. RESPONDENT(s)
JUDGMENT
K.V. Viswanathan, J.
1. Shahu Sampatrao Jadhavar was employed as a watchman in the
Respondent no. 2-Sugar Factory. His duty hours were from early
morning 3 am to 11 am. On 22nd April 2003, he left home on his
Motorcycle to report for duty. However, unfortunately, he never
Signature Not Verified
Digitally signed by
NEETU SACHDEVA
reached his place of work. When he was 5 kms away from the factory,
Date: 2025.07.29
16:46:21 IST
Reason:
1
his motorcycle was involved in a fatal accident. He left a large family
behind. A widow, four children and his mother.
2. In a claim filed under the Employees’ Compensation Act, 1923
(hereinafter the ‘EC Act’) the employer and the insurance company set
up the defence that the accident had not arisen out of or in the course
of his employment, since the accident occurred outside the precincts of
the factory. Overruling the same, the Commissioner for Workmen’s
Compensation and Civil Judge, Senior Division, Osmanabad awarded
a sum of Rs 3,26,140/- along with interest @ 12 per cent per annum
from 22.05.2003 to the family members. The Insurance Company was
directed to deposit the amount since there was a valid Insurance Policy.
The employer was asked to pay 50 per cent of the awarded amount as
penalty. The employer and the Insurance Company were directed to
pay the amount of penalty and the awarded compensation within one
month from the date of the order.
3. Aggrieved, the Insurance Company filed First Appeal No.2015 of
2011 before the High Court of Judicature of Bombay, Bench at
Aurangabad. The High Court has reversed the findings of the
2
Commissioner and set aside the order holding that since the deceased
was on his way to his employment, the accident cannot be said to have
its origin in the employment. The aggrieved family members are in
appeal by way of special leave.
4. The High Court, to support its conclusion, relied on the judgment
dated 11.09.1996 of this Court rendered in Regional Director, E.S.I.
Corporation & Another vs. Francis De Costa and Another, (1996) 6
SCC 1. The said judgment arose under the Employees’ State Insurance
Act, 1948 (hereinafter the ‘ESI Act’). However, the crucial phrase
employed in the operating Section of both the ESI Act and the EC Act,
were the same. The Employees’ Compensation Act, 1923 was
originally known as the Workmen’s Compensation Act, 1923.
5. We have heard Mr. Atul Babasaheb Dakh, learned counsel for the
appellants and Ms. Amrreeta Swaarup, learned counsel for the
respondent No.1-Insurance Company. Respondent No.2 employer,
though served, has not entered appearance.
6. Learned counsel for the appellant submitted that looking to the
nature of the work of the deceased, the peril which he faced was not
something personal rather it was incidental to his employment.
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Learned counsel contended that there was causal connection between
the employment and the accident. Learned counsel relied on the theory
of notional extension to support his plea. Learned counsel submitted
that the EC Act is a beneficial legislation intended for the welfare of
the employees. Learned counsel submitted that after the order of the
trial Court, the Insurance Company had deposited the compensation
with interest and the appellants were permitted to withdraw the
principal amount. Learned counsel submitted that subsequent to the
judgment in Francis De Costa (supra), Section 51E has been
introduced in the ESI Act and, as such, the judgment in Francis De
Costa (supra) can no longer govern the situation.
7. Learned counsel for the respondent No.1-Insurance Company
submitted that the accident cannot be said to have its origin in the
employment. Learned counsel contended that the employment cannot
commence until the employee has reached the place of work and what
happened before that could not be said to be in the course of
employment. Learned counsel strongly relied on the judgment in
Francis De Costa (supra) and certain judgments relied upon in the said
judgment. Learned counsel distinguished the judgment in General
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Manager, B.E.S.T. Undertaking, Bombay vs. Mrs. Agnes, (1964) 3
SCR 930 = 1963 SCC OnLine SC 252 and submitted that in the said
case the employee was given the facility to travel back home in the bus
by the employer therein and, as such, the theory of notional extension
was applied. According to the learned counsel, the said theory can have
no application to the facts of the present case. According to the learned
counsel, the employee was engaged in “a purely personal matter while
commuting to or from work”.
8. We have carefully considered the submissions of the learned
counsel for the parties and perused the records.
QUESTIONS FOR CONSIDERATION:
9. The primary question that arises for consideration in this case is
whether the accident which caused the death of the deceased could be
said to have arisen out of and in the course of employment?
10. Certain incidental questions also arise which have been set out
later in the judgment.
5
STATUTORY PROVISIONS: –
11. Before we advert to the holding in Francis De Costa (Supra), it
will be useful to refer to the relevant statutory provisions in the EC Act
as well as the ESI Act. Section 3 of the EC Act reads as under: –
“3. Employer’s liability for compensation.- (1) If personal
injury is caused to a 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 ……….”
