EMPLOYEES INSURANCE COURT

S.NO FRAMEWORK PROVIDED UNDER THE PROVISIONS

ACT

1 Constitution of the courts Section 74

2 Jurisdiction of the courts Section 75

3 Institution of proceedings Section 76

4 Commencement of proceedings Section 77

5 Powers of the Court Section 78

6 Appearance by legal practitioners, etc Section 79

7 Reference to High Court Section 81

8 Appeal Section 82

9 Stay of payment pending appeal Section 83

INTRODUCTION

The Employees State Insurance Act was enacted and enforced in the year 1948, It
extends to the whole of India. The Employees Insurance Court is the adjudicatory body
within the act and it is provided under Chapter VI - ‘Adjudication of Disputes and Claims’.
This Chapter consists of a complete framework within which the functions of the court can be
efficiently performed and sufficient powers to frame rules were given to the respective State
Governments to utilise them according to their discretion.
CONSTITUTION OF THE COURT (Section 74)

Power1 to constitute an Employees’ Insurance Court is provided to the State Government

which shall be done through a notification in the Official Gazette and the jurisdiction of the
Court shall be for such areas as may be specified in the notification. The number of judge 2s
is upto the discretion of the State Government. The qualifications 3 of a Judge of the court as
provided by this act is if he is or has been a judicial officer or is a legal practitioner of five
years standing. Discretion4 is provided to the State Government to appoint the same Court for
two or more areas and the same can be exercised for appointing two or more courts for the
same local area, as a consequence of which the State Government may by general or special
order regulate the distribution of business between them.

In Jivaji Rao Cotton Mills V. E.S.I.C5, the question before the court was two-fold,
1. Is it necessary to constitute an Employees’ Insurance Court first and then to appoint a
judge to discharge the functions of that Court?
2. Whether the State Government was bound to frame rules under Section 96 of the Act
before it could exercise the power conferred on it by Section 74 of the Act?

It was held that there is nothing in the general law or in the specific p[rovisions of Section 75
and 96 suggesting that it was necessary for the State Government to have constituted an
Employees’ Insurance Court first and thereafter appoint an officer as judge to discharge the
functions thereof.
Further the State Government was not bound to frame rules under Section 96 before it could
constitute Employees’ Insurance Court in exercise of its powers under Section 74, since
Section 96 is merely enabling in nature and it was never intended to place an embargo on the
other provisions of the Act.

1 Section 74(1)
2 Section 74(2)
3 Section 74(3)
4 Section 74(4) & (5)
5 AIR 1962 Madh Pra 340
JURISDICTION OF THE COURT (Section 75)

Enumeration6 of certain specified questions or disputes to be within the purview of the Court
are specifically provided herein but subject to sub-section (2A).

These matters involve :

● Deciding any question or dispute that demands the finding if any person is an
employee within this Act or if he is liable to pay employee’s compensation.
● Determining the rate of wages or average daily wages of an employee under this Act.
● Ascertaining the rate of contribution to be payable by the principal employer to his
employee.
● The finding as to who is or was the principal employer for an employee.
● Declaring the right of any person to any benefit and to its corresponding amount and
duration.
● The Court can further impugn the directions given by the Corporation under section
55A on the review of any payment of dependants’ benefit.

Apart from these specified matters the Court is provided with a wider discretion to discuss
any other matter that might arise as a dispute in respect of any contribution or benefit or other
dues payable or recoverable under this act, between a

● Principal employer & the Corporation

● Principal employer & immediate employer
● Person & the Corporation
● Employee & Principal or Immediate employer

The Court also has jurisdiction to decide on claims 7, but subject to the provisions of sub-
section (2A)

● Recovery of contribution from the principal employer

6 Section 75(1)
7 Section 75(2)
 ● Principal employer’s claim to recover contributions from any immediate employer
● Claim against a principal employer under section 68, which speaks about
Corporation’s right to fine the principal employer when he neglects or fails to pay any
contribution to the detriment of the employee.
● Claim under section 70 for the recovery of value or amount of benefits received by a
person not lawfully entitled
● Any claim for the recovery of any benefit admissible under this Act

Any disablement question8 that arises to which the decision of a Medical Board or a Medical
Appeal Tribunal was not obtained and the decision whereof is necessary for the
determination of claim or question before the Court, it shall direct the Corporation to have the
question decided under this Act and then proceed with the determination of the claim or
question in accordance with the decision of the medical board or the medical appeal tribunal,
except when an appeal under section 54A(2) is filed before the Court in which case all the
issues arising before it maybe determined by the Court itself.

