Employees State Insurance Act, 1948: Judicial Approach

Employees State Insurance Act, 1948: Judicial Approach

Author:  Gagana M,

 3rd Year BA LLB (Hons).

“All labour that uplifts humanity has dignity and importance and should be undertaken with painstaking and excellence”- Martin Luther Jr

India is one of the largest country with working population. In the dawn of industrial revolution and with introducing factory system, man has been exposed to risks of employment, injury, accident, hospital and dispensaries. Also, according to International labour Organisation measures India adopted Social Welfare and Social Security as the primary base to improve the plight of Working Class. In this view many legislations have been formulated in India. One among them is the Employees’ State Insurance Act, 1948 (ESI Act). This paper is designed as a judicial approach toward the Act. Mainly addressing the 5 benefits that provided under the act, role of Appropriate Government, Corporation, Local Office and claims. Temporary and permanent application of the ESI Scheme in India. Judicial approach and role of courts and tribunal dealing with the employees, procedural aspect and claim clearance. Labour Commission reports in favour and in amplification of the Act. Interpretation to the statutory provisions of the Act by Judiciary with catering interest toward socio-economic justice and well-being of industrial workmen correlating with the judgements and case laws.  The paper would also deal with the administration of the Act and the Scheme in several states of India. Stressing on the acceptance of the judiciary for reformation in the field of social security. Lastly, dealing with Centre- State Relations with respect to allocation of funds, benefit claims, legislative actions and Federalized structure. 


The chief aspect of Social Welfare is Social Security, which is very apt for Industrial societies. The state acting for the community has the responsibility to provide minimum standards of health, economic security and welfare planning. This is to ensure high standard of human resource utilization, eradication of poverty and unemployment and for upholding the civilized structure and cultural heritage.  Also, as the expression highlights in the statement of Article 22 of the Universal Declaration of Human Rights, adopted in 1948, that ” Everyone, as a member of society, has the right to social security”[1]. The industrial workmen from time immemorial have been exploited and are prone to destitution. In order to protect the workmen, employees and of the same kind in India there have been many legislations formulated. Even, Article 41 under Directive Principles of State Policy of the Indian Constitution, declares that ” The State shall, within the limits of its economic capacity and development, make effective provision for securing the right public assistance in cases of unemployment, old age, sickness and disablement, and in other cases of undeserved want.”[2]

The idea of Social Security emerged from Germany from Bismarck time and has spread to other countries, envisaging safety against an entire array of causes of individual insecurity in an industrial setup with extending the protection as a right through safeguard measures. Usually the emphasize on the right to statutory benefits to build a rapport between employer and employee, their contributions, from which the claims are paid and also strengthening the legal right to authorized benefits. The Indian government was highly centralized. The Constitutional position was that the Central legislature could makes laws relating to labour problems. The first act was passed in 1923 by name Workmen’s Compensation act covering about three million workers of that time. Other acts existed in the same era are the Trade Disputes Act of 1928 re-affirmed in 1934 and The Employment of Children Act, 1938. Later, welfare of labour, health insurance, employment insurance and trade-union were included among the subjects of concurrent legislation in the Act of 1935. The Kanpur Labour Enquiry Committee (1938), the Bihar Labour Enquiry Committee (1940), The Bombay Textile Labour Enquiry Committee (1940) etc. were formed and laid recommendations for adoption of compulsory sickness insurance scheme for the permanent workers. The Employees’ State Insurance Corporation in the Government of India is established under the Employees’ State Insurance Act, 1948. This act creates for the benefit fund in conjunction with the states to provide medical services with inclusion of cash assistance from the fund. As which was framed in appropriate proposals and standards of India by adopting formulation of other countries and international bodies. This was in the view that administration and legislation of social security benefitting the common interest of the employees’ development taking the workmen or employee as a centre consideration.

