IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 07.06.2011 CORAM: THE HONOURABLE MRS.JUSTICE ARUNA JAGADEESAN CMA.No.716 & 717/2003 CMP.Nos.5323 & 5324/2003 Deputy Regional Director ESI Corporation Limited Singapore Plaza, Coimbatore-12 Appellant in both CMAs Vs 1.Yasoda 2.Minor Vimala rep by mother and natural Guardian Yasoda 3.Karupayee 4.The Management, M/s.Pankaja Mills Coimbatore RR1to4-CMA.716/03 5.Ranganayaki 6.The Management, M/s.Prasanth Textiles Vedapatti, Coimbatore RR1&2-CMA.717/03 Prayer:- These Civil Miscellaneous Appeals are filed against the Judgement and Decree dated 6.8.2001 made in ESI.OP.Nos.46 and 114/2001 by the ESI Court (Labour Court), Coimbatore. For Appellants : Ms.S.Jayakumari For Respondent : Mr.NGR.Prasad for M/s. Row and Reddy-RR1to3-CMA.716/03 and R1-CMA.717/03 Mr.R.Parthiban-R4-CMA.716/03 Mr.D.Balaraman-R2-CMA.717/03 JUDGEMENT These Civil Miscellaneous Appeals are filed by the ESI Corporation Limited against the Judgement and Decree dated 6.8.2001 made in ESI.OP.Nos.46 and 114/2001 by the ESI Court (Labour Court), Coimbatore. 2. The case of the Petitioners/claimants in ESI.OP.No.46/2001 is that the 1st Petitioner's husband, namely, Veerasamy, an employee of the 1st Respondent M/s.Pankaja Mills, https://hcservices.ecourts.gov.in/hcservices/ Coimbatore, met wit an accident on 25.10.1990 at about 6.40 p.m., when he came out of the spinning room, a rod placed in the polythene cover struck him and pierced his throat as a result of which, he died at the spot. The deceased was appointed in the said Mills on 1.3.1988 and his last drawn salary was Rs.1695.84/-. According to the Petitioners, who are the legal heirs of the deceased Veerasamy, he was a beneficiary under the Employees State Insurance Act and he paid the ESI Contribution from October 1989 to March 1990 and the corresponding benefit period was from July 1990 to December 1990. Hence, the Petitioners claimed disability benefits of the deceased worker from the date of the accident. 3. In so far as the Petitioner/claimant in ESI.OP.No.114/2001 is concerned, she was working in the Carding in the 1st Respondent M/s.Prasanth Textiles and on 23.1.1995, when she was working in the Reeling Section, she met with an accident and her left foot was crushed in between the drive shaft pulley and the floor, resulting in a deep cut injury on the left foot. Immediately, she was taken to the Hospital and her left foot was removed and thus she suffered a permanent disability. At the time of the accident, she was drawing a salary exceeding Rs.3000/-. Since the accident took place only during the benefit period, the 2nd Respondent ESI Corporation Limited is liable to pay the disablement benefits to the Petitioner/claimant. 4. The ESI Corporation in both the cases raised a defence that as on the date of the accident, the employee in both the cases ceased to be an employee, as defined under Section 2(9) of the Employees State Insurance Act (herein after referred to as the Act), as their wages exceeded Rs.1600/- and therefore, they ceased to be covered under the Act for the employment. The ESI Court, after appreciating the materials on record, came to the conclusion that the employee sustained injury in an accident out of and during the course of employment and also granted the benefit to the claimants in both the cases on the ground that the employee died only during the benefit period, placing reliance on the decision of the Division Bench of this court reported in 2003-3-LLN-1073 (ESI Corporation, Chennai and S.Savithri and others) wherein it was held that the insured having paid contribution from October 1990 to March 1991, for which corresponding benefit period is July 1991 to December 1991 and the date of the accident and death had fallen within the benefit period, the Petitioners, who are the dependents are entitled to the benefits. Aggrieved by the said order, the ESI Corporation has filed these Civil Miscellaneous Appeals. 5. Ms.S.Jayakumari, the learned counsel for the Appellants had taken me through the impugned order under challenge. She found fault with the impugned order on the ground that as on the date of the accident, that is, on 25.10.1990 in the case of CMA.716/2003 and 23.1.1995 in the case of CMA.No.717/03, the respective employeess were not at all the employees within the meaning of https://hcservices.ecourts.gov.in/hcservices/ Section 2(9) of the Act. It was argued by her that admittedly, the wage of the deceased employee Veerasamy was Rs.1695.84/- and the wages of the employee Ranganayaki was above Rs.3000/- even as per her claim petition and therefore, they were not at all employee to be covered under the Act. The learned counsel for the Appellant contended that the employees are not entitled for any benefits under the Act, as the accident had occurred when they ceased to be an employee as defined under the Act. The learned counsel took me through the Regulation IV of the Act and also relied on the decision of the Honourable Supreme Court reported in 2008-11-LLJ- 997-SC (Krishnankutty Nair, P.B. Vs. Regional Director, ESI Corporation and another). 6. The point that would fall for court's consideration is, whether the Respondents/claimants in each appeal are entitled for the benefit under the Act for the injury sustained in the benefit period during which they cease to be an employee? 