12. Section 46(1)(d) (which deals with ‘Benefits’) and Section 2(8)
(which deals with ‘Employment Injury’) in the ESI Act, are set out
hereinbelow: –
“Section 46. Benefits
(1) Subject to the provisions of this Act, the insured persons,
their dependants or the persons hereinafter mentioned, as the
case may be, shall be entitled to the following benefits, namely,-
(d) periodical payments to such dependents of an insured
person who dies as a result of an employment injury
sustained as an employee under this Act, as are entitled to
compensation under this Act (hereinafter referred to as
dependants’ benefit);
Section 2(8) “employment injury” means 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
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occupational disease is contracted within or outside the
territorial limits of India.”
(Emphasis supplied)
13. It will be noticed that both under the EC Act and under the ESI
Act the entitlement arises to the employee for recompense if the
accident arises out of and in the course of his employment.
HOLDING IN FRANCIS DE COSTA (SUPRA): –
14. In Francis De Costa (Supra) the employee met with an accident
when he was on his way to the place of employment, at a distance of
1 km, from the place of work. This Court found against the employee
by holding as under: –
“5. …… Therefore, the employee, in order to succeed in this
case, will have to prove that the injury he had suffered arose out
of and was in the course of his employment. Both the conditions
will have to be fulfilled before he could claim any benefit under
the Act. It does not appear that the injury suffered by the
employee in the instant case arose in any way out of his
employment. The injury was sustained while the employee
was on his way to the factory where he was employed. The
accident took place one kilometre away from the place of
employment. Unless it can be said that his employment
began as soon as he set out for the factory from his home, it
cannot be said that the injury was caused by an accident
“arising out of … his employment”. A road accident may
happen anywhere at any time. But such accident cannot be7
said to have arisen out of employment, unless it can be shown
that the employee was doing something incidental to his
employment.
6. In our judgment, by using the words “arising out of … his
employment”, the legislature gave a restrictive meaning to
“employment injury”. The injury must be of such an extent as
can be attributed to an accident or an occupational disease
arising out of his employment. “Out of”, in this context, must
mean caused by employment. Of course, the phrase “out of” has
an exclusive meaning also. If a man is described to be out of his
employment, it means he is without a job. The other meaning of
the phrase “out of” is “influenced, inspired, or caused by: out of
pity; out of respect for him” (Webster’s Comprehensive
Dictionary — International Edition — 1984). In the context of
Section 2(8), the words “out of” indicate that the injury must be
caused by an accident which had its origin in the employment.
A mere road accident, while an employee is on his way to his
place of employment cannot be said to have its origin in his
employment in the factory. The phrase “out of the employment”
was construed in the case of South Maitland Railways Pty.
Ltd. v. James [67 CLR 496] where construing the phrase “out of
the employment”, Starke, J., held
“the words ‘out of’ require that the injury had its origin in the
employment”.
7. Unless an employee can establish that the injury was caused
or had its origin in the employment, he cannot succeed in a claim
based on Section 2(8) of the Act. The words “accident … arising
out of … his employment” indicate that any accident which
occurred while going to the place of employment or 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.
8. The other words of limitation in sub-section (8) of Section 2
are “in the course of his employment”. The dictionary meaning
of “in the course of” is “during (in the course of time, as time
goes by), while doing” (The Concise Oxford Dictionary, New
Seventh Edition). The dictionary meaning indicates that the
accident must take place within or during the period of
8
employment. If the employee’s work-shift begins at 4.30
p.m., any accident before that time will not be “in the course
of his employment”. The journey to the factory may have
been undertaken for working at the factory at 4.30 p.m. But
this journey was certainly not in the course of employment.
If ‘employment’ beings from the moment the employee sets
out from his house for the factory, then even if the employee
stumbles and falls down at the doorstep of his house, the
accident will have to be treated as to have taken place in the
course of his employment. This interpretation leads to
absurdity and has to be avoided.”
(Emphasis supplied)
ENACTMENT OF SECTION 51E WITH EFFECT FROM
01.06.2010 IN THE ESI ACT: –
15. If Francis De Costa (Supra) is to be applied as it is, the appellants
will be out of Court. However, a very important statutory intervention
happened on 01.06.2010 in the ESI Act, wherein Section 51E was
introduced. Section 51E reads as under: –
“51E. Accidents happening while commuting to the place of
work and vice versa. – 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 the
employment is established.”
9
THE FURTHER INCIDENTAL QUESTIONS THAT ARISE IN
THE CASE:
16. Section 51E clearly neutralised the holding in Francis De Costa
(Supra) when it provided 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. 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.
17. In considering the applicability of Section 51E of the ESI Act to
the case of appellant certain threshold questions need to be addressed:-
(i) Does Section 51E of the ESI Act have retrospective effect so as to
cover an accident that has taken place on 22.04.2003 when the Section
was enacted on 01.06.2010?
(ii) Assuming Section 51E of the ESI Act applies, would the said
interpretation enure to the benefit of the appellants whose claim arises
under the EC Act?
10
(iii) Lastly, assuming both the above questions are answered in favour
of the appellants are the ingredients of Section 51E attracted to the facts
of the present case?
