Labor Law Project Presentation

EMPLOYEES STATE INSURANCE ACT

SECTIONS (60 - 100)
INTRODUCTION

The Employees State Insurance Act, 1948 provides for certain
benefits to employees in case of sickness, maternity and
employment injury and also makes provisions for certain other
matters in relation thereto. The Act extends to the whole of
India. The Central Government is empowered to enforce the
provisions of the Act by notification in the Official Gazette, to
enforce different provisions of the Act on different dates and for
different States or for different parts thereof. The Act applies in
the first instance to all factories (including factories belonging
to the Government) other than seasonal factories. Section 1(5)
of the Act empowers the appropriate Government to extend any
of the provisions of the Act to any other establishment or class
of establishments, industrial, commercial, agricultural or
otherwise, in consultation with the Employees State Insurance
Corporation set up under the Act.

BENEFITS
In ESI scheme, a worker in insurable employment is called insured
person. Insured persons and their family are entitled to different types of
benefits.
Under Section 46 of the Act, the insured persons, their dependents are
entitled to the following benefits on prescribed scale:
(a) Periodical payments in case of sickness certified by medical
practitioner;
(b) Periodical payments to an insured workman in case of confinement
or miscarriage or sickness arising out of pregnancy, confinement;
(c) Periodical payment to an insured person suffering from
disablement as a result of employment injury;
(d) Periodical payment to dependants of insured person;
(e) Medical treatment and attendance on insured person;
(f) Payment of funeral expenses on the death of insured person at the
prescribed rate.

GENERAL RULES CONCERNING BENEFITS

Benefits not assignable or attachable
According to section 60 of the Act, the right to
receive any payment of any benefits under this
Act shall not be transferable or assignable. No
cash benefits payable under this Act shall be
liable to attachment or sale in execution of any
decree or order of any court.
Bar against receiving or recovery of compensation or
damages under any other law
Section 53 provides that an insured person or his dependent
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 under the Workmens
Compensation Act, or any other law for the time being in
force or otherwise in respect of any employment injury
sustained by the insured person as an employee under this
Act.
Similarly Section 61 contains a bar of benefits under other
enactments providing that when a person is entitled to any of
the benefits provided by the ESI Act, he shall not be entitled
to receive any similar benefits admissible under the
provision of any other enactment.

Persons not to commute cash benefit Section 62
of the Act provides that, save as may be provided in
the regulations, no person shall be entitled to
commute for a lump sum any disablement benefit
admissible under this Act.
Persons not entitled to receive payments in
certain cases- Section 63 of the Act provides that,
save as may be provided in the regulations, sickness
benefit or disablement benefit for temporary
disablement on any day on which he works or
remains on leave or on a holiday in respect of which
he receives wages or on ay day on which he remain on
strike.

Recipient of sickness or disablement benefit to
observe conditions the person concerned must
observe conditions specified in Section 64 of this Act,
regarding medical treatment.
Benefits must not be combined An insured person
shall not be entitled to receive for the same period ;
a. both sickness and maternity benefit;
b. both sickness and disablement benefit for
temporary disablement
c. both maternity benefit and disablement benefit for
temporary disablement.
However, where a person is entitled to more than one
of the benefits mentioned above, he shall be entitled to
choose which benefit he shall receive.

Mode of payment of benefit The benefits available
to the insured employees under the ESI Act except
medical benefit are required to be paid in cash.
Regulation 52 of the Employees State Insurance
(Gen.) Regulations, 1950 prescribes the time limit
within which the benefits payable under the Act shall
be paid. It specifically provides in its sub-regulation
(4) of the Regulation 52 that benefits under the Act
shall be paid in cash at a Local Office on such days and
working hours as may be authorized by him from
time to time in this behalf, or, at the option of the
claimant and subject to deduction of the cost of
remittance, by means of postal money orders or other
orders payable through a post office, or by any other
means which the appropriate office may in the
circumstances of any particular case consider
appropriate. Provided that the corporation may waive
the deduction of the cost of remittance in such cases
as the Director General may form time to time specify.


In order to provide speedy remedy to the employees
governed by the provisions of this Act, a provision has
been made to establish independent court for the
purpose of adjudication of disputes and claims. The
court constituted under the provisions of this Act is
known as Employees Insurance Court.