Benefits provided under the ESI Act:

The Act provides for five types of benefits, namely, (1) medical benefits, (2) sickness cash benefits, (3) disablement benefits, (4) dependents’ benefits and (5) maternity benefits. To agree, several provisions are provided under the Workmen’s Compensation Act (8 of 1923) for similar benefits but this Act is an exception of all. The Act shall apply to all the factories including government factories other than seasonal factories.[3] Here, the appropriate government is the state government acts in consultation with the central government. The Act may apply to other establishments or class of establishments.[4] For one-year period the factories and class of factories may be exempted by the appropriate governments, which is subject to renewal as well; and government factories where the employees enjoy substantially similar or superior benefits may be exempted altogether.[5] “Factory” means any premises on which 20 or more persons are working or were working on any day of the preceding 12 months, and in any part of which a manufacturing process is being carried on with aid of power or is ordinarily so carried on, except mines subject to the operation of the Indian Mines Act or a railway running shed.[6] Certain general provisions of the Act were, after its adoption, promptly applied throughout India.[7] To govern the industry and labour there is standing committee, which is responsible for administering corporation affairs.[8]  Medical problems, dispensaries, hospitals and other services can be addressed to an Advisory Medical Benefit Council[9] and sought benefit. Local corporations have been established in the various industrial areas. The Employees’ Insurance Courts have been established in the various States. Local committees, regional board and local medical benefit councils will be appointed by the Corporation for administering the act.[10]

Section 46 of the Act provide for entitlement to the five benefits mentioned above. Sections 47, 49, 50, 51, 52, 53 and 56[11] provide for the conditions and rates of benefits for the persons entitled to claim benefits. These sections make it clear that the payment, at least of certain benefits, bears relationship to the contributions prescribed under the Act.[12]

As soon as a person joins a factory under Employees’ State Insurance Act, he will be registered as an insured employee. Accordingly, the regional office divides the insured persons into 3 sets as A, B and C. For these persons there is different contribution and corresponding benefit period. Here, there is also staggering period, which is normally an interval of twelve to fourteen weeks, between the close of a contribution period and the beginning of the corresponding benefit period.

For maternity benefit, the evidence should include (1) notice of pregnancy, (2) certificate of pregnancy (not earlier than seven days from such notice) (3) certificate of expected confinement (not earlier than fifty days from the expected date of confinement) or confinement (within thirty days of the date on which confinement takes place).[13] In case of disablement benefit, notice of accident should be made by the employee or person acting on his/ her behalf to the concerned employer.[14] This accident notice should contain all essential particulars as to name, insurance number and occupation of the injured person. These entries will be made and maintained in an Accident Book as per the regulations.[15] All serious injuries and fatal injuries at the place of employment should be reported to the Insurance Medical Officer and Local Office.[16] In regard to sickness benefit the claims clerk checks the relevant particulars for determining the claim such as the total number of days of certified incapacity since the date of the preceding certificate on the basis of which the payment was made ; whether 56 days benefit has not already been drawn during the preceding 365 days ; whether certification is regular ; whether certificates have been submitted in time ; whether claim is not one for which incapacity reference is necessary or pending and whether any more information is needed to determine the claim.[17] The sickness benefit can be extended, for these claims would be stamped in red ink as tuberculosis, leprosy, mental or malignant disease benefit.[18]

Working of Employee’s Insurance Courts:

Most of the cases are those involving coverage and liability to pay contributions. Other set of cases involves the recovery by the corporation of indemnity or damages from employers who have violated the law or persons who owe indemnity.[19] Damages or indemnity or reimbursement are collectable under the Employees’ Insurance Act from an employer who has violated a safety rule applicable to an establishment in which an industrial injury has led to the payment of benefits.[20] Cases relating to dependents’ benefits are most significant ones. There were very few cases available on certification or appeal on significant questions of law in claims cases in high court. Among these few cases court held that it was discretion of the corporation to accept or reject the evidence of sickness, alternative to a certificate from Insurance Medical Officer, which hardly means that an abuse of discretion would not amount to excess of statutory authority which could be corrected as an error of the law or in the law. The appeals that reach high court would at least be pending for three years, this delay with considerable efforts are being made to overcome it. Judicial administration and high court review would remain essential to the proper application of laws. A significant judgement from Kerala High court in P. Asokan v. Western India Plywoods Ltd[21], on determining the scope of Employees’ State Insurance Act with respect to sections 53 and 61 regarding the right of workman to claim for compensation against the employer for injuries sustained by the employer’s negligence.[22] The impact of statutory provisions on section 61 are mentioned under Technological Institute of Textiles v. Its workmen[23]and Alembic Glass Indus- trie
s v. Workmen[24]

