Holding

Under Sec. 46(c) of the Employees State Insurance Act, an injury must be sustained while the claimant is an employee; therefore, the appellant is not entitled to disability benefit.

Summary

P.B. Krishnankutty Nair, a former employee covered under the Employees State Insurance (ESI) scheme, suffered an accident on 15 June 1990 and claimed disability benefit. He had ceased to be an employee on 1 October 1989 because his salary exceeded the cut‑off wage, but his contribution period as an insured person continued until 30 June 1990. The ESI Corporation denied the claim, arguing that the injury occurred after he was no longer an employee. The Supreme Court examined the definitions of "employee" (Sec. 2(9)) and "insured person" (Sec. 2(14)) and the conditions for disablement benefit under Sec. 46(c) of the ESI Act. It held that both conditions – being an insured person and sustaining the injury while employed – must be satisfied; the mere continuation of the contribution period is insufficient. Consequently, the appellant was not entitled to disability benefit and the appeal was dismissed.

Issues considered

Whether an injury occurring after a person ceases to be an employee but while he remains an insured person within the contribution period qualifies for disability benefit under Sec. 46(c) of the ESI Act.
Interpretation of the definitions of "employee" (Sec. 2(9)) and "insured person" (Sec. 2(14)) in relation to eligibility for disablement benefit.
Whether the contribution period alone determines entitlement to disability benefits.

Legislation cited

Employees' State Insurance Act, 1948s. 2(14), s. 2(9), s. 46

Subjects

Employees State Insurance Actdisability benefitinsured personemployee definitioncontribution periodsection 46eligibilitySupreme Court

Judgment

~ I
[2008] 4 S.C.R. 492

A P.B. KRISHNANKUTTY NAIR
V. • ....
THE REGIONAL DIRECTOR, ESI CORPN. & ANR.
(Civil Appeal No. 6497 of 2001)
MARCH 7, 2008
B
[TARUN CHATTERJEE & HARJIT SINGH BEDI, JJ.]

Employees State Insurance Act, 1948 - ss.2(9), 2(14)
and 46 - Claim for disability benefit - Eligibility - Appellant
• ..
c ceased to be an employee we.f. 1st October, 1989 as his
monthly salary exceeded Rs. 16001- from such date - However
as he had made contributions towards his insurance for the
period 1st April, 1989 to 30th September, 1989, his
contribution period was to end on 30th June, 1990 -Appellant
met with an accident on 15th June, 1990 and suffered injuries
D
- Claim by Appellant for disability benefit under the Act -
Tenability of - Held: Not tenable - As the injury had been
~
suffered after the Appellant ceased to be employee, he would ,.
not be entitled to any benefit of disablement notwithstanding
the fact that his contribution period and his status as an insured
E person continued up to 30th June 1990.

The cut-off wage fixed under the Employees State
Insurance Act, 1948 at the relevant time was Rs.1600/- per
month. Appellant ceased to be an employee w.e.f. 1st
F October, 1989 as his monthly salary exceeded Rs.1600/-
from such date. However as he had made contributions
towards his insurance for the period 1st April, 1989 to 30th
..
September, 1989, his contribution period was to end on
30th June, 1990.
G Appellant met with an accident on 15th June, 1990
and suffered injuries. He claimed entitlement to benefit of
disability under the Act on account of such injuries.
Respondent-ES! Corporation resisted the claim for "
t
disability benefit on the ground that Appellant had ceased
H 492
P.B KRISHNANKLTTY NAIR v. THE REG. DIRECTOR, 493
ESI CORPN. & ANR.

to be an employee w.e.f. 1st October, 1989, but granted A
... • sickness benefit to Appellant for the period 16th June,
1990 to 30th June, 1990. Appellant filed application before
the Employees Insurance Court seeking disability benefit
under the Act which was allowed. Respondent- ESI
Corporation filed appeal against the order. High Court B
allowed the appeal holding that as the accident occurred
after the claimant-appellant had ceased to be an employee,
though within the contribution period, he was not entitled
'> t
to any disability benefit. Hence the present appeal.
Dismissing the appeal, the Court c
HELD: The only difference between the two
contesting parties is with regard to the significance of the
contribution period which was to end on 30th June 1990.
For determining as to whether an employee was entitled
D
to the benefit under the Act, reference has to be made to
section 46(c) of the Employees State Insurance Act, 1948
... ~
which specifically provides for two cumulative conditions
for its applicability i) the claimant must be an insured
person and ii) that such an injury must be sustained when
he was an employee. In the present case as the injury had E
been suffered after the claimant ceased to be employee,
he would not be entitled to any benefit of disablement
notwithstanding the fact that his contribution period and
his status as an insured person continued up to 30th June
1990. [Para 7] [498-F, G, H; 499-A] F
,,.
CIVIL APPELLATE JURISDICTION : C vii Appeal No.
6497 of 2001.
From the final JLdgmert and Order dated 28.02.2000
of the f-l'.gh Court of Kerala at Ernakulam in M.F.A. No. 169 G
of 1992.

