In any industrial society the problem of the labour management relations
becomes so important that some sort of social insurance becomes necessary to
provide adequate protection from loss caused to the worker by accident. With the
view to improve the conditions of employees some social insurance legislation
have been enacted.
The Employees Compensation Act ( hereinafter ECA) is one of the earliest
measures adopted for the benefit of worker. It was passed in 1923 & came into
force on 1st July 1924. The ECA,1923 is one of the most important social
legislation. It aims at providing financial protection to employees and their
dependents in case of accidental injury by means of payment of compensation by
employer. It is the social security law application for employer and employee.
It is applicable to factories, mines, construction, oil fields, establishments
but not applicable to armed forces.
Before this act, workers who met with the accidents while performing their duty
not only lost their lives & limbs but denied any medical aid and more often then
not just removed from their jibs and lost their livelihood placing them & their
families in great difficulty.
By passing of this act, liability of employer was fixed and now he is required
by law to pay compensation to victim.
Object of the Act:
The object of the act was to make provision for the payment of compensation by
certain class of employer to their employees for injury by accident. This act
was framed with a view to provide for compensation to employees incapacitated by
injury from accident arising out of and in the course of employment .
Features of the Act:
- The ECA,1923 is modelled on the British pattern. Under the act payment
of compensation has been made obligatory on all employers whose employees
are entitled to claim benefit under the Act.
- The Employee or his dependent may claim compensation of the injury has
been caused by the accident arisen out of and in the course of employment.
- Amount of compensation payable depends in case of death on the average
monthly wages of the deceased employee and in case of injured employee both
on the average monthly wages and the nature of disablement.
- A subcontractor may indemnify his contractor if he has to pay
compensation to the employee. This act is administered by commissioner for
employees compensation appointed by the State Government.
Section 2(1)(d) of the ECA,1923 divides the dependents of the deceased
employee in three categories as follows :
A. First Category- The dependents belonging to this category are widow, minor
(legitimate or adopted) son, unmarried (legitimate or adopted) daughter, and a
The dependents of the first category are not required to prove their dependency
on the deceased employee at the time of his death. For example, the widow or any
other dependent in this category may not be dependent on the earning of the
deceased employee, yet they fall within the definition of dependents of first
category and can claim compensation.
Widow belongs to the first category of dependents. A widow is not required to
prove her dependency on the deceased employee at the time of his death.
- R.B. Moondra & Co. Vs. Ms. Bhanwari
In this case, the Court held that "a widow who is entitled to claim
compensation at the time of death of her husband is not disentitled by her
Laxmirani Behera Vs.Commissioner of Employees' Compensation & Asst. Labour
In this case, the Orissa HC held that concubine of deceased employee is not a
"widow". Therefore concubine cannot be characterized as 'dependent' and is not
entitled to compensation under the ECA,1923.
A foster parent is not included within the word 'parent'. So, a mother does not
mean a foster mother.
B. Second Category
- United India Insurance Co. Vs. Smt. Hrinakshi
The maternal aunt of deceased employee claimed compensation being a foster
mother. She contended that being a foster mother, she falls within the
definition of 'dependent' of first category. But the Court did not allow the
compensation to the maternal aunt on the ground that the word 'mother' in
the definition of 'dependent' under Sec. 2(1)(d) does not include foster
The dependents belonging to this category are if wholly dependent on the
earnings of the employee at the time of his death, a son or a daughter who has
attained the age of 18 years and who is infirm.
The dependents belonging to second category are required to prove their physical
or mental infirmity as well as their total dependency on the earnings of the
deceased employee. If the dependents prove the above mentioned facts, only then
they fall within the definition of the dependents of second category and can
C. Third Category
The dependents belonging to this category are:
- New India Assurance Co. Ltd. Vs. Tijender Kaur & Ors.
In this case it was laid down that the definition of dependent lay down that
no application for settlement can be made other than by the dependent or
- A widower,
- A parent other than a widowed mother,
- A minor illegitimate son,
- An unmarried illegitimate daughter,
- A daughter ( legitimate or illegitimate or adopted) if married and minor
or if widowed and a minor,
- A minor brother or an unmarried sister or a widowed sister if a minor,
- A widowed daughter-in-law,
- A minor child of a predeceased son,
- A minor child of a predeceased daughter where no parent of the child is
- A paternal grandparent of no parent of the employee is alive.
The dependents of the third Category must prove their whole or partial
dependency on the earnings of the employee at the time of his death.
- Divisional Manager, New India Assurance Co. Ltd. V. Raludas Sakar
'Widower' falls in the third category of dependents. The law does not
require that the widower should be wholly dependent on the earnings of the
deceased wife. It has been held by the Court that partial dependence to
whatever extent is sufficient to bring the 'widower' within the third
category of dependents under Sec. 2(1)(d).