BENEFICIAL NATURE OF THE ESI ACT 1948: –
18. The ESI Act was enacted to provide for certain benefits to
employees in case of sickness, maternity and employment injury as
well as for making provisions for certain other matters in relation
thereto. Section 46 deals with the benefits that the insured persons, their
dependents and other persons mentioned in the Act are entitled to. This
Court in Bombay Anand Bhavan Restaurant v. Deputy Director,
Employees’ State Insurance Corporation and Another, (2009) 9 SCC
61, while rightly characterizing the ESI Act as a beneficial legislation
and a law intended to provide for social security, held as follows: –
“20. The Employees’ State Insurance Act is a beneficial
legislation. The main purpose of the enactment as the Preamble
suggests, is to provide for certain benefits to employees of a
factory in case of sickness, maternity and employment injury
and to make provision for certain other matters in relation
thereto. The Employees’ State Insurance Act is a social
security legislation and the canons of interpreting a social
legislation are different from the canons of interpretation of
taxation law. The courts must not countenance any subterfuge
which would defeat the provisions of social legislation and the11
courts must even, if necessary, strain the language of the Act in
order to achieve the purpose which the legislature had in placing
this legislation on the statute book. The Act, therefore, must
receive a liberal construction so as to promote its objects.”
(Emphasis supplied)
19. It was further held that the Act was intended to ameliorate various
risks and contingencies which the employees face while working in an
establishment or factory. This Court held that the Act was intended to
promote the general welfare of the workers and, as such, called for a
liberal interpretation: –
“21. This Court (sic The High Court), in ESI
Corpn. v. Jayalakshmi Cotton and Oil Products (P) Ltd. [1980
Lab IC 1078 (A.P.)] has observed that the ESI Act is a social
security legislation and was enacted to ameliorate the various
risks and contingencies which the employees face while working
in an establishment or factory. It is thus intended to promote
the general welfare of the workers and, as such, is to be
liberally interpreted.”
(Emphasis supplied)
20. What is important to note is that the ESI Act applies to all
factories, including factories belonging to the Government and also to
establishments or class of establishments, industrial, commercial,
agricultural or otherwise notified in the official gazette under Section
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1(5) of the Act. In fact, the principal difference between the ESI Actand the EC Act is that while the ESI Act applied to the employees of
factories and notified establishments as mentioned above, the EC Act
applied to employees under all other employers as defined.
21. The 62nd report of the Law Commission on the EC Act submitted
under the chairmanship of former Chief Justice of India, Justice P.B.
Gajendragadkar, in Para 1.11, rightly noticed the distinction as under:
“1.11. After the passing of the Employees’ State Insurance Act,
the area of application of the Workmen’s Compensation Act has
diminished, to a certain extent. But the Employees’ State
Insurance Act applies only to (i) factories, and (ii) notified
establishments, and in the rest of the cases the Workmen’s
Compensation Act still holds the field.”BENEFICIAL NATURE OF THE EC ACT: –
22. 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, as set out earlier, provides 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. Section 4 sets out that where
13
death results from the injury an amount equal to 50 per cent of themonthly wages of the deceased employee multiplied by the relevant
factor ought to be paid.
23. The EC Act is also a beneficial piece of legislation. In 2016, this
Court in Jaya Biswal & Others v. Branch Manager, IFFCO Tokio
General Insurance Company Limited & Another, (2016) 11 SCC 201,
while holding that the EC Act was a social welfare legislation meant to
benefit the workers and their dependents and to give the employees a
sense of security held as under: –
“20. The EC Act is a welfare legislation enacted to secure
compensation to the poor workmen who suffer from injuries
at their place of work. This becomes clear from a perusal of the
preamble of the Act which reads as under:
“An Act to provide for the payment by certain classes of
employers to their workmen of compensation for injury by
accident.”
This further becomes clear from a perusal of the Statement of
Objects and Reasons, which reads as under:
“… The growing complexity of industry in this country,
with the increasing use of machinery and consequent
danger to workmen, along with the comparative poverty of
the workmen themselves, renders it advisable that they
should be protected, as far as possible, from hardship
arising from accidents.
An additional advantage of legislation of this type is that,
by increasing the importance for the employer of adequate14
safety devices, it reduces the number of accidents to
workmen in a manner that cannot be achieved by official
inspection. Further, the encouragement given to employers
to provide adequate medical treatment for their workmen
should mitigate the effects to such accidents as do
occur. The benefits so conferred on the workman added to
the increased sense of security which he will enjoy, should
render industrial life more attractive and thus increase the
available supply of labour. At the same time, a
corresponding increase in the efficiency of the average
workman may be expected.”
21. Thus, the EC Act is a social welfare legislation meant to
benefit the workers and their dependants in case of death of
workman due to accident caused during and in the course of
employment should be construed as such.”
(Emphasis supplied)
24. At this stage, it is important to notice one provision in the ESI Act
which bars receiving or recovering compensation under any other law
if compensation has been received under the ESI Act, viz. Section 53,
which is extracted hereinbelow: –
“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.”15
This is only set out to demonstrate how the ESI Act and the EC Actoperate in close tandem.
IS SECTION 51E OF THE ESI ACT CLARIFICATORY?