The principal employer9 is compelled to deposit 50% of the due amount as claimed by the
Corporation to the Court, when a dispute is between the principal employer and the
Corporation, with discretion provided to the Court to waive or reduce the amount to be
decided after recording its reasons in writing.

In Hindustan Zinc Ltd v. Union of India and Others 10, the Constitutional validity of
Section 75(2-B) was challenged.
It was pleaded that deposit of 50% of amount claimed by the E.S.I Corporation as a
precondition for entertaining application under Section 75 renders the remedy of the
Employer illusory and is violative of Article 14 of the Constitution of India. The High Court
referring to the statutory provisions and decisions held that Section 75(2-B) of the E.S.I Act,
1948 was intra vires and not violative of Article 14 of the Constitution of India.

8 Section 75(2A)
9 Section 75(2-B)
10 (2005) I LLJ 842 (Raj)
The jurisdiction of the Civil Court is ousted with respect to the aforementioned question or
disputes as well as the adjudication on any liability which is to be decided by a Medical
Board, or Medical Appeal Tribunal or by the Employees' Insurance Court.

In Kishore Lal v. Chairman, Employees’ State Insurance Corporation 11, the Appellant
was an employee insured with the Respondent Corporation. He filed a complaint under the
Consumer Protection Act, 1986 for negligence in the treatment of his wife by the E.S.I
dispensary. The District Consumer Forum as well as the State and National Commissions
dismissed his complaint. Hence he filed an appeal in the Supreme Court.

The Supreme Court dealt with two questions which arose in this appeal. One was whether the
jurisdiction of the Consumer Forum was ousted by Section 75 of the Employees’ State
Insurance Act, 1948. The Supreme Court held it was not and observed that Section 75(1)(a)
to (g) did not include damages to claim for medical negligence like the present case.

In Employees’ State Insurance Corporation v. Hari Hazara 12, the extent of the Medical
Board’s authority was in dispute.
It was held that in case of injuries covered by the Schedule, the extent of loss of earning
capacity need not be investigated inasmuch as the relevant item in the Schedule would finally
determine the question. But in case of injuries not covered by the Schedule, the extent of loss
of earning capacity is to be decided on evidence and the opinion of the Medical Board in this
regard will be final and binding between the parties and the Tribunal must pass an award in
conformity with the decision of the Medical Board.

INSTITUTION OF PROCEEDINGS (Section 76)

All proceedings13 before the Employees’ Insurance Court shall be instituted in the Court
appointed for the local area in which the insured person was working at the time the question
or dispute arose but subject to the provisions of the Act as well as any rules made by the State
Government.

11 2007 III 181 (SC)

12 (1989) II LLJ 415 (Cal)
13 Section 76(1)
The Court has the power to transfer14 the matter arising out of any proceeding before it to be
dealt by any other Court within the same state if it is satisfied that the same can be
conveniently disposed of by the other Court and it shall transmit the records forthwith.

Similar power15 is given to the State Government but to a wider extent so as to transfer any
matter pending before the Employee’s Insurance Court to any such Court in another State
with the consent of the latter’s State Government. The cases16 transferred to such other Courts
shall be deemed to be originally instituted there and shall be continued as such..

COMMENCEMENT OF PROCEEDINGS (Section 77)

The proceedings before the Court are to be commenced 17 by way of an application and the
prescribed period of limitation18 within which such application must be made is 3 years from
the date the cause of action arose.

A three-fold ‘deeming cause of action’ is enunciated by way of an Explanation , as follows,

● Cause of action towards a claim for benefit does not arise unless the insured person or
incase of dependant’ benefit, the dependant of the insured person claims the benefit as
per the regulations made for that behalf within a period of 12 months after the claim is
due, provided the Employees’ Insurance Court can extend the period on reasonable
grounds.

● Cause of action regarding a claim by the Corporation for recovering contributions

from the principal employer is to arise on the date on which the claim by the
Corporation was first made.

● Cause of action incase of a claim by the principal employer for recovering

contributions from an immediate employer is not to arise till the date by which

14 Section 76(2)
15 Section 76(3)
16 Section 76(4)
17 Section 77(1)
18 Section 77(1-A)
 evidence of contributions having been paid is due to be received by the Corporation as
per the regulations.

