Full Judgment Text
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment delivered on: 25.04.2018
+ FAO 54/2018, C.M.No.5481/2018
MOHINDER PAL SINGH ..... Appellant
Through: Mr. Anoop Bagai, Senior Advocate
with Mr. S.C. Varma and Mr.
Narottam Vyas, Advocates.
versus
UPENDER PASWAN & ORS ..... Respondents
Through: Mr. Ashish Upadhyay, Advocate for
R-1.
Mr. Siddharth Dutta, Advocate for
R-2 & R-3.
Mr. V.K. Singh and Ms. Manogya
Singh, Advocates with SSO Paramjit
Singh Bains for R-3/ESIC.
CORAM:
HON'BLE MR. JUSTICE NAJMI WAZIRI
NAJMI WAZIRI, J (Oral)
1. This appeal impugns an order dated 23.09.2016 passed by the learned
Commissioner under Employees Compensation Act, 1923 (the Act) granting
compensation to the claimant-respondent No.1.
2. The brief facts of the case are that Mr. Upender Paswan- respondent
No.1, was employed with the appellant. During the course of his duties, on
15.02.2013, he suffered an injury resulting in amputation of his right wrist.
FAO 54/2018 Page 1 of 14
A claim for compensation was filed under the Act. The claim was allowed
on 23.09.2016 and an amount of Rs.10,07,616/- was awarded alongwith
simple interest @ 12 % per annum from the date of filing of the petition i.e.
15.03.2015. The appellant has deposited the requisite amount. The Award is
challenged on the ground that an insurance cover under the Employees’
State Insurance Act, 1948 (ESI Act) was sought on 25.02.2013 and
insurance cover was granted to the employee concerned alongwith other
employees of the appellant w.e.f. 08.02.2013. However, the insurance claim
for compensation was rejected on 27.06.2013 by the Employees State
Insurance Corporation.
3. In support of his contentions, the learned Senior Counsel for the
appellant, relies upon the judgment of the Supreme Court in Bharagath
Engineering vs. R. Ranganayaki & Anr., 2002 Supp (5) SCR 642, which
held that it was immaterial as to when the application for registration and the
payment of the premium was made, because under the beneficial scheme of
the said Act, Rules and Regulations, the employee is deemed to be covered
from the date of his employment. In that case, the employee had already
passed away due to an accident in the course of his employment. The
registration was sought much after his demise. The rejection of the insurance
claim was quashed by the Supreme Court on the ground that:-
“.....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
FAO 54/2018 Page 2 of 14
operation of Section 53 of the Act, proceedings under the
Compensation Act were excluded statutorily.”
4. The appellant also relies upon the decision of the Kerala High Court
in Employee’s State Insurance Corporation vs. Maria Tiles, decided on
02.01.2014, which held that:-
“5. Section 2(14)of the Act defines "insured person"
which reads thus: "insured person" means a person who is or
was an employee in respect of whom contributions are or were
INSA.80/2011 7 payable under the Act and who is by reason
thereof, entitled to any of the benefits provided by the Act."
The definition includes a person who is or was an employee in
respect of whom contributions are or were payable under the
Act and who is by reason thereof, entitled to any of the benefits
provided by the Act. Scheme of the Act, Rules and Regulations
thereunder, indicate that the insurance covered under the Act
is distinct and different from the contract of insurance in
general. Payment or nonpayment of contributions and action
or non-action prior to or subsequent to the date of accident is
really inconsequential in considering the entitlement of
benefits by an injured employee in a covered establishment
under the Act. Where the employee has suffered an
employment injury as defined under section 2(8) of
INSA.80/2011 8 the Act and there is no dispute that he was an
employee of the employer and where there is a statutory
interdiction under section 53 of the Act barring the employee
or dependent from claiming compensation or damages under
any other law, he has to be treated as an insured person under
the Act even where no application had been moved to register
him or contribution was paid in respect of him by the
employer. Apex Court analysing section 2(14) of the Act in
Bharaqgath Engineering v. Rranganayaki (2003(2) SCC138
has held that the employer has not paid contribution to
Corporation is not a ground to hold that he was not an insured
person and thus deny benefits under the Act or to his
dependants. Application filed and contribution paid with
respect to the employee, was much later to the accident cannot
FAO 54/2018 Page 3 of 14
be considered decisive to hold that the employee was not an
'insured person.' Section 2(14) clearly takes within its ambit an
employee in respect of whom contribution is or was payable
under the Act. That clearly would INSA.80/2011 9 show that
even when there was default or negligence on the part of
employer to pay contribution with respect to an employee, but,
it was required to be paid under the Act, that employee has to
be treated as an insured person.”