Constitution of Employees Insurance Court
The State Government has been empowered under
Section 74 of the Act to constitute Employees Insurance
Court by notification in the Official Gazette for such
local area as may be specified in the notification. The
court shall consist of such number of judges as the
State Government may think fit.
ADJUDICATION OF DISPUTES AND CLAIMS
JURISDICTION OF THE EMPLOYEES INSURANCE
COURT

(a) whether any person is an employee within the meaning of
this Act or whether he is liable to pay the employee's
contribution, or
(b) the rate of wages or average daily wages of an employee for
the purposes of this Act, or
(c) the rate of contribution payable by a principal employer in
respect of any employee, or
(d) the person who is or was the principal employer in respect
of any employee, or
(e) the right of any person to any benefit and as to the amount
and duration thereof, or
(ee)any direction issued by the Corporation under section 55A
on a review of any payment of dependants' benefit, or
(f)[Omitted]

(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 [subject to the provisions of sub-
section (2A)] shall be decided by the Employees'
Insurance Court in accordance with the provisions of
this Act.

"immediate employer", is defined as a person who has
undertaken the execution, on the premises of a
factory or an establishment to which this Act applies
or under the supervision of the principal employer or
his agent, of the whole or any part of any work which
is ordinarily part of the work of the factory or
establishment of the principal employer or is
preliminary to the work carried on in, or incidental to
the purpose of, any such factory or establishment, and
includes a person by whom the services of an
employee who has entered into a contract of service
with him are temporarily lent or let on hire to the
principal employer
CLAIMS (SEC 75(2))

Subject to provisions of Section 75 (2-A) the following
claims shall be decided by the Employees Insurance
Court namely;
(a) claim for the recovery of contributions from the
principal employer;
(b) claim by a principal employer to recover
contributions from any immediate employer;
(c) [omitted]
(d) claim against a principal employer under section
68;
(e) claim under section 70 for the recovery of the value
or amount of the benefits received by a person when he
is not lawfully entitled thereto; and
(f) any claim for the recovery of any benefit admissible
under this Act.

In Regional Director of ESI Corpn. v. Narayan
Chandra Rajkhowa and others, 1998 SCC (L&S) 127,
where the respondent employees made an application
to the ESI Court, contending that they were not
required to make contribution for the ESI Scheme as
the medical benefits which they were enjoying earlier
on the basis of the medical rules of the employers
establishment were more advantageous to them than
the benefits under ESI Scheme. The ESI Court allowed
the said application. The ESI Corpn. challenged the
jurisdiction of the ESI Court and urged that the only
remedy available to the respondent employees was to
approach the Central Government for grant of
exemption form the provisions of the Act under Section
88 of the Act. The Supreme court observed that there is
no merit in this contention. The High court has rightly
held that in view of the provisions contained in Section
75 (1)(g) the ESI court has jurisdiction to entertain the
application that was submitted by the respondent
employees.

The provision of section 88 dealing with the exemption
and section 99-A dealing with power to remove
difficulties would not cover the dispute which was
raised by the respondent employees which involves
adjudication of disputes whether the benefit which
were being availed of by them prior to the application
of ESI Scheme to them were more advantageous than
those under ESI scheme. The said dispute could only be
adjudicated upon by the ESI Court. Thus the appeals
were allowed, and the matter was remitted to the ESI
Court for determination of the question whether the
medical benefits that were being availed of by the
employees under the NTC Rules were more
advantageous than the benefits which would be
available to them under the ESI Scheme that has been
made applicable under the impugned circular.

SECTION 75(2-A)

Provides that if in any proceedings before the
Employees Insurance Court a disablement question
arises and the decision of a medical board or medical
appeal tribunal has not been obtained on the same and
the decision of such question is necessary for the
determination of the claim or question before the
Employees Insurance court, that court shall direct the
Corporation to have the question decided by this Act,
and shall thereafter proceed with the determination of
the claim or question before it in accordance with the
decision of the medical board or the medical appeal
tribunal, as the case may be, except where an appeal
has been filed before the Employees Insurance Court
under sub-section (2) of Section 54-A in which case the
Employees Insurance Court may itself determine all the
Issues arising before it.
Section 75 under its sub-section (3) bars the
jurisdiction of civil courts for all matters which are to
be decided or adjudicated, either by the medical board
or by the medial appeal tribunal or by the employees
insurance court under the provisions of the Employees
Insurance Act. It has been held that the existence of the
Employees Insurance Court is a necessary condition
precedent to bring into play the provisions of sub-
section (3) of Section 75 so as to oust the jurisdiction of
the Civil Court. If the insurance court has not been
established the provisions of Section 75(3) do not
become operative.
INSTITUTION OF PROCEEDINGS

Section 76 of the Act makes the following provision in
regard to institution of proceedings in the Employees
Insurance Court;
(1) Subject to the provisions of this Act and any rules
made by the State Government, all proceedings 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.

