Accident while commuting to work is "arising out of and in the course of employment"
Commuting Accidents and Theory of Notional Extension: Supreme Court Interprets
Introduction
In a significant judgment delivered on July 28, 2025, the Supreme Court of India in the case of Daivshala v. Oriental Insurance Co. Ltd. has broadened the interpretation of the phrase "arising out of and in the course of employment" under the Employees' Compensation Act, 1923. This judgment marks a pivotal shift in understanding commuting accidents within the purview of employment-related incidents, reaffirming the beneficial nature of social security legislation.
Background
The case arose from a tragic accident involving Shahu Sampatrao Jadhavar, a watchman employed at a sugar factory, who met with a fatal accident while commuting to work. The family sought compensation under the Employees' Compensation Act, 1923, but faced challenges as the accident occurred outside the factory premises. Initially, the Commissioner for Workmen's Compensation granted compensation, which was overturned by the Bombay High Court. The Supreme Court was approached to resolve the issue.
Key Legal Questions
The Supreme Court addressed whether an accident occurring during the commute could be deemed to arise out of and in the course of employment. The primary question involved interpreting the scope of employment and whether the theory of notional extension could apply.
Statutory Interpretation
The judgment delves into Section 3 of the Employees' Compensation Act, 1923, and Section 51E of the Employees' State Insurance Act, 1948, highlighting their common objectives as social security legislations. The Court emphasized that both statutes aim to provide protection and compensation for employees, warranting a liberal and beneficial interpretation.
Theory of Notional Extension
The Court revisited the theory of notional extension, which allows for an extension of the employer's premises to include areas employees traverse while commuting. By applying this theory, the Court recognized that commuting accidents could indeed fall within the ambit of employment-related accidents, provided there is a clear nexus between the circumstances, time, place, and employment.
Impact of Section 51E of the ESI Act
Section 51E of the ESI Act, introduced to specifically address commuting accidents, was pivotal in this case. Although enacted in 2010, the Supreme Court interpreted it as clarificatory and retrospective, aligning its meaning with the Employees' Compensation Act, 1923. This section deems accidents during commuting to be employment-related if a nexus is established, thereby setting a precedent for similar cases.
Conclusion
The Supreme Court's judgment in Daivshala v. Oriental Insurance Co. Ltd. is a milestone in labor law jurisprudence, expanding the protective scope of compensation acts to include commuting accidents. By embracing a broad interpretation, the Court reinforced the social security objectives of such legislation, ensuring workers and their dependents receive due compensation and protection. This decision not only benefits employees but also serves as a guiding principle for future cases involving commuting accidents and employment-related claims.
Implications for Employers and Insurers
Employers and insurance companies must now recognize the extended liability for commuting accidents, ensuring adequate coverage and compensation mechanisms are in place. This judgment underscores the importance of understanding the notional extension of employment premises and adapting policies to meet the expanded legal interpretations.
Final Thoughts
The Supreme Court has once again demonstrated its commitment to safeguarding workers' rights and welfare, reiterating that beneficial legislation must be interpreted liberally to fulfill its intended purpose. This judgment serves as a beacon for enhancing the social security landscape in India, promoting justice and fairness for employees across sectors.
Daivshala v. Oriental Insurance Co. Ltd., (SC) : Law Finder Doc Id # 2756270