25. It is in this background that the question whether Section 51E,
enacted on 01.06.2010, will have retrospective application needs to be
decided. Thereafter, the further question of applying the said meaning
to the EC Act will have to be addressed. Unless we find that Section
51E is clarificatory and declaratory in character, the question of
applying it retrospectively will not arise. A declaratory Act is one
which is enacted to remove doubts existing as to common law or the
meaning or effect of any statute. Was Section 51E enacted to clarify
and set at rest any serious doubt that obtained earlier? It has been held
by this Court that an Act will be declaratory if it is intended to remove
doubts and if its object was to supply an obvious omission or to clear
up any ambiguity as to the meaning of a previously existing statute. In
such an event, this Court has held that the said statute being declaratory
and clarificatory in nature, it can be given retrospective effect.
16
26. In the classic work, Justice G.P. Singh’s Principles of Statutory
Interpretation (14th Edition), the following passage occurs to describe
what declaratory statutes are. It will be useful to extract the same:-
“(i) Declaratory statutes
The presumption against retrospective operation is not
applicable to declaratory statutes. As stated in CRAIES and
approved by the Supreme Court: “For modern purposes a
declaratory Act may be defined as an Act to remove doubts
existing as to the common law, or the meaning or effect of
any statute. Such Acts are usually held to be retrospective.
The usual reason for passing a declaratory Act is to set aside
what Parliament deems to have been a judicial error,
whether in the statement of the common law or in the
interpretation of statutes. Usually, if not invariably, such an
Act contains a preamble, and also the word ‘declared’ as well as
the word ‘enacted’. ” But the use of the words ‘it is declared’ is
not conclusive that the Act is declaratory for these words may,
at times, be used to introduce new rules of law and the Act in the
latter case will only be amending the law and will not necessarily
be retrospective. In determining, therefore, the nature of the Act,
regard must be had to the substance rather than to the form. If a
new Act is ‘to explain’ an earlier Act, it would be without object
unless construed retrospective. An explanatory Act is
generally passed to supply an obvious omission or to clear
up doubts as to the meaning of the previous Act. It is well
settled that if a statute is curative or merely declaratory of the
previous law retrospective operation is generally intended. The
language ‘shall be deemed always to have meant’ or ‘shall be
deemed never to have included’ is declaratory, and is in plain
terms retrospective. In the absence of clear words indicating that
the amending Act is declaratory, it would not be so construed
when the pre-amended provision was clear and unambiguous.
An amending Act may be purely clarificatory to clear a meaning
of a provision of the principal Act which was already implicit.
A clarificatory amendment of this nature will have retrospective17
effect and, therefore, if the principal Act was existing law when
the constitution came into force, the amending Act also will be
part of the existing law.”
27. The said passage has been quoted with approval in several
judgments of this Court, namely, Commissioner of Income Tax,
Bombay and Others vs. Podar Cement Pvt. Ltd. and Others, (1997) 5
SCC 482 and State Bank of India vs. V.Ramakrishnan and Anr.,
(2018) 17 SCC 394.
28. It has also been held in Podar Cement Pvt. Ltd. (supra) applying
the said interpretation as under:-
“54. From the circumstances narrated above and from the
memorandum explaining the Finance Bill, 1987 (supra), it is
crystal clear that the amendment was intended to supply an
obvious omission or to clear up doubts as to the meaning of
the word “owner” in Section 22 of the Act. We do not think
that in the light of the clear exposition of the position of a
declaratory/clarificatory Act it is necessary to multiply the
authorities on this point. We have, therefore, no hesitation to
hold that the amendment introduced by the Finance Bill, 1988
was declaratory/clarificatory in nature so far as it relates to
Section 27(iii), (iii-a) and (iii-b). Consequently, these
provisions are retrospective in operation. If so, the view taken
by the High Courts of Patna, Rajasthan and Calcutta, as noticed
above, gets added support and consequently the contrary view
taken by the Delhi, Bombay and Andhra Pradesh High Courts
is not good law.
(Emphasis supplied)
18
29. Equally so, in K. Govindan and Sons vs. CIT, Cochin, (2001) 1
SCC 460 holding an explanation to sub-section (8) of Section 139 of
the Income Tax Act introduced with effect from 01.04.1986 to be
applicable to Assessment Year 1984-85, this Court held as under:-
“22. The view taken by us that a first or initial assessment under
Section 147 of the Act is a “regular assessment” within the
meaning of Section 139(8) of the Act, has been the position of
law even before the explanation in Section 139(8) was added
by amendment. In that view of the matter the explanation
merely clarified the position taking it beyond the pale of doubt.
Parliament thought it necessary to add the explanation with
a view to remove the doubt raised in certain decisions of
different High Courts in which a contrary view was taken.
Thus the explanation is merely a clarificatory provision and has
application to the period of assessment in the case i.e.
Assessment Year 1984-85.”
(Emphasis supplied)
30. It is now time to apply the said principle to the case at hand to
examine whether Section 51E is clarificatory in character or not. The
question whether any accident occurring while commuting from the
residence to the place of work and vice versa constituted an accident
arising out of and in the course of employment has vexed the Courts
for very long, resulting in diverse findings based on individual facts.