~
C Jayaraj and Malini Poduval for the Appellant.
C.S. Rajar. V~. l="rancis and Arupar: Mishra for the
H
494 SUPREME COURT REPORTS (2008] 4 S.C.R.

A Respondents.
f ....
The Judgment of the Court was delivered by
HARJIT SINGH BEDI, J. 1. This appeal arises out of the
following facts.
B 2. The appellant who was a covered employee under the
ESI scheme met with an accident in the course of his
employment on 15th June 1990. An accident report was sent by
the employer respondent No.2 in the present appeal to the ~ ...
respondent Corporation. The Corporation however refused to
c treat the injuries sustained, as injuries suffered during
employment on the plea that on the date of the accident the
employee was not covered under the ESI scheme. It was also
communicated to the employee by a communication dated 4th
December 1990 that he had ceased to be an employee with
D effect from 1st October 1989 and therefore he would not be
entitled to any benefit for the disability but would be eligible for
sickness benefits for the period 15th June 1990 to 30th June
..,,
.,
1990. The employee thereupon filed an application before the
Employees Insurance Court, Alappuzha claiming the benefit of
E disability on account of the injuries that he had suffered. In the
counter statement filed by the Corporation, it was pointed out
that the employee as an insured person had made contributions
up to 30th September 1989 and that he ceased to be an
employee with effect from 1st October 1989 as his salary had
F exceeded Rs.16001- per month from 1st October 1989 and as
such was not entitled to any benefit towards disability. The
Employees Insurance Court in its order dated 14th November
..
1991 examined the various provisions of the Employees State
Insurance Act 1948 (hereinafter called the "Act") and in particular
the definition of 'employee' and 'insured person' under section
G
2(9) and 2(14) respectively as well as section 46 that dealt with
'benefits' and ultimately concluded that although the claimant
ceased to be an employee with effect from 30th September 1989 ..
he was nevertheless an "insured person" in terms of section 1
2(14) as he had paid contributions towards his insurance which
H
\ ~
P.B. KRISHNANKUTIY NAIR v. THE REG. DIRECTOR, 495
.ESI CORPN. & ANR. [HARJIT SINGH BEDI, J.]

.. • would cover his case from 1st April 1989 to 30th September A
1989 though he continued to be an insured person up to 30th
June 1990 and as such his claim for the injury on 15th June was
fully justified under the Act.
3. Aggrieved by the order of the Employees Insurance
Court, the Corporation preferred an appeal before the High B
Court of Judicature at Kerala. The High Court in its judgment
dated 28th February 2000 noted that the facts of the case were
,. • not disputed and relying on a decision of the Division Bench of
that very court in MFA 621/1986 (Regional Director, ESI
Corporation vs. K.K.Surendra Babu) observed that if a person c
was not an employee during a particular contribution period and
an accident had taken place during such period, he would not
be entitled to ESI benefits. Having held above, the court further
concluded that as the accident in the present case had also
occurred after the claimant had ceased to be an employee, D
though within the contribution period, he was not entitled to the
• , benefit of the payment of insurance from the Corporation. The
appeal was accordingly allowed and the order of the Employees
Insurance Court dated 14th November 1991 was set aside. It is
in this situation that the matter is before us in appeal at the E
instance of the employee.
4. Certain facts are admitted on record: the date of
accident 15th June 1990, and that the contribution had been
made for the period 1st April, 1989 to 30th September 1989
which brought the contribution period to 30th June 1990. In these F
~
admitted facts, the learned counsel for the appellant has raised
several arguments before us with reference to the statutory
provisions. He has referred us to the definitions of 'employee'
in section 2(9) of the Act and to 'insured person' in Section 2
(14) of the Act and to section 46 which talks about the benefits G
for an insured person in case of injury or sickness, and has
~
argued that as the clarmant was an insured person up to the
end of the contribution period i.e up to 30th June 1990, the
accident haviAg taken place within that period, the Corporation
was liable to make payment to him. As against this, the learned H
ij I

