Summary and Analysis of Daivshala & Ors. vs. The Oriental Insurance Co. Ltd. & Anr

1. Heading of the Judgment

Case Name: Daivshala & Ors. vs. The Oriental Insurance Co. Ltd. & Anr.
Court: Supreme Court of India
Civil Appeal No.: 6986 of 2015
Judges: Justice Manoj Misra & Justice K.V. Viswanathan
Date of Judgment: 28th July 2025

2. Related Laws and Sections

The judgment primarily revolves around the interpretation of the following statutes:

• Employees’ Compensation Act, 1923 (EC Act)
  Section 3(1): Employer’s liability for compensation if injury arises "out of and in the course of employment."

• Employees’ State Insurance Act, 1948 (ESI Act)
  Section 2(8): Defines "employment injury" as an injury caused by accident arising "out of and in the course of employment."
  Section 51E (Introduced in 2010): Deems accidents during commute to/from work as arising "out of and in the course of employment" if a nexus with employment is established.

3. Basic Judgment Details

• Facts:
  The deceased, Shahu Sampatrao Jadhavar, was a watchman employed by a sugar factory.
  On 22nd April 2003, while commuting to work at 3 AM, he met with a fatal accident 5 km from the workplace.
  His dependents (widow, children, and mother) filed a claim under the EC Act.

• Lower Courts:
  Commissioner for Workmen’s Compensation: Awarded compensation, holding the accident occurred "in the course of employment."
  High Court: Reversed the decision, ruling that the accident did not arise out of employment as it happened during commute.

• Supreme Court’s Task:
  Determine whether the accident arose "out of and in the course of employment."
  Examine if Section 51E of the ESI Act (which covers commute-related accidents) applies retrospectively and extends to the EC Act.

4. Explanation of the Judgment

Key Issues Addressed

1. Whether the accident arose "out of and in the course of employment"?
   The phrase requires a causal connection between employment and the accident.
   The Court analyzed precedents like:
   Francis De Costa (1996): Held commute accidents are not covered unless employment begins at the workplace.
   Agnes (1963): Applied "notional extension" theory to include employer-provided transport.
   Saurashtra Salt (1958): Recognized "notional extension" but limited it to proximity to the workplace.

2. Retrospective Application of Section 51E (ESI Act):
   Section 51E (2010 amendment) deems commute accidents as employment-related if a nexus exists.
   The Court ruled Section 51E is clarificatory (removes ambiguity) and thus applies retrospectively.

3. Applicability of Section 51E to the EC Act:
   Both Acts are social welfare legislations with similar phrasing ("arising out of and in the course of employment").
   The Court applied the principle of statutes in pari materia (laws on the same subject) to interpret the EC Act in line with the ESI Act.

Decision

• The Supreme Court allowed the appeal, holding:
  The accident occurred while the deceased was dutifully proceeding to work as a night watchman.
  A clear nexus existed between the time, place, and employment duties.
  Thus, the accident arose "out of and in the course of employment" under the EC Act.

• The High Court’s judgment was set aside, and the Commissioner’s award was restored.

Significance

• Expands the scope of "course of employment" to include reasonable commute under the EC Act.

• Affirms that beneficial legislations (like EC and ESI Acts) must be interpreted liberally to protect workers.

Outcome

The dependents of the deceased workman were entitled to compensation under the EC Act, as the accident during commute was deemed employment-related. The judgment harmonizes the interpretation of similar phrases across labour welfare statutes.