19
31. As early as in 1958, this Court had to grapple with the said issue
in Saurashtra Salt Mfg. Co. v. Bai Valu Raja & Ors., 1958 SCC
OnLine SC 131. This Court recognized the theory of notional
extension and set out the statement of law as under: –
“7. As a rule, the employment of a workman does not
commence until he has reached the place of employment and
does not continue when he has left the place of employment,
the journey to and from the place of employment being
excluded. It is now well-settled, however, that this is subject
to the theory of notional extension of the employer’s
premises so as to include an area which the workman passes
and repasses in going to and in leaving the actual place of
work. There may be some reasonable extension in both time and
place and a workman may be regarded as in the course of his
employment even though he had not reached or had left his
employer’s premises. The facts and circumstances of each
case will have to be examined very carefully in order to
determine whether the accident arose out of and in the
course of the employment of a workman, keeping in view at
all times this theory of notional extension.”
(Emphasis supplied)
Thereafter, on facts, it was held as under: –
“8.…..A workman is not in the course of his employment
from the moment he leaves his home and is on his way to his
work. He certainly is in the course of his employment if he
reaches the place of work or a point or an area which comes
within the theory of notional extension, outside of which the
employer is not liable to pay compensation for any accident
happening to him. In the present case, even if it be assumed that
the theory of notional extension extends upto point D, the theory
cannot be extended beyond it. The moment a workman left point
B in a boat or left point A but had not yet reached point B, he20
could not be said to be in the course of his employment and any
accident happening to him on the journey between these two
points could not be said to have arisen out of and in the course
of his employment. Both the Commissioner for Workmen’s
Compensation and the High Court were in error in supposing
that the deceased workmen in this case were still in the course
of their employment when they were crossing the creek between
points A and B. The accident which took place when the boat
was almost at point A resulting in the death of so many workmen
was unfortunate, but for that accident the appellant cannot be
made liable.”
(Emphasis supplied)
32. On facts, the claim for compensation was declined. What is
however, significant is that this Court recognized the theory of notional
extension which is to be applied to an area outside the precincts of the
office premises. However, it was left to be determined in each case as
to whether the area fell within the notional extension or not.
33. Jurists across the world were also grappling with this difficult
question. Lord Denning in his inimitable style in Regina V. National
Insurance Commissioner, Ex Parte Michael, (1977) 1 WLR 109
graphically described the scenario thus:-
“So we come back, once again, to those all too familiar words
‘arising out of and in the course of his employment’. They have
been worth, to lawyers, a king’s ransom. The reason is because,
although so simple, they have to be applied to facts which vary
infinitely. Quite often the primary facts are not in dispute; or21
they are proved beyond question. But the inference from them is
matter of law. And matters of law can be taken higher. In the old
days they went up to the House of Lords. Nowadays they have
to be determined, not by the courts, but by the hierarchy of
tribunals set up under the National Insurance Acts.”
34. Thereafter, the learned Judge recognized that the phrase “in the
course of his employment” will include doing something which was
reasonably incidental to the employment, when he held as under in Ex
Parte Michael (supra).
“11. Construing the meaning of the phrase “in the course of his
employment”, it was noted by Lord Denning that the meaning
of the phrase had gradually been widened over the last 30
years to include doing something which was reasonably
incidental to the employee’s employment. The test of
“reasonably incidental” was applied in a large number of
English decisions. But, Lord Denning pointed out that in all
those cases the workman was at the premises where he or she
worked and was injured while on a visit to the canteen or
other place for a break. Lord Denning, however, cautioned
that the words “reasonably incidental” should be read in
that context and should be limited to the cases of that kind.
Lord Denning observed:
“Take a case where a man is going to or from his place of
work on his own bicycle, or in his own car. He might be said
to be doing something ‘reasonably incidental’ to his
employment. But, if he has an accident on the way, it is well
settled that it does not ‘arise out of and in the course of his
employment’. See Alderman v. Great Western Rly. Co. [(1937)
2 All ER 408 : 1937 AC 454] ; Netherton v. Coles [(1945) 1 All
ER 227] . Even if his employer provides the transport, so that
he is going to work as a passenger in his employer’s vehicle
(which is surely ‘reasonably incidental’ to his employment),
22
nevertheless, if he is injured in an accident, it does not arise
out of and in the course of his employment:
see Vandyke v. Fender [(1970) 2 All ER 335, 340 : (1970) 2
QB 292, 305] . It needed a special ‘deeming’ provision in a
statute to make it ‘deemed’ to arise out of and in the course
of his employment (see Section 8 of the 1965 Act).”
(Emphasis supplied)
35. It will be noticed that, in the extract above, towards the end a
mention is made of special deeming provision which covered cases of
accidents happening while travelling in employer’s transport. This
scenario is very similar to Section 51C of the ESI Act which deals with
accidents happening while on employer’s transport, which was
introduced with effect from 28.01.1968.