5. It is the appellant’s case that the proceedings before the
Commissioner, Workmen Compensation, were barred under section 53 of
the ESI Act and the injured-employee would need to be compensated under
the same.
6. On 16.02.2018 this Court had ordered:-
“It is not in dispute that the injured-employee has to be
compensated, be it under the Compensation Act, or under the
ESI Act. Monies have been deposited under the Workmen‟s
Compensation Act. If any monies are granted under the ESI
Act, the appellant can be re-imbursed to the extent of payment
made by them. Since the issue raised in this appeal may take
some time to be adjudicated upon, monies awarded to the
injured-employee ought to be released as he has suffered an
injury way back on 15.02.2013 i.e. five years to date.
In the circumstances, a sum of Rs.2,00,000/- shall be
released to the injured-employee. The remaining amount shall
be kept in an interest bearing Fixed Deposits of Rs. 1,00,000/-
each to mature every successive year; each FDR shall be
released upon its maturity alongwith interest accrued thereon
directly into the account of the injured-employee. The bank
account shall be maintained in a Bank near his place of
residence. Should the injured-employee require monies in any
exigency, he will have the liberty to move an application in
this regard before this Court”.
FAO 54/2018 Page 4 of 14
7. The learned Senior Counsel for the appellant contends that the
appellant came under the coverage of the ESI Act on 08.02.2013 because the
strength of its employees became twelve as on that date. It was required to
apply for registration within 15 days of reaching that threshold. A letter
dated 25.02.2013 was issued by the ESIC apropos the registration of
appellant’s employees under Section 2(12) of the ESI Act. An online
application was made on 25.02.2013 and the hard copy of the same was
submitted to the ESIC Office on 26.02.2013. The employment of the
appellant’s employees including the injured employee, Mr. Upender Paswan
was verified. The appellant company was issued an Employer Code;
subsequently, the employee was issued an Insured Person Certificate. The
appellant contends that the application for registration dated 26.02.2013
mentioned, at Serial No.18 of the Form, that Mr. Upender Paswan had met
with an accident on 15.02.2013. The Court would note that the said
information was not a statutory requirement of disclosure but an additional
information provided by the appellant without any particulars. The
appellants were thereafter directed to deposit interests towards late payment
of the “employee contribution”, which they so did. An application for
compensation/indemnification for loss was filed by the insured-injured
employee-Mr. Upender Paswan. The claim was rejected by the ESIC by a
letter dated 27.06.2013 on the ground that the case has not been admitted as
an employment injury because the registration of the factory with the ESIC
was done after the occurrence of accident. Therefore, no case was made out
from the date of coverage. The employee then sought compensation under
the Employees Compensation Act. A compensation of Rs. 10,07,616/- was
FAO 54/2018 Page 5 of 14
awarded along with an interest @ of 12% per annum. This amount has
already been directed to be released to the injured employee.
8. The dispute is essentially between the appellant and ESIC.
The learned Senior Advocate for the appellant submits, that in term of
Bagarath Engineering (supra) the benefit of insurance coverage under the
ESIC would be extended to the injured employee prior to the registration of
the employer under the said Act. In the same vein, the High Court of Kerala
in Employee’s State Insurance Corporation vs. Maria Tiles decided on
02.01.2014, held as under:-
“5. Section 2(14)of the Act defines "insured person"
which reads thus: "insured person" means a person who is or
was an employee in respect of whom contributions are or were
INSA.80/2011 7 payable under the Act and who is by reason
thereof, entitled to any of the benefits provided by the Act."