7. It is necessary to mention the relevant section and the regulation for disposal of these appeals. Section 2(9) pertains to the definition of employee which reads as under:- "2(9): 'employee' means 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, 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 o 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 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 principle Employer by the person with whom the person whose services are so lent or let on hire has entered into a contract of service. (b) any person so employed whose wages (excluding remuneration for overtime work) exceed such wages as may be prescribed by the Central Government a month. Provided that an employee whose wages (excluding https://hcservices.ecourts.gov.in/hcservices/ remuneration for overtime work) exceed such wages as may be prescribed the Central Government at any time after (and not before) the beginning of the contribution period, shall continue to be an employee until the end of that period." 8. Section 49 deals with 'sickness benefit' available to the employee and Section 51 deals with disablement benefit to which the employee is entitled. In particular, Section 51(b) deals with 'permanent disablement benefit'. Regulation 4 provides the different periods as under:- "4. Contribution and benefit periods:- contribution periods and the corresponding benefit periods shall be as under:- -------------------------------------------------------- Contribution Period Corresponding Benefit Period -------------------------------------------------------- 1st April to 30th September 1st January of the year following to 30th June 1st October to 31st March 1st July to 31st December of the year following. -------------------------------------------------------- 9. It is not in dispute that the employees Veerasamy (deceased) and Ranganayaki were employed with their respective Managements. It is also not in dispute that the injury occurred on 25.10.1990 and 23.1.1995 respectively out of and during the course of employment. The payment of contribution by the respective Managements is also not in dispute. Admittedly, the employees were drawing wages exceeding Rs.1600/- According to the Appellant, the cause of action arises for the employees only when the employment injury is caused and as, on that date, the employee ceased to be an employee as defined in Section 2(9) of the Act on account of excess of wages they drew and therefore, they are not liable to pay the benefit. On other hand, according to the Respondents, they were seeking benefit for the contribution they have already made and therefore, the Appellant cannot absolve its liability. 10. In 2003-3-LLN-1073 referred to above, relied on by the learned counsel for the Respondents/claimants, in paragraphs 12 and 13, it was held as under:- "12. In our case, we have already held that the materials placed by the Petitioners show that the insured person had paid contribution from October 1990 to March 1991, for which the corresponding benefit period is July 1991 to December 1991 and the date of the accident and death all within the benefit period. In the light of the Honourable Supreme Court and in view of the factual details, we are in agreement with https://hcservices.ecourts.gov.in/hcservices/ the conclusion arrived at by the court below. Further, the scheme of the Act, Rules and the regulations spelled out that the insurance covered under the Act is distinct and differ from the contract of insurance in general. Under the Act, the contributions go into a fund under S.26 for displacement, sickness, maternity, etc., the contribution required to be made is not paid back even if an employee does not avail any benefit. It is also relevant to note that the Employees State Insurance Act, 1948 is a piece of social welfare legislation enacted primarily with the object of providing certain benefits to employees in a case of sickness, maternity and employment injury and also to make provisions for certain other matters incidental thereto. The Act, in fact tries to attain the goal of socio-economic justice enshrined in the Directive Principles of State Policy under Part IV of the Constitution, in particular Arts.41, 42 and 43 which enjoin the State to make effective provision for securing the right to work, to education and public assistance in case of unemployment, old age, sickness and disablement, and in other cases of any under served want to make provision for securing just and human conditions of work and maternity relief and to secure by suitable legislation or economic organisation or in any other way, to all workers, work, a living wage, decent standard of life and full enjoyment of leisure and social and cultural activities. This Act covers a wider spectrum than the Factories Act. Extensive regulations have been framed under the Act to identify the employees who would be entitled to the benefits. An elaborate machinery is provided for the effective administration of the Act, the apex body being the ESI Corporation, subordinate to which are the Standing Committee and Medical Benefit Council. The Corporation is a public Corporation controlled and subsidised by the Government for the benefit of the employees, its object being rendering service to a weaker section of the public. 13. In the light of the object of the enactment, various provisions inclusive of rules and regulations, elaborate machinery and the materials placed by the Petitioners before the ESI Court, it is fully justified in holding that the Petitioners are dependents and entitled to the benefits under Rule 58 of the ESI (Central Rules) 1950." 