Can employee claim compensation for accident while travelling to and from work? Supreme Court answers

The Supreme Court recently held that an accident occurring to an employee while commuting to or from work is covered under the Employees’ Compensation Act, 1923 (EC Act), provided there is a nexus between the circumstances, time and place of the accident and the employment. [Daivshala & Ors v. Oriental Insurance Co. Ltd. & Anr]

A Bench of Justices Manoj Misra and KV Viswanathan held,

"...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."

The Court restored the award of compensation granted by the Commissioner for Workmen’s Compensation, which had been reversed by the Bombay High Court.

The deceased, Shahu Sampatrao Jadhavar, was employed as a watchman in a sugar factory. While riding to report for his 3 AM shift, he met with a fatal accident about 5 kilometres from the workplace. His family was awarded compensation under the EC Act by the Commissioner, who found that the accident had arisen “out of and in the course of employment”.

The High Court had reversed this, holding that since the accident occurred while the employee was on his way to work, and not on the premises, it could not be linked to his employment.

The Supreme Court, however, took note of the introduction of Section 51E of the Employees’ State Insurance (ESI) Act, 1948 with effect from June 1, 2010. The provision states:

“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.”

Referring to a number of precedents, the Court held that Section 51E is clarificatory in nature and has retrospective effect, noting:

“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... we have no manner of doubt that the said amendment is clarificatory in character and will have retrospective effect.”

The Court also held that though Section 51E is part of the ESI Act, its interpretative principle applies to the EC Act because both statutes are “beneficial legislations intended as social security measures”, and that the operative phrase “arising out of and in the course of employment” is identical in both.

“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.”

On facts, the Court found that the deceased was riding to work for a night shift and that there was a clear nexus between the circumstances, time and place in which the accident occurred and his employment as watchman.

The High Court’s order was set aside and the award of the Commissioner restored.

Advocate-on-Record Atul Babasaheb Dakh and Advocates Diganta Gogoi, Bitu Kumar Singh and Praveen Kumar Pandey appeared for the appellants.

Advocate-on-Record Amreeta Swarup appeared for the insurance company.

[Read Judgment]