The definition includes a person who is or was an employee in
respect of whom contributions are or were payable under the
Act and who is by reason thereof, entitled to any of the benefits
provided by the Act. Scheme of the Act, Rules and Regulations
thereunder, indicate that the insurance covered under the Act
is distinct and different from the contract of insurance in
general. Payment or nonpayment of contributions and action
or non-action prior to or subsequent to the date of accident is
really inconsequential in considering the entitlement of
benefits by an injured employee in a covered establishment
under the Act. Where the employee has suffered an
employment injury as defined under section 2(8) of
INSA.80/2011 8 the Act and there is no dispute that he was an
employee of the employer and where there is a statutory
interdiction under section 53 of the Act barring the employee
or dependent from claiming compensation or damages under
any other law, he has to be treated as an insured person under
the Act even where no application had been moved to register
him or contribution was paid in respect of him by the
employer. Apex Court analysing section 2(14) of the Act in
FAO 54/2018 Page 6 of 14
Bharaqgath Engineering v. Ranganayaki (2003(2) SCC138
has held that the employer has not paid contribution to
Corporation is not a ground to hold that he was not an insured
person and thus deny benefits under the Act or to his
dependants. Application filed and contribution paid with
respect to the employee, was much later to the accident cannot
be considered decisive to hold that the employee was not an
'insured person.' Section 2(14) clearly takes within its ambit an
employee in respect of whom contribution is or was payable
under the Act. That clearly would INSA.80/2011 9 show that
even when there was default or negligence on the part of
employer to pay contribution with respect to an employee, but,
it was required to be paid under the Act, that employee has to
be treated as an insured person.
6. Section 68 of the Act enable the Corporation to
initiate recovery proceedings against the opposite party after
the Corporation providing benefits to the employee with
respect to whom there was default or negligence on his part to
pay contribution and even twice the amount of contribution
can be recovered from the employer in such case, has been
canvassed by the counsel to impeach the order of E.I. Court.
In the Writ Petition W.P(c) 38153/2007 Corporation
impleaded as additional respondent has not canvassed or
raised such a contention. In the judgment rendered in the writ
petition specific direction had been issued for deposit of
compensation awarded by the Commissioner by the opposite
party, providing him opportunity to claim reimbursement from
INSA. 80/2011 10 Corporation proving that the employee was
an „insured person‟ under the Act. In the light of such specific
directions given under the judgment E.I. court was bound to
order reimbursement of the amount deposited by opposite
party to satisfy the claim of the employee when such employee
was proved to be an insured person under the Act. If the
Corporation is having statutory empowerment under section
68 of the Act to proceed against the opposite party for its
failure or negligence to pay contribution under the Act with
respect to the employee it can resort do so in accordance with
FAO 54/2018 Page 7 of 14
law. Order of the E.I. Court does not reflect that Corporation
has set forth its statutory entitlement to have recovery from the
employer on a challenge referable to section 68 of the Act.
Further more any recovery proceeding thereunder can arise
only after providing benefits to employer by Corporation and
that too for realisation of defaulted contribution, even to twice
the sum due, from employer. There is no merit in the
challenges INSA. 80/2011 11 raised to impeach the order of
E.I. Court. Appeal is dismissed directing both partied to suffer
their respective costs.”