11. In the above case, as on the date of the accident, on account of increase in the wages, the ESI Corporation denied to pay the benefit. But, their Lordships held that for the contribution https://hcservices.ecourts.gov.in/hcservices/ period from October 1990 to March 1991, he would be entitled to the benefits during the corresponding benefit period, i.e. July 1991 to December 1991 and just because, the employee received more than Rs.1000/- salary per month, as on the date of the accident, he cannot be barred from receiving the benefit from the Corporation. 12. But, in the latest decision reported in 2008-11LLJ- 997-SC, cited supra, the Honourable Supreme Court settled the position of law in this regard and categorically held that as the injury had been suffered after the claimant ceased to be an employee, he would not be entitled to any benefits of disablement notwithstanding the fact that his contribution period and his status as an insured person continued upto June 30, 1990. It is held as below:- "7. An examination of the provisions would show that the claimant was an employee upto September 30, 1989 and ceased to be so on the next day as his salary had exceeded Rs.1600/- per month which was the cut off wage fixed under the Act at that time. Admittedly, also the claimant was an insured person and the only difference between the two contesting parties is with regard to the significance of the contribution period which was to end on June 30, 1990. For determining as to whether an employee was entitled to the benefit under the Act, reference has to be made to Section 46(c) which would cover the present case. Section 46(c) specifically provides for two cumulative conditions for its applicability (i) the claimant must be an insured person and (ii) that such an injury must be sustained when he was an employee. We, therefore, find that as the injury had been suffered after the claimant ceased to be an employee, he would not be entitled to any benefit of disablement notwithstanding the fact that his contribution period and his status as an insured person continued up to June 30, 1990." 13. The wording of Section 46(C) of the Act suggests that the wages of the employee during the month of the accident is determinative of his being entitled to the benefit. It would result in depriving the employee or his legal heirs as the case may be of their right thereunder if the wages on the date of the accident exceeds Rs.1600/- and consequently make him not an employee. 14. In the present appeals, on the date of the accident, the wages of the deceased employee Veerasamy and employee Ranganayaki exceeded Rs.1600/- and hence, they ceased to be an employee within the meaning of Section 2(9) of the Act and therefore, the claimants are not entitled to the benefits. https://hcservices.ecourts.gov.in/hcservices/ 15. The ESI Court had not considered the statutory provisions in Section 46(1) (C) of the Act and the legal position of law and thus entered into an error in allowing the petitions filed by the Respondents/ claimants. 16. At this juncture, the learned counsel for the Respondents 1 to 3 in CMA.No.716/2003 and the 1st Respondent in CMA.No.717/2003 sought for leave of the court to give liberty to recourse to law in the matter of claim before the Workmen Compensation Commissioner without any necessity for any petition being filed for condonation of delay, for they were prosecuting their claim before the Wrong Forum in the ESI Court and relied on the order of this court dated 13.8.2010 made in WP.Nos.1454, 7579 and 20978/2001 wherein liberty was given to the Petitioners to work out their remedies before the competent authority. In the peculiar facts and circumstances of the case, I am of the view that this request could be considered. 17. In the result, these Civil Miscellaneous Appeal are allowed and the impugned order passed by the ESI Court in allowing the petitions in ESI.OP.Nos.46 and 114/2001 stand set aside. However, the Respondents 1 to 3 in CMA.No.716/2003 and the 1st Respondent in CMA.No.717/2003 are given liberty to file a claim petition before the Commissioner under the Workmen Compensation Act, *Coimbatore without any necessity to file an application for condonation of delay. The claimants may as well seek liberty of the Workmen Compensation Commissioner to get their claim decided out of turn and the Authority concerned is directed to dispose of the claim within a period of three months from the date of receipt of a copy of this order. No costs. Consequently, the connected MPs are closed. Sd/- Asst.Registrar Dated: 15.6.2011 *Corrected as per the order of this court dated 30.6.2011 and made herein Sd/ Assistant Registrar Dated: 1.7.2011 /True Copy/ Sub.Asst.Registrar Srcm https://hcservices.ecourts.gov.in/hcservices/ To: 1.The Presiding Officer, ESI Court (Labour Court), Coimbatore. 2. The Commissioner for workmen Compensation, Chennai. 3.The Record Keeper, VR Section, High Court, To be substituted Madras to the order 4. The Commissioner for Workmen's compensation already despatched Coimbatore on 29.6.2011 + 2 cc to M/s. Row and Reddy, Sr.32390 & 32389 + 1 cc to Mr.R. Parthiban, sr.32546 + 1 cc to Mr.D. Balaraman, sR.32636 CMA.No.716 & 717/2003 JRG(CO EU 17.6.11 kk 1/7 https://hcservices.ecourts.gov.in/hcservices/