36. However, before we discuss Section 51C of the ESI Act, we need
to discuss the judgment of this Court dated 10.05.1963 in Agnes
(Supra). In Agnes (Supra), one Nanu Raman a bus driver of the
appellant company therein after finishing his work boarded another bus
to go to his residence. That bus was involved in an accident resulting
in his death. Agnes – his widow sued for compensation under the EC
Act and contended that her husband died in an accident arising out of
and in the course of employment. This Court, while affirming the
23
judgment of the High Court, which granted compensation by a majorityheld as under: –
“12. Under s. 3 (1) of the Act the injury must be caused to the
workman by an accident arising out of and in the course of his
employment. The ques-tion, when does an employment begin
and when does it cease, depends upon the facts of each case.
But the Courts have agreed that the employment does not
necessarily end when the “down tool” signal is given or when
the workman leaves the actual workshop where he is
working. There is a notional extension of both the entry and
exit by time and space. The scope of such extension must
necessarily depend on the circumstances of a given case. An
employment may end or may begin not only when the
employee begins to work or leaves his tools but also when he
uses the means of access and egress to and from the place of
employment……
14. ……….As the free transport is provided in the interest of
ser-vice, having regard to the long distance a driver has to
traverse to go to the depot from his house and vice versa, the
user of the said buses is a proved necessity giving rise to
an implied obligation on his part to travel in the said buses as a
part of his duty. He is not exercising the right as a member of the
public, but only as one belonging to a service. The entire Greater
Bombay is the field or area of the service and every bus is an
integrated part of the service. The decisions relating to accidents
occur-ring to an employee in a factory or in premises be-longing
to the employer providing ingress or egress to the factory are not
of much relevance to a case where an employee has to operate
over a larger area in a bus which is in itself an integrated part of
a fleet of buses operating in the entire area. Though the
doctrine of reasonable or notional extension of employment
developed in the context of specific workshops, factories or
harbours, equally applies to such a bus service, the doctrine
necessarily will have to be adapted to meet its peculiar
requirements. While in a case of a factory, the premises of the
employer which gives ingress or egress to the factory is a limited
one, one, in the case of a city transport ser-vice, by analogy, the
24
entire fleet of buses forming the service would be the
“premises”. An illustration may make our point clear. Suppose,
in view of the long distances to be covered by the employees,
the Corporation, as a condition of service, provides a bus for
collecting all the drivers from their houses so that they may reach
their depots in time and to take them back after the day’s work
so that after the heavy work till about 7 p.m. they may reach their
homes without further strain on their health. Can it be said that
the said facility is not one given in the course of employment? It
can even be said that it is the duty of the employees in the interest
of the service to utilize the said bus both for coming to the depot
and going back to their homes. If that be so, what difference
would it make if the employer, instead of providing a
separate bus, throws open his entire fleet of buses for giving
the employees the said facility? They are given that facility
not as members of the public but as employees; not as a grace
but as of right because efficiency of the service demands it.
We would, therefore, hold that when a driver when going
home from the depot or coming to the depot uses the bus,
any accident that happens to him is an accident in the course
of his employment.”
(Emphasis supplied)
37. In Mackinnon Mackenzie and Co. (P) Ltd. vs. Ibrahim
Mahmmed Issak, (1969) 2 SCC 607, this Court dealing with the phrase
“arising out of and in the course of employment” held as under:-
“5. To come within the Act the injury by accident must arise both
out of and in the course of employment. The words “in the course
of the employment” mean “in the course of the work which the
workman is employed to do and which is incidental to it.” The
words “arising out of employment” are understood to mean that
“during the course of the employment, injury has resulted from
some risk incidental to the duties of the service, which, unless
engaged in the duty owing to the master, it is reasonable to believe25
the workman would not otherwise have suffered.” In other words
there must be a causal relationship between the accident and the
employment. The expression “arising out of employment” is
again not confined to the mere nature of the employment. The
expression applies to employment as such — to its nature, its
conditions, its obligations and its incidents. If by reason of any
of those factors the workman is brought within the zone of special
danger the injury would be one which arises ‘out of employment’.
To put it differently if the accident had occurred on account of a
risk which is an incident of the employment, the claim for
compensation must succeed, unless of course the workman has
exposed himself to an added peril by his own imprudent act….”
(Emphasis supplied)
Here again, the court used the phrase to mean nature, condition,obligation and incidents of employment. It will be noticed that this
Court in Agnes (supra) too, while applying the theory of notional
extension, adapted it in its application to the facts of the said case.
38. Agnes (supra) was delivered on 10.05.1963. By an amendment
with effect from 28.01.1968 (added by Act 44 of 1966), Section 51C
was introduced in the ESI Act in the following terms:-
“51C. Accidents happening while travelling in
employer’s transport.
(1) 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, if26
(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.
(2) In this section Vehicle includes vessel and an aircraft.”
39. It will be noticed that a law which came to be laid down in Agnes
(supra) while interpreting the phrase “arising out of and in the course
of employment” in the EC Act was given effect by a statutory
recognition in the ESI Act. This is set out to demonstrate the cognate
nature of the EC Act and the ESI Act. Both the statutes seek to
ameliorate the conditions of workmen and provide them social security
benefits and improve their conditions of service.