9. The learned counsel for the respondents submits that this Court in
Sushil Goyal vs. Luckson Siddique & Ors. MANU/DE/0366/2014, has
distinguished the applicability of Bharagath Engineering (supra) in the
facts of that case and held that unless the unit stood registered with the ESIC
and the name of the employee was registered with the latter, benefits would
not flow to the injured employee, otherwise it would be deemed to be a
fraud upon the statutory insurance scheme. It held, inter alia:
“6. In my opinion, in the facts of this case, the argument
urged on behalf of the appellant placing reliance on the
judgment of the Supreme Court in Bharagath Engineering
(supra) case is misconceived because the judgment in the case
of Bharagath Engineering proceeds in a factual basis where
an employee is in fact an employee and his name is shown in
the register of employees as duly registered with ESIC. It is
not the law as per Bharagath Engineering(supra) case that
even if a person is not shown in the register of employees and
is not an employee on the date of the accident, even then ESIC
still incurs liabilities for an employee who is not in the register
and who is not registered with ESIC as per the returns filed by
the employer. Section 44 of the ESIC Act talks of filing of
returns with ESIC, and, maintenance of a register of
employees by the employer. Contributions are to be made
therefore with respect to specified employees existing on the
employment register whose total number have to be specified
FAO 54/2018 Page 8 of 14
in the returns made as per the register. A mere registration of
an employer under ESIC Act cannot and does not mean that
such registration applies with respect to un-specified number
of employees inasmuch as registration is applicable only for
specific employees and specified number of employees. There
cannot be any other interpretation of the liability of ESIC Act
under the provisions of the Act otherwise it will be very easy
for an employer to give a lesser number of employees in the
employment register, pay lesser contribution, and then after
happening of an accident seek to include employees who have
suffered as a result of the accident, by filing returns with ESIC
thereafter, and thereby deny its/employers' liability by seeking
to fasten the liability upon ESIC. If the employer is permitted
in such a case to plead that it is not liable then it will be as if
to permit a fraud to be played upon ESIC, and which
interpretation of the provisions of the Act I cannot subscribe
to. I cannot permit the argument as urged on behalf of the
appellant to succeed because admittedly in the documents filed
with ESIC by the employer of the previous year of the accident
the deceased Sh. Aftab Alam was not shown as an employee
and he was sought to be shown as an employee only by filing
returns after one year. Registration with ESIC is valid only
with respect to such employees who are employees as duly
shown in the returns with ESIC and also in the employees'
register maintained by the employer for being covered
under the ESIC Act. If I permit the argument urged on behalf
of the appellant to succeed then grave fraud can be played
upon ESIC because a person would not be an employee
covered under ESIC and yet, liability would be thrown on
ESIC. The object of the observations of the Supreme Court in
the case Bharagath Engineering (supra) is to ensure that once
an employer with a particular number of specified employees
with details is registered with ESIC, then, even when premiums
are not paid by the employer, ESIC would still be liable to the
dependents of the deceased, inasmuch as, it is the duty of ESIC
to recover the premiums and other amounts recoverable under
the ESIC Act from the employer. The argument, therefore,
urged on behalf of the appellant/employer is rejected and the
FAO 54/2018 Page 9 of 14
liability in the present case falls upon the appellant and not
upon ESIC”.
10. The respondents also rely upon the decision of this Court in Writ
Petition (Civil) No. 11027/2016 between the same parties and concerning
the same lis and issue. It was held:
“9. ESI Corporation have submitted the relevant
documents with respect to the petitioner's coverage as
th
Annexure R1 to R6 along with the affidavit dated 07
December, 2016. ESI Corporation has also submitted verified
copy of the entire record.
10. On careful consideration of the submissions made
by the petitioner and the record of the Corporation, this Court
is satisfied that the petitioner was not covered under the ESI
Act on the date of the accident i.e. 15th February, 2013. The
petitioner applied for registration of its unit by an on-line
application on 25th February, 2013. ESI Corporation,
therefore, rightly rejected the petitioner's claim on 27th June,
2013. The rejection of the petitioner's claim has not been
challenged by the petitioner and has, therefore, attained
finality. The claim of respondent No. 1 is therefore, not barred
by Section 53 of ESI Act”.
11. The appellant’s LPA No. 166/2017, was rejected by an order dated
12.09.2017. The Court held:-
“ .........11. A compensation of the relevant provisions of
the two Act makes it clear that both the Acts provide for
compensation to a workman/employee for personal injury
caused to him by accident arising out of and in the course of
his employment. The ESI is a later Act and has a wider
coverage. It is more comprehensive. It also provides for more
compensation than what a workman would get under the
Workmen's Compensation Act. The benefits which an
employee can get under the ESI Act are more substantial than
the benefits which he can get under the Workmen's
Compensation Act. The only disadvantage, if at all it can be
FAO 54/2018 Page 10 of 14
called a disadvantage, is that he will get compensation under
the ESI Act by way of periodical payments and not in a lump
sum as under the Workmen's Compensation Act. If the
legislature in it; wisdom thought better to provide for
periodical payments rather than lump sum compensation its
wisdom cannot be doubted. Even if it is assumed that the
workman had a better right under the Workmen's
Compensation Act in this behalf it was open to the legislature
to take away or modify that right. While enacting the ESI Act
the intention of the legislature could not have been to create
another remedy and a forum for claiming compensation for an
injury received by the employee by accident arising out of and
in the course of his employment.