The19 Form, its particulars, along with its fee is to be as per the rules made by the State
Government in consultation with the Corporation.

POWERS OF THE COURT (Section 78)

The Employees’ Insurance Court20 is equipped with all the powers of a Civil Court for the
purposes of,

● Summoning and enforcing the attendance of witnesses

● Compelling the discovery and production of documents and material objects
● Administering oath and recording evidence

The Employees’ Insurance Court shall be deemed to be a Civil Court within the meaning of
section 195 and Chapter XXVI of the Code of Criminal Procedure, 1973 which deals with
‘Prosecution for contempt of lawful authority of public servants, for offences against public
justice and for offences relating to documents given in evidence’ and ‘Provisions As To
Offences Affecting The Administration Of Justice’ respectively.

The procedure21 to be followed by the Employees’ Insurance Court is to be as per the rules
made by the State Government, the Court has discretion in respect of all costs 22 incidental to
any proceedings before it subject to the rules made by the State Government for this behalf.
Orders23 passed by the Employees' Insurance Court are enforceable as it was a decree passed
in a suit by a Civil Court.

In Employees’ State Insurance Corporation v. Surendra Sharma24, the power of review

of the E.I. Court was under consideration to which it was held that the power of review was
19 Section 77(2)
20 Section 78(1)
21 Section 78(2)
22 Section 78(3)
23 Section 78(4)
24 (2003) I LLJ 1045 (Gau)
not an inherent power but had to be conferred on law either specifically or by necessary
implication. Under the Employees’ State Insurance Act, 1948 no p[owe was given to
Employees’ Insurance Court to review its judgement and the application of the Code of Civil
Procedure was limited in proceedings under the said Act to matters mentioned in the Section.

APPEARANCE BY LEGAL PRACTITIONERS, ETC (Section 79)

The representation of any person to or before an Employees’ Insurance Court for the
purposes of appearance, application or act on his behalf to be made by a legal practitioner or
by an officer of a registered trade union authorised in writing by such person, but the
permission of the Court is required for any other person so authorised.

Employees’ State Insurance Act, 1948 is a welfare legislation, hence its needless to say that
prolonged litigation attributes of a Civil Court has to be streamlined and mitigated in order to
provide the needy employee with what he deserves. On a similar note it cannot be expected
on behalf of an employee to avail the services of a legal practitioner at every instance, hence
the Act provides with alternate modes of representations.

REFERENCE TO HIGH COURT (Section 81)

The Employees’ Insurance Court has been accoutred with the competence to make a
reference to the High Court and it is bound by the decision of the latter.

It is pertinent to note that this provision is quite restrictive in the sense that the Employees’
Insurance Court can only submit any ‘Questions of Law’ for the decision of the High Court,
this aspect highlights the expedient and efficient framework of this Act so as to attenuate any
delays.Since ‘questions of fact’ are not required to be decided by taking any evidence or
witnesses, one can say that this is not a time consuming process.

APPEAL (Section 82)

A blanket ban25 on appeal has been entrenched by way of a ‘saving clause’ which prohibits
appeal from the Employees’ Insurance Court other than by way of this section.

An appeal26 shall be made to a High Court subject to a qualification that the order of the
Employees’ Insurance Court involves a ‘Substantial Question of Law’.

The meaning of the term ‘Substantial Question of Law’ has been quite settled through catena
of decisions as meaning, not previously settled by the law of the land or any binding
precedent, and must have a material bearing on the decision of the case and or the rights of
the parties before it, if answered either way.

Period of limitation27 to file an appeal has been fixed at 60 days, but sub-section 4 of section
82 provides a rider that the provisions of sections 5 and 12 of the Limitation Act, 1963 28 shall
apply to appeals under this section. These provisions state about ‘Condonation of delay’ and
‘Exclusion of time in legal proceeding’, which in general aid the bona fide petitioner to relax
the strict provisions to some extent provided there was no fault on his behalf.

STAY OF PAYMENT PENDING APPEAL (Section 83)

An appeal preferred by the Corporation against an order of the Employees’ Insurance Court,
is subjected to the rider that such Court may in its own discretion or when directed by the
High Court should withhold the payment of any sum directed to be paid in the impugned
order.

25 Section 82(1)
26 Section 82(2)
27 Section 82(3)
28 Section 82(4)