- New India Assurance Co. Ltd. Vs. Sanganna Gowda
The court held that the widower a 'dependent' under Sec. 2(1)(d). The court
held that the widower in this case was a 'coolie' by avocation and the
coolie's work is not regular and at times seasonal, therefore, he could be
said to be dependent partially upon earnings of his wife at the time of her
- Unmarried sister & Minor Brother
Unmarried sister and minor brother of the deceased employee fall in the
third category of "dependents" under clause (III) of sec. 2(d) if they prove
their dependency whether partial or total on deceased employee at the time
of his death.
- Suresh Kumar & Ors. Vs. Smt. Urmila & Ors.
In this case, the unmarried sister and minor brother of the deceased
employee moved an application for share in the compensation to the widow and
widowed mother of the deceased employee. Because the widow and widowed
mother belong to the first category of dependent in clause(i) of Sec.2(d)
and therefore they have not to prove their dependency on the deceased
But the Court rejected the claim of the unmarried sister and minor brother.
Because unmarried sister and minor brother could not prove their dependency
on the deceased employee. Whereas unmarried sister and brother belong to the
third category of dependents in clause (III) of Section 2(d). Therefore,
they were required to prove dependency on the earnings of the deceased
employee to claim ashier in the compensation payable to the dependence of
the deceased employee.
- Laxmi Behera Case
In this case, the Orissa HC held that the concubine of deceased not being a
"widow" cannot be characterized as "widow" and is not entitled to
compensation under Employees' Compensation Act,1923. But the children born
through her, being illegitimate children of deceased would be entitled to
compensation. Because they fall in the definition of "dependent" under
clause (III)of sec. 2(d).
Employee means a person, who is:
- According to Sec. 2(34) of the Railways Act,1989, railway servant means
"any person employed by a Railway Administration in connection with the
service of a railway." According to the definition of employee under Sec.
2(dd) , a railway servant is a employee if:
- He is not 'permanently' employed in any administrative, district or sub-
divisional office of a railway; and
- He is not employed in any such capacity as specified in Schedule II of
- A master, seaman or other member of the crew of a ship; A captain or
other member of the crew of an aircraft; a person recruited as driver,
helper, mechanic, cleaner, or in any other capacity in connection with a
motor vehicle; a person recruited for work abroad by a company; and who is
employed outside India in any such capacity as is specified in Schedule II
and the ship, aircraft or motor vehicle, or company, as the case may be, is
registered in India; or
- Employed in any such capacity as is specified in Schedule II, whether
the contract of employment was made before or after the passing of this Act
and whether such contract is expressed or implied, oral or in writing; but
does not include any person working in the capacity of a member of the Armed
Forces of the Union; and any reference to any employee who has been injured
shall, where the employee is dead, include a reference to his dependents or
any of them.
According to the definition under Sec. 2(e), the term 'employer' includes the
- Kerala Balagram Registered Society V. K.M. Kochuman
In this case it has been held that, the person employed for the purpose of
sifting harvested paddy has been held to be an "employee" within the definition
of employee under Sec. 2(dd) of the ECA,1923.
- Bhopal Sugar Industries V. Sumitra Bai
The Court held that the word "farming" ordinarily means business of cultivating
land which obviously does not mean merely ploughing of land but all other
subsequent operations in which a farmer necessarily engages like irrigating the
fields, harvesting the crops, etc. As deceased was bitten by the snake in the
course of his employment, therefore, the widow of deceased was entitled to
- Director of Printing & Publication Vs. Bramananda Dhall
The Court rejected the claim of the Junior Production Officer on the ground that
he did not fall within the definition of employee under Sec. 2(dd) read with
item (ii) of Schedule II. Because item (ii) of Schedule II excludes the person
employed in clerical capacity in a factory from the definition of 'employee'
under Sec. 2(dd) of the ECA,1923.
- Principal Secretary, Transport Deptt., Government of Sikkim Vs..Smt. Narayna
The deceased employee held the gazetted post in State Engineering Service. As
the employment in such capacity was not mentioned in the Schedule II of the
ECA,1923,the employee was held not to be within the definition of employee under
Section 2(dd) ECA,1923. Therefore, the provisions of compensation under the
ECA,1923 did not apply to the deceased employee.
- Narayan Vs. Southern Railway
The Kerala HC in this case held that there exists an employer- employee
relationship between the railways and the licensed porter.
'Managing agent' is an employer
- Any body of persons whether incorporated or not.
- Managing agent of the employer.
- Legal representative of the deceased employer.
- When the services of an employee are temporarily lent or let on hire to
another person by the person with whom the employee has entered into a
contract of service or apprentice, means such other person while the
employee is working for him.