40. The 62nd Report of the Law Commission of India on the EC Act
was submitted in October, 1974 under the Chairmanship of Chief
Justice (Retired) P.B. Gajendragadkar. As rightly set out in the Report,
the purpose of Workmen’s Compensation laws was to eliminate the
hardship experienced under the common law system by providing for
27
payment of benefits regardless of fault and with a minimum of legal
formality. Further, the Law Commission Report analyzed several
provisions of the ESI Act including Section 51A, 51B, 51C and 51D.
In para 3.3 of the Report, while discussing Section 51C of the ESI Act,
the following crucial observations were made:-
“Having carefully considered all aspects of the matter, we are of
the view that Section 51C of the ESI Act should be adopted with
modification that it should not be necessary that the transport
of provided by the employer if the workman is travelling
directly to or from the place of employment.”
(Emphasis supplied)
41. These observations were made after exhaustive analysis of the
legal position prevailing in different jurisdictions on the issue of
accidents occurring outside the employer’s premises while the
workman is on his way to and from his work. The Law Commission
Report also discussed the International Labour Convention of 1964 for
compensation on way to work accidents.
42. The High Courts in India were also engaged with this issue about
the interpretation of the phrase “arising out of and in the course of
employment” with regard to accidents occurring while proceeding to
28
the place of work by the employee. In Sadgunaben Amrutlal vs. ESI
Corporation, 1981 Lab 1C 1653 a judgment doubted by this Court in
Francis De Costa (supra), the Division Bench of the Gujarat High
Court took the view that the theory of notional extension is an elastic
and flexible formula to be applied in a purposeful manner. The High
Court in that case extended the benefits to the dependents of the
employee even though the death occurred at a public bus stop while the
employee was boarding the bus to reach the workplace.
43. Earlier in Bhagubai vs. Central Railway, (1954) 2 LLJ 403 even
though the employee was proceeding to the workplace, since he was
proceeding through the premises belonging to the employer, where he
was stabbed the dependents were given the benefit. This Court in
Francis De Costa (supra) did not adversely comment on the said
judgment.
44. This parade of case law is only to highlight that there was
considerable doubt and ambiguity surrounding the phrase “accident
arising out of and in the course of employment” insofar as cases
concerning accident occurring to employees while proceeding to work
29
and vice versa, and different rulings had, depending on facts, interpreted
them differently. Even the theory of notional extension had its own
peculiarities. It was to clarify and put beyond doubt 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.
In view of that, we have no manner of doubt that the said amendment
is clarificatory in character and will have retrospective effect.
MEANING OF THE PHRASE “DEEMED TO HAVE” IN
SECTION 51E OF THE ESI ACT: –
45. There is one more aspect to be dealt with here. The words
“deemed to have” used in Section 51E is not in the context of legal
fiction. It is well settled that the expression “deemed” is sometimes
used to impose for the purpose of a statute an artificial construction for
a word or phrase that would not otherwise prevail. Very often, it is also
used to put beyond doubt a particular construction that might otherwise
be uncertain. Sometimes it is used to give a comprehensive description
that it includes what is obvious, what is uncertain and what is, in the
30
ordinary sense, impossible. [See Hira H. Advani vs. State of
Maharashtra, (1969) 2 SCC 662]
46. In St. Aubyn vs. Attorney-General, (1951) 2 All ER 473, Lord
Radcliffe felicitously explained the concept as under:-
“The word ‘deemed’ is used a great deal in modern legislation.
Sometimes it is used to impose for the purposes of a statute an
artificial construction of a word or phrase that would not
otherwise prevail. Sometimes it is used to put beyond doubt a
particular construction that might otherwise be uncertain.
Sometimes it is used to give a comprehensive description that
includes what is obvious, what is uncertain and what is, in the
ordinary sense, impossible.”
It is very clear that the word “deemed” in Section 51E is employed toput beyond doubt a particular construction, that hitherto was uncertain.
STATUTES ‘IN PARI MATERIA’: –
47. The question further remains whether assuming Section 51E is
retrospective would the interpretation flowing out of 51E of the ESI
Act be imported into the EC Act to interpret the phrase “accident
arising out of and in the course of employment” to decide whether it
will include accidents happening to employees while commuting to the
place of work and vice versa. Before we answer the question, we would
make it absolutely clear that it is not our endeavour to import Section
31
51E of the ESI Act into the EC Act. All that we are examining here is
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.
48. First of all, the operative phraseology occurring in Section 3 of
the EC Act is the same as the one that it occurs in Section 2(8) of the
ESI Act which defines, ‘employment injury’. Secondly, as held by this
Court and as noticed hereinabove, both Acts are beneficial legislations
intended as social security measures to ameliorate the conditions of
employees. 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 case law, as noticed hereinabove, also
indicates how Saurashtra Salt (supra) and Agnes (supra) which were
under the EC Act was applied in Francis De. Costa (supra), a case
arising under the ESI Act. Equally, the High Court of Gujarat in
32
Sadgunaben Amrutlal (supra) a case under the ESI Act, had discussed
the ratio in Saurashtra Salt (supra) which arose under the EC Act.
49. 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.