(2) If the court is satisfied that any matter arising out of
any proceeding pending before it can be more
conveniently dealt with by any other Employees'
Insurance Court in the same State, it may, subject to any
rules made by the State Government in this behalf, order
such matter to be transferred to such other Court for
disposal and shall forthwith transmit to such other court
the records connected with that matter.
(3) The State Government may transfer any matter
pending before any Employees' Insurance Court in the
State to any such court in another State with the consent
of the Stale Government of that State.
(4) The court to which any matter is transferred under
sub-section 2 or sub-section 3 shall continue the
proceedings as if they had been originally instituted in it.

COMMENCEMENT OF PROCEEDINGS

Section 77 of the Act provides that proceedings before
an employees insurance court shall be commenced by
way of an application. So far as the period of limitation
is concerned it has been provided that every such
application shall be made within a period of three years
form the date of cause of action. However, the cause of
action in respect of a claim for benefit shall not be
deemed to have arisen unless the insured person or in
the case of dependents benefit, the dependent of the
insured person claims or claim that benefit in
accordance with the regulations made in that behalf
within a period of twelve months after the claim had
become due.

POWERS OF EMPLOYEES INSURANCE COURT

Section 78 provides that the Employees Insurance Court
possess all the powers of a civil court for the purpose of;
Summoning and enforcing the attendance of witnesses;
Compelling the discovery and production of documents and
material objects; and
Administering oath and recording evidence.

The employees insurance court constituted under the provision
of Section 74 of the Act shall be deemed to be a civil court
within the meaning of Section 195 and Chapter XXVI of the
Code of Criminal Procedure, 1973. Such court shall follow such
procedure as may be prescribed by rules made by the State
Government.

In ESI Corporation v. Saseendran, 2002 SCC (L&S) 90, a
special leave petition was filed, complaining that the
ESI Court has no power to give a direction to the ESI
Corporation to find a suitable employment for the
respondent under Section 19 of the ESI Act. The
Supreme Court observed that Section 19 provides
that the Corporation in addition to the scheme of the
benefits specified in the Act, promotes measures for
the improvement of the health and welfare of insured
persons and for the rehabilitation and re-employment
of insured persons who have been disabled or injured
and may incur in respect of such measures
expenditure from the funds of the corporation within
such limits as may be prescribed by the Central Govt.
the appeal was dismissed accordingly.

APPEARANCE OF LEGAL PRACTITIONERS BEFORE
INSURANCE COURT (SECTION 79)

A legal practitioner, or an officer of a registered trade
union authorized in writing or with the permission of the
insurance court or any other person so authorized in
allowed to make an application, appear or act on behalf of
any person before the employees insurance court. But if
the person is required to be examined as a witness, he has
to appear personally before the insurance court and in all
other cases he may be represented through any party as
mentioned above.

APPEAL (SECTION 82)

Normally no appeal shall lie form an order of an
employees insurance court. But where a substantial
question of law is involved the appeal shall lie to the High
Court within sixty days from order of an employees
insurance court.

CONCLUSION

The ESI scheme is the first contributory scheme of
social security instituted in India. The scheme has
benefited a large number of industrial and other
employees. Some of its provisions such as those on
waiting period and maternity benefits are superior to
international standard. However, the scheme suffers
from certain limitations. In the first instance, the rate of
progress has been slow. Even after such a long time the
entire eligible population has not yet been covered
under this scheme. The reason for this slow progress is
stated to be lack of enthusiasm on the part of certain
State Governments. There have been difficulties in
acquisition of land and construction of hospitals. The
suggestions made by ESI Review Committee are
expected to remove these difficulties.

Secondly, the scheme is modes. It covers only a section
of population. It covers only three contingencies;
Sickness, Maternity and Employment injury. Other
contingencies, such as, old age, unemployment and
invalidity have not been protected.
In fairness to the scheme, it may be said that efforts are
being made for improvement of the scheme and
removal of its defects. It is difficult, almost impossible
to achieve perfection in a national venture of the
magnitude of the ESI Scheme. But if proper steps are
taken to remove the shortcoming of the scheme, in
view of the suggestions made by the Mudaliar
Committee the ESI Review Committee, the National
Commission on Labor, the Scheme would acquire more
feature of an ideal scheme in the course of time.






THE END