Administration of Employees’ State Insurance Scheme:

Concurrent list under the constitution of India includes social security and social insurance while list II that is the state list includes public health, sanitation, hospitals and dispensaries. Section 58 of the act,- “The State Government shall provide for insured persons and their families reasonable medical, surgical and obstetric treatment.”[25]Here, the expenditure is shared between the union as represented by the corporation and the states.  The basis of administration combines territorial basis, appropriate representation of the contributing parties, beneficiaries and medical profession, unification and centralisation of funds which is not inconsistent with local management. The medical benefit council is established as a specialised body to govern the medical benefit and certificate for grants. This scheme was implanted first in Delhi and Kanpur.


In spite of stability and uniformity in the medical treatment given to the insured persons, a great leeway requires to be made so far as facilities for hospitalisation, adequate facilities for specialist services. We should do away with the diarchy arrangement and vest full administrative control in the Corporation. The procedure with respect to maternity benefit is most complicated both in eligibility and certification criteria which should be sorted with recent amendments. Regulations 76-A and 83-A and the instructions as to the submission of a claim for permanent disablement, or dependents’ benefits require a claim to be made for one or more calendar months.
As observed by Sri Jagganathan, “the guiding principle of 18th and 19th century federalism was independence of state and federal authorities, that of the 20th century is the need for co-operation between them”[26]So, to uphold the Federal Structure social welfare matters should be brought under the State Jurisdiction. This would enable smooth functioning of the Centre-State Relation. To balance the loss, the government amended the Act on 1stOctober, 2019. The changes made are compulsory Employees’ State Insurance registration of Employees, whoever has registered will be provided with the card. Notable change is timely deposit of the ESI contribution by the employer to the employee or shall bear the penalty of Rs.10,000/- Also, High Court Review should be allowed. Then the working of tribunal should completely be detached from that of the administration which makes claim determinations. These suggestions are made to bring about more improvements, constant attention, periodical vigilance.

[1] Article22, United Nations Declaration of Human Rights

[2] Article 41, Directive Principles of State Policy, Constitution of India

[3] Section 1(4), Employees’ State Insurance Act, 1948

[4] ibid

[5] Section 87, Employees’ State Insurance Act, 1948

[6] Section 2(12), Employees’ Stat
e Insurance Act, 1948

[7] Annexure to the Act as published (1959) by the Manager of Publications, Delhi, p. 48.

[8] Section 8, Employees’ State Insurance Act, 1948

[9] Section 10, Employees’ State Insurance Act, 1948

Section 95-97, Employees’ State Insurance Act, 1948

[11] Employees’ State Insurance Act, 1948

[12] Employment Injury And Employees’ State Insurance Scheme : Functional Perspectives, Veer Singh, Journal of the Indian Law Institute, Vol. 29, No. 1 (January-March 1987), pp. 76-93

[13] Regulation 87,88,89 of Employees’ State Insurance Rules

[14] Regulation 65 of Employees’ State Insurance rules

[15] Regulation 65, 66 of Employees’ State Insurance Rules

[16] ibid

[17]  E.S.I.C. instructions on Sickness and Extended Sickness Benefit Procedure, March, 1960. P.11.

[18] Claims Determination And Hearing Procedure Under The Employees’ State Insurance Act, Ralph F. Fuchs and V. Jagannadham, Journal of the Indian Law Institute, Vol. 4, No. 1 (Jan.-Mar., 1962), pp. 1-42

[19] Section 66, Employees’ State Insurance Act, 1948

[20] ibid 

[21] A.I.R. 1987 Ker 103.

[22] Scope of Sections 53 And 61 Under The Employees’ State Insurance Act, 1948: Kerala High Court’s Pioneering Judgment, C. Jayaram, Journal of the Indian Law Institute, Vol. 32, No. 2 (April-June 1990), pp. 259-263

[23] (1965) 2 L.L.J. 149.

[24] A.I.R. 1976 S.C. 209

[25] Section 58, Employees’ State Insurance Act, 1948

[26] Indian Journal of Public Administration, Vol. No. 2. pp.195-96

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