50. In Justice G.P. Singh’s Principles of Statutory Interpretation (14th
Edition), dealing with statutes in pari materia, the following passage
finds mention:-
“Statutes in pari materia
It has already been seen that a statute must be read as a
whole as words are to be understood in their context. Extension
of this rule of context permits reference to other statutes in
pari materia, i.e. statutes dealing with the same subject-
matter or forming part of the same system. VISCOUNT
SIMONDS in a passage already noticed conceived it to be a
right and duty to construe every word of a statute in its
context and he used the word context in its widest sense
including “other statutes in pari mate-ria”. As stated by
LORD MANSFIELD: “Where there are different statutes in
pari materia though made at different times, or even
expired, and not referring to each other, they shall be taken
and construed together, as one system and as explanatory of
each other.”
(Emphasis supplied)
33
51. In the State of Madras vs. A. Vaidyanatha Iyer, 1958 SCR 580,
this Court held as under:-
“… Therefore where it is proved that a gratification has been
accepted, then the presumption shall at once arise under the
section. It introduces an exception to the general rule as to the
burden of proof in criminal cases and shifts the onus on to the
accused. It may here be mentioned that the legislature has
chosen to use the words ‘shall presume’ and not ‘may
presume’ the former a presumption of law and latter of
fact. Both these phrases have been defined in the Indian
Evidence Act, no doubt for the purpose of that Act, but s.4
of the Prevention of Corruption Act is in pari materia with
the Evidence Act because it deals with a branch of law of
evidence, e.g. presumptions, and therefore should have the
same meaning….”
(Emphasis supplied)
52. In Craies on Legislation (9th Edition) dealing with statutes in pari
materia has the following observation in para 20.1.26.
“Statutes in pari materia
Two Acts are said to be in pari materia if taking all their
circumstances into account it is natural to construe them as if
they formed part of a single code on a particular matter. Where
this is found to be the case the result is that definitions in one
may be applied to expressions found in another, and decided
cases setting out principles of application to one will be
applied to the other.
The fact that two statutes have the same titles may be
indicative of their being in pari materia. As Bridge L.J. said in
R. v Wheatley-
“Looking at the two statutes [the Explosives Act 1875 and the
Explosive Substances Act 1883], at the nature of the34
provisions which they both contain, and in particular at the
short and long titles of both statutes, it appears to this court
that clearly they are in pari materia, and that conclusion alone
would seem to us to be sufficient to justify the conclusion
which the judge reached that the definition of the word
‘explosive’ found in the 1875 Act is available to be adopted
and applied under the provisions of the 1883 Act.”
53. In State of Assam and Another vs. Deva Prasad Barua &
Another, (1969) 1 S.C.R. 698, this Court while construing Section 19
of the Assam Agricultural Income-tax Act, 1939 gave it the
construction given to Section 22 of the Indian Income-tax Act and held
as under:-
“… Moreover s.19 is in pari materia with s.22 of the Income-
tax Act and the law which has been laid down by this Court,
while interpreting the provisions of that section, must govern
the construction of the provisions of s.19 as well.”
54. In AG vs. Prince Ernest Augustus of Hanover, Lord Viscount
Simonds observed as follows:-
“For words, and particularly general words, cannot be read in
isolation: their colour and content are derived from their context.
So it is that I conceive it to be my right and duty to examine every
word of a statute in its context, and I use “context” in its widest
sense, which I have already indicated as including not only other
enacting provisions of the same statute, but its preamble, the
existing state of the law, other statutes in pari materia, and the
mischief which I can, by those and other legitimate means,
discern the statute was intended to remedy.”
(Emphasis supplied)35
55. Applying the above principle, we interpret 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
from the place of employment to his residence after performing duty,
provided the nexus between the circumstances, time and place in which
the accident occurred and the employment is established.
56. The following undisputed facts emerge in this case: –
a) The deceased – Shahu Sampatrao Jadhavar was employed with
the respondent No.2-Sugar factory;
b) He was employed as watchman and his duty hours on 22.04.2003
was 3 AM to 11 AM.
c) It is undisputed that he was proceeding to his workplace when the
accident occurred at place which was 5 kms (approx.) from the
workplace while the employee was proceeding towards the
workplace.
In view of the above, considering that the deceased was a night
watchman and was dutifully proceeding to his workplace to be well on
36
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 arisen out of and in the course of employment,
the Commissioner for Workmen’s Compensation and Civil Judge,
Senior Division, Osmanabad was justified in ordering the claim under
the EC Act by his judgment of 26.06.2009.
57. The appeal is allowed and the judgment of the High Court of
Judicature at Bombay, Bench at Aurangabad dated 01.12.2011 in First
Appeal No. 2015 of 2011 is set aside and the judgment of the
Commissioner for Workmen’s Compensation and Civil Judge, Senior
Division, Osmanabad in Workmen’s Compensation Application No. 28
of 2005 dated 26.06.2009 is restored. No order as to costs.
…………………………….J.
[MANOJ MISRA]
.…………………………….J.
[K. V. VISWANATHAN]
New Delhi;
28th July, 2025
37