Employees’ State Insurance Act, 1948
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This article is written by Neelabh Keshav Sinha, a first-year student from Symbiosis Law School, Noida who is pursuing BBA LLB. The article provides an overview of the Employees’ State Insurance Act and its different provisions, along with a few landmark judgments.

Table of Contents


The Employees’ State Insurance Act incorporates a number of sections, these sections provide for medical benefits and insurance for any employees working under factories registered under the ESI Corporation. This is an exciting prospect from both an employee’s and a legal perspective as the beginning of a formal social security program in India.

This article will explain the highlight sections of the Act, as well as elaborate landmark cases that prove the authenticity of the scheme, and how it worked for the benefit of its employees at times of need.

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Application and scope of the Act

The Employees’ State Insurance Act, 1948 (ESI), enables the financial backing and support to the working class in times of medical distress such as:

  • Sickness.
  • Maternity Leave.
  • Disorders(mental or physical).
  • Disability.
  • Death.

It is a self-financed initiative, which serves as a type of social security scheme, to prevent the working class from any financial problems arising out of the above medical issues.

Constitutionality of the Act

The ESI Act serves as a constitutional instrument because of its practice of providing insurance and medical insurance. While the ESI Act is mostly executed through the ESI Corporation, the Central Government takes control of most of the proceedings.

This control by the Central Government largely contributes to the constitutionality of the Act, because Insurance, be it public or private, is listed in the Seventh Schedule of the Indian Constitution as a Union List subject i.e. it can only be legislated by the Central Government.

Corporation, Standing Committee & Medical Council

Establishment of Employees’ State Insurance Corporation

The ESI Act exercises its function through the Employees’ State Insurance Corporation, established via Section 3, a body created to maintain social security. It was established on 24 February, 1952. The corporation is supposed to grant relief to the employees in case of medical emergencies.

Constitution of Corporation

The composition of the ESIC is defined in Section 4, and it is as follows:

  • The Director-General.
  • Chairman, appointed by the Central Government.
  • Vice-Chairman appointed by the Central Government.
  • Not more than 5 persons nominated by the Central Government.
  • 1 person to represent each state.
  • 1 person representing the Union Territories.
  • 10 persons representing employers.
  • 10 persons representing employees.
  • 2 persons representing the medical profession.
  • 3 members of parliament (2: Lok Sabha and 1: Rajya Sabha).

Term of office of members of the Corporation

Via Section 5, the following members are appointed for up to a 4 year period:

  • Director-General.
  • Chairman.
  • Vice-Chairman.
  • The 5 people nominated by Central Government.
  • The members representing each state.
  • The members representing each Union Territory.

Eligibility for re-appointment or re-election

An outgoing member of ESIC, the Standing Committee of ESIC, or the Medical Benefit Council is automatically eligible for re-appointment or re-election into office as the case may be, at the pleasure of the appointing Central Government.

Authentication of orders, decisions, etc.

The signature of the Director-General of ESIC is the only necessary requirement to authenticate an outgoing order or a decision, there is no other way to authenticate or enforce an order.

The Director-General can also temporarily delegate his authority to any other officer. In this case, the signature of the authorised officer will also suffice to authenticate an order.

Constitution of Standing Committee

The composition of the Standing Committee of ESIC is as follows:

  • A chairman appointed by Central Government.
  • 3 members within the corporation representing 3 state governments.
  • 3 members within the corporation representing employers.
  • 3 members within the corporation representing employees.
  • 1 member within the corporation representing the medical profession.
  • One MP belonging to the corporation.
  • The Director-General.

Terms of office of members of Standing Committee

The following members are appointed for a two year period: 

  • The Chairman.
  • The 3 members representing the states.

Medical Benefit Council

The Medical Benefit Council is an advisory body on matters related to the administration of medical benefits under the ESI scheme. It consists of:

  • The Director-General of ESIC as Chairman.
  • The Director-General of Health Services as co-Chairman.
  • The Medical Commissioner of ESIC.
  • One member for each state appointed by State Government.
  • Three members representing employers.
  • Three members representing employees.
  • Three members including one woman representing the medical profession.

Tenure of the members of the Medical Benefit council

The following members of the Medical Benefit Council are appointed for a period of 4 years, these are:

  • The Director-General of ESIC as Chairman.
  • The Director-General of Health Services as co-Chairman.
  • The Medical Commissioner of ESIC.
  • One