496 SUPREME COURT REPORTS [2008) 4 S.C.R.

A counsel for the respondent has argued that the sine qua non for
determining the eligibility for the payment of insurance under
t ..
the Act was that a person was required to be an employee on
the date 9f the accident and the claimant had admittedly ceased
to be an employee with effect from 1st October 1989 and thus,
B he was not entitled to the payment of any disability benefit.
5. At the very outset, we may point out that the judgment
relied upon by the Division Bench in reaching the impugned
decision has not been cited before us by any of the counsel.
~ ..
We, therefore, do not have the benefit of the wisdom of the
c Division Bench in those cases and have accordingly examined
the matter ourselves.
6. The matter must hinge on the various provisions brought
to our notice by the learned counsel. We produce hereinbelow.
Section 2(9), 2 (14) and Section 46 of the Act:
D
"Sec.2(9) "employee" means any person employed for
wages in or in connection with the work of a factory or ..,,
...
establishment to which this Act applies and -
(i) who is directly employed by the principal employer
E on any work of, or incidental or preliminary to or
connected with the work of, the factory or
establishment, whether such work is done by the
employee in the factory or establishment or
elsewhere; or
F
(ii) who is employed by or through an immediate
employer on the premises of the factory or "'
establishment or under the supervision of the principal
employer or his agent on work which is ordinarily
part of the work of the factory or establishment or
G
which is preliminary to the work carried on in or
incidental to the purpose of the factory or
establishment; or 1

(iii) whose services are temporarily lent or let on hire
H to the principal employer by the person with whom
~ ~

P.B. KRISHNANKUTIY NAIR v. THE REG. DIRECTOR, 497
ESI CORPN. & ANR. [HARJIT SINGH BEDI, J.]

• the person whose services are so lent or let on hire A
has entered into a contract of service;

Sec.2(14) "insured person" means a person who is or
was an employee in respect of whom contributions are or
were payable under this Act and who i~. by reason thereof,
entitled to any of the benefits provided by this Act. 8

Sec.46.Benefits. -(1) Subject to the provisions of the Act,
,. t the insured persons [their dependants· or the persons
hereinafter mentioned, as the case may be,] shall be
entitled to the following benefits, nan;iely - c
(a) periodical payment to any insured person in case of
his sickness certified by a duly appointed medical
practitioner [or by any person possessing such
qualifications and experience as the Corporation
may, by regulations, specify in this behalf (hereinafter D
referred to as sickness benefit);
"'
(b) periodical payments to an insured woman in case of
confinement or miscarriage or sickness arising out
of pregnancy, confinement premature birth of child
or miscarriage, such woman being certified to be E
eligible for such payments by an authority specified
in this behalf by the ·regulations (hereinafter referred
to a maternity benefits);]
(c) periodical payments to an insured person suffering F
# from disablement as a result of an employment injury
'1
sustained as an employee under this Act and certified
to be eligible for such payments by an authority
specified in this behalf by the regulations (hereinafter
referred to as disablement benefit);
G
(d) periodical payments to such dependants of an
insured person who dies as a result of an employment
injury sustained as an employee under this Act, as
are entitled to compensation under this Act
(hereinafter referred to as dependants' benefit); H
498 SUPREME COURT REPORTS [2008] 4 S.C.R.

A (e) medical treatment for an attendance on insured
persons (hereinafter referred as to medical benefit;
and
(f) payment to the eldest surviving member of the family
of an insured person who has died, towards the
-
B expenditure on the funeral of the deceased insured
person, or, where the insured person did not have a
family or was not living with his family at the time of i ..
his death, to the person who actually incurs the
expenditure on the funeral of the deceased insured
c person (to be known as [funeral expenses)
Provided that the amount of such payment shall not exceed
[such amount as may be prescribed by the Central
Government] and the claim for such payment shall be made
within three months of the death of the insured person or
D
within such extended period as the Corporation or any
officer or authority authorized by it in this behalf may allow.] .. ..
(2) The Corporation may, at the request of the appropriate
Government, subject to such conditions as may be laid
E down in the regulations, extend the medical benefits to the
family of an insured person."
7. An examination of the provisions would show that the
claimant was an employee up to 301h September 1989 and
ceased to be so on the next day as his salary had exceeded
F Rs.1600/- per month which was the cut off wage fixed under the
...
Act at that time. Admittedly, also the claimant was an insured
person and the only difference between the two contesting
parties is with regard to the significance of the contribution
period which was to end on 301h June 1990. For determining as
G to whether an employee was entitled to the benefit under the
Act, reference has to be made to section 46(c} which would
cover the present case. Section 46(c) specifically provides for ....
two cumulative conditions for its applicability i) the claimant must
be an insured person and ii) that such an injury must be sustained
H when he was an employee. We therefore find that as the injury
P.B. KRISHNANKUTTY NAIR v. THE REG. DIRECTOR, 499
ESI CORPN. & ANR. [HARJIT SINGH BEDI, J.]

had been suffered after the claimant ceased to be an employee, A
he would not be entitled to any benefit of disablement
notwithstanding the fact that his contribution period and his status
as an insured person continued up to 301h June 1990. The
Corporation has been taken pains to point out that certafn
benefits which would accrue to the claimant such as the benefit s
of sickness, has already been given to him. In this view of the
matter, we find no merit in the appeal. It is accordingly
,. ~ dismissed. No costs.
8.8.B. Appeal dismissed.
c

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