Background:

The present case arose from a tragic accident involving Shahu Sampatrao Jadhavar, a night watchman employed at a sugar factory. On April 22, 2003, while traveling to work on his motorcycle for his shift starting at 3:00 AM, he met with a fatal accident approximately five kilometers from his workplace. His dependents, including his widow, children, and mother, filed a claim under the Employees’ Compensation Act, 1923, seeking compensation on the ground that the accident occurred during the course of his employment. The Workmen’s Compensation Commissioner ruled in their favor, awarding compensation and interest, holding that the accident arose out of and in the course of employment. However, the Bombay High Court reversed this decision, stating that the accident occurred during the employee’s commute and was therefore not covered under the Act.

Issues

1. Whether an accident that occurs while an employee is commuting to work be considered as arising out of and in the course of employment under Section 3 of the Employees’ Compensation Act, 1923, thereby entitling the employee or their dependents to compensation?

Observations:

The following observations were made by the court:

• • The Court emphasized that the Employees’ Compensation Act, 1923, is a social welfare legislation and must be interpreted liberally in favor of employees and their dependents.
• • The Court held that an accident occurring during the employee’s travel to or from work can be said to arise “out of and in the course of employment” if a clear and proximate nexus exists between the accident and the employment.
• • Although Section 51E of the Employees’ State Insurance Act, 1948 (introduced in 2010), specifically covers commuting accidents, the Court observed that this provision is clarificatory in nature, not substantive, and could therefore be applied to interpret similar phrases in the Employees’ Compensation Act.
• • The Court applied the principle of pari materia, noting that both the EC Act and the ESI Act are social welfare statutes with similar objectives and wording, so they should be interpreted harmoniously.
• • The Court disagreed with the High Court's narrow interpretation that commuting accidents are outside the scope of employment, stating that such a view undermines the protective intent of the legislation.

Decision:

The Supreme Court allowed the appeal, set aside the judgment of the Bombay High Court, and restored the award passed by the Workmen’s Compensation Commissioner. The Court held that:

• • The accident that occurred while the deceased was commuting to his workplace did arise out of and in the course of his employment under Section 3 of the Employees’ Compensation Act, 1923.
• • There was a sufficient nexus between the accident and the employment, as the deceased was traveling at a fixed time to report for duty.
• • Therefore, the dependents of the deceased were entitled to compensation, and the insurance company was liable to pay the amount awarded by the Commissioner.

Why this case matters:

• • Expands scope of “course of employment” to include commuting accidents.
• • Protects workers and dependents under the Employees’ Compensation Act.
• • Applies Section 51E of ESI Act retrospectively as a clarificatory provision.
• • Ensures consistent interpretation of welfare laws (EC Act and ESI Act).
• • Sets a precedent for future compensation claims involving commute-related accidents.

Laws related thereto:

Under Employees’ Compensation Act, 1923:

• Section 3: Defines “injury” and provides for compensation where an employee suffers an accident “arising out of and in the course of employment.”

Under Employees’ State Insurance Act, 1948:

• Section 51E: Specifically states that injuries sustained during commuting to and from work shall be deemed to have arisen out of and in the course of employment, subject to certain conditions.

Judicial Precedents:

• Francis De Costa v. Bharat Sanchar Nigam Ltd. (2006): Advocated a liberal interpretation of “arising out of and in the course of employment” in favor of employees.

• Agnes v. Oriental Insurance Co. Ltd. (2007): Recognized accidents connected with employment, including certain non-workplace injuries.

• Saurashtra Salt Works v. ESI Corporation (1978): Emphasized the necessity of a nexus between the injury and employment.