12. In this background and context we have to consider
the effect of the bar created by Section 53 of the ESI Act. 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 words 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" 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 infer a different intention
by referring to the previous history of the legislation. That
would amount to by passing 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 construing 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 in view of the bar
created by Section 53 of application for compensation Act was
not maintainable."
FAO 54/2018 Page 11 of 14
12. The appellants then preferred an SLP No. 33855/2017 in which the
following order was passed on 05.01.2018:-
“The Special Leave Petition is dismissed.
However, if an appeal is filed by the petitioner within a
period of two weeks from today the same shall be entertained
and disposed of on merits and in accordance with law without
raising the question of limitation.
Pending application stands disposed of”.
13. Pursuant thereto, the present appeal has been filed under section 30 of
the Act. The learned counsel for the ESIC states that the appeal is not
maintainable, in view of the bar under section 75 of the ESI Act. The sub-
section 75 (1)(g) of the ESI Act reads as under:-
“75. Matters to be decided by the Employees’ Insurance
Court . — (1) If any question or dispute arises as to —
(g) any other matter which is in dispute between a principal
employer and the Corporation, or between a principal
employer and an immediate employer, or between a person
and the Corporation or between an employee and a
principal or immediate employer, in respect of any
contribution or benefit or other dues payable or recoverable
under this Act, 3 [or any other matter required to be or
which may be decided by the Employees‟ Insurance Court
under this Act],
such question or dispute 4 [subject to the provisions of sub-
section (2A)] shall be decided by the Employees‟ Insurance
Court in accordance with the provisions of this Act.”
14. It is not in dispute that the ESIC’s letter dated 27.06.2013 rejecting
the appellant’s claim has not been challenged either by the employee
FAO 54/2018 Page 12 of 14
concerned or the appellant-employer. Should the appellants have had a
grievance against the rejection, a statutory appeal could have been preferred
before the appropriate forum, as specified under the statue, i.e., before the
Employees’ Insurance Court.
15. In view of the preceding discussion, it is evident that the employee
could not have been awarded the benefit of compensation under the ESI Act,
because of the denial of his coverage under the insurance scheme. This
issue was between the employer and the ESIC because the denial of
coverage to or rejection of the claim, would inexorably lead to a liability for
compensation on the employer. The employee could not have been kept
waiting to rehabilitate himself till the issue of his coverage and benefits
under the said Act was determined in the appeal. The statutory appeal
against the rejection of the claim because of non-coverage would lie only
before the Employees Insurance Court. Hence, this appeal is not
maintainable.
16. On 14.10.2016, the present appellant-employer had sought a review of
the order rejecting the claim of the injured employee. This Review Petition
was rejected. While dismissing the SLP preferred by the appellant, on
05.01.2018, the Supreme Court had noted that if an appeal is filed within a
period of two weeks from that day, the same shall be entertained and
disposed off on merits in accordance with law without raising the question
of limitation. The appeal in accordance with the law, would mean the
appeal envisaged under section 75 of the ESI Act. Without there being an
adjudication under section 75 of the ESI Act, this appeal would not be
maintainable. In view of the ESIC’s contention that there was no insurance
coverage and this position not having been reversed in appeal by a court of
FAO 54/2018 Page 13 of 14
competent jurisdiction; the impugned order passed by the Commissioner,
Employees’ Compensation cannot be said to be in error because the injured
employee would either be under the coverage of ESIC scheme or by default
under the Employees Compensation Act. It cannot be the case that the
workman/ employee would not be covered under either of the statutes. He
cannot be rendered remediless. Insofar as is was established that the injury
occurred during the course of employment, the compensation having been
awarded to the injured-employee in terms of the Act, the impugned order
cannot be faulted. Should the workman be entitled to a higher compensation
pursuant to other proceedings pursued by the appellants, the former shall be
duly accorded the additional benefits.
17. In the circumstances, the appeal is without merits and is accordingly
dismissed.
NAJMI WAZIRI, J
APRIL 25, 2018
RW
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