Manager is not employer
- Baijnath Singh v. Oudh Tirhut Railway
In this case, the Allahabad HC observed that "an employer may be one Individual
or more than one. If there are two or more employers, then it will be open to
them to appoint one of them as a managing agent. A managing agent so appointed
will not be subordinate to the other employer but will act as the representative
of the other."
Further the Court held that "it may be that an employer is a minor or insane or
under some disability. In that case a guardian or any other person acting as the
representative of the employer for the purpose of carrying on such employer's
trade or business will be a managing agent, not subordinate to that employer."
Manager does not represent the employer. Because manager acts in subordination
to his employer. " Subordinate " means subordinate in law and not in fact.
- Raghunath Sahai V. Sarup Singh
The Court held that Raghunath Sahai being the manager of Kampa Devi does not
fall within the definition of 'employer'. Thus, compensation cannot be claimed
against Raghunath Sahai. However, the respondent, Sarup Singh, could pursue the
remedy against Kampa Devi as she is the employer.
Death or different kinds of disablements are result of an injury. The ECA,1923
provides compensation for the kinds of disablements are as follows:
Permanent total disablement
Injuries deemed to result in " Permanent total disablement":
- Permanent total disablement
- Permanent partial disablement
- Temporary disablement whether total or partial.
- Every injury specified in Part I of Schedule I
According to Sec. 2(l), "permanent total disablement" is deemed to result every
injury specified in Part I of Schedule I of the ECA,1923.
Following are the injuriee deemed to result in "permanent total disablement" as
contained in Part I of Schedule I.
- Loss of both hands or amputation at higher sites.
- Loss of a hand and a foot.
- Double amputation through leg or thigh, or amputation through leg or
thigh on one side and loss of other foot.
- Loss of sight to such an extent as to render the claimant unable to
perform any work for which eyesight is essential.
- Very severe facial disfigurement.
- Absolute deafness.
Incapacity for all work which the employee was capable of performing at the time
of the accident : Permanent total disablement
ii. Combination of injuries specified in Part II of Schedule I
- Narian Singh v/s Srinivas Sabata
The Hon'ble SC held that as the injury incapacitated the employee for all
work which he was capable of performing at the time of accident, therefore
the employee suffered permanent total disablement. The SC held that Sabata
was carpenter by profession and by loss of his left arm from elbow he has
evidently been rendered unfit for the work of carpenter as the work of
carpentry cannot be done by in hand only.
- Kaveri v/s Markanda Naidu,1998 Lab IC 61 (Kant)
If the employee is incapacitated to do all the work which he was capable of
performing at the time of accident it is a case of total disablement. It may
be that in view of the injuries the employee is capable enough to render
some other sort of work, but still when there is incapacity to the work
which he was capable of performing by the date of accident, it is a case of
- Puran Dutt v/s H.R.T.C
The claimant driver suffered 30% physical disability, it was found that in
this case that though there is 30% of physical disability, yet the injury
sustained by the employee that crushed his leg incapacitated the employee to
do the work of driving which he was capable of performing at the time of the
accident. The HC in this case held that assessment of the compensation under
Sec. 4(1)( c ) of the ECA,1923 taking into consideration that the claimant
driver has suffered permanent total disability and loss of earning capacity
at 100% was proper.
According to Sec. 2 (l), " permanent total disablement " is deemed to result
from the loss of earning capacity, as specified in Part II of the Schedule I if
the aggregate percentage of the loss of earning capacity per cent or more.
For example, according to Part II of the Schedule I, the loss of earning
capacity in case of amputation through shoulder joint is 90%. Whereas loss of
earning capacity for the loss of partial vision of one eye has been specified to
be 10% in Part II of Schedule I.
If an employee suffers injury resulting in loss of partial vision of one eye and
amputation through shoulder joint, then the aggregate percentage of the loss of
earning capacity amounts to 100%. Thus, in case the combination of injuries
caused loss of 100% of earning capacity. Therefore, in such case the disablement
is deemed to be "permanent" and " total" in its nature.
Permanent partial disablement
- K. Gopal V. Management, Pandain Roadways Corp. Ltd.
Total disablement is assessed only with reference to the work, the employee
was performing at the time of the accident. If the employee becomes disabled
to perform the work, he was capable to perform at the time of accident, then
it is total disablement.
According to Sec.2(g) of th ECA,1923, " permanent partial disablement" means
such disablement as reduces the earning capacity in every employment which he
was capable of undertaking at that time."
According to Sec. 2(g), every injury specified in Part II of Schedule I is
deemed to result in permanent partial disablement. Part II of Schedule I
specifies the percentage of loss of earning capacity for 48 kinds of injuries.
- Kaveri v/s. G. Markanda Naidu
Law Specifically provides that injuries specified in Part II of Schedule I,
shall always be deemed to result in permanent partial disablement and there
is no question of any further examination or investigation.
Where permanent partial disablement results from injury not specified in Part
II of Schedule I
In such a case the permanent partial disablement is assessed by the qualified
medical practitioner. The percentage of loss of earning capacity in such case is
determined by the qualified medical practitioner. However, according To Sec.
4(1)(c ), while assessing the loss of earning capacity, the medical practitioner
must have due regard to the percentage of loss of earning capacity specified for
different injuries in the Schedule.
Temporary partial disablement
- Prakash Kumar Sathpathy v/s. Rama Chandra Maharana
For example, the amputation through the shoulder joint is a scheduled injury
for which the Schedule fixed the loss of earning capacity at 90%. But there
may not be an amputation but the movement of the hand is restricted due to
some grievous injury or say due to malunion of the fracture.
For this injury the Schedule does not fix percentage of loss of earning
capacity. For such non scheduled injury, the loss of earning capacity is
determined by the qualified medical practitioner on the basis of percentage
- New India Assurance Co Ltd. v/s. Sudarsan Samal
In this case, the Orissa HC held that " a doctor is competent to speak about
the physical disablement suffered by the injured which is reasonably within
the scope of his expertise. Regarding loss of earning capacity, which cannot
be equated with physical disablement in all cases, he cannot be said to be
an expert in the matter."
The Orissa HC further held that the commissioner in whom the power of
adjudication is vested under the Act may or may not accept the doctor's
statement relating to loss of earning capacity of the injured on judging the
- United India Insurance Vs. K. Mohanan
But in this case, the Kerala HC held that, the commissioner in absence of
assessment made by qualified medical practitioner, cannot himself assess
loss of earning capacity of injured employee.
Reduction of "earning Capacity" for non- scheduled injury is a question of
Reduction of "earning capacity" is an essential ingredient of "partial
disablement" as defined under Sec. 2(g) of the ECA,1923. Part II of Schedule
I enlists the injuries and specifies the extent of reduction of earning
capacity for such injuries. But an injury may not be enlisted in the
Schedule, therefore for which reduction of earning capacity is not fixed. In
the case of that non- scheduled injury, the reduction in earning capacity
will have to be proved as a fact.
The loss of earning capacity is not co-extensive with the loss of physical
capacity. It is only in case of a scheduled injury that such a loss is
presumed. Where an employee claims compensation in respect of an injury
which is not scheduled injury, the loss of earning capacity cannot be proved
by mere medical evidence. It must be proved by evidence which will establish
that the employee was as a result of the injury unable to earn as much as he
did any other question of fact.
In case of non- scheduled injury the physical disability is assessed by
"qualified medical practitioner."
According to Sec.2(g), "partial disablement" means, where the disablement is of
a temporary nature, such disablement as reduces the earning capacity of an
employee in any employment in which he was engaged at the time of accident
resulting in the disablement.
Loss of earning capacity may not be co- extensive with physical incapacity
Medical evidence is opinion evidence, and, it is only with regard to the
physical aspect of the injuries, that the opinion of a medical witness is
relevant and admissible, as the opinion of expert. But loss of earning capacity
is not a matter for medical opinion and is not a matter to which a medical
evidence can possibly speak.
However, medical opinion is taken into consideration when the Tribunal is to
assess the loss of earning capacity. As loss of earning capacity is not
necessarily extensive with the loss of physical capacity, and it is always open
for the Tribunal to assess the loss of earning capacity, having due regard to
the medical evidence on record.
- National Insurance Co Ltd v/s. M. Shyam Prasad
In this case, though the physical incapacity certified by the doctor was 25
percent, the Tribunal calculated the compensation on the basis of 30 percent
loss of earning capacity that exceeded 25 percent loss of physical capacity.
Here, it was held that in case of non- scheduled injuries, the Tribunal can
determine percentage of loss of earning capacity beyond percentage of
disability certificate by a medical practitioner under Section 4(1)(c ) (ii)
of the ECA,1923.
- Palraj v/s. Divisional Controller, NEKRTC
The Hon'ble SC in this case held that, " while computing compensation for
disabilities being suffered by a workman, it is the functional disability
resulting in the loss of earning capacity which is the criteria which is
followed in assessing compensation."
This act is made for the welfare of the employees. If the employee suffers
personal injury by an accident and accident arises out of and in the course of
employment then he can claim compensation from his employer. Amount of
compensation is decided in the basis of injury. So to claim compensation one
must know who can claim in his behalf and how much.
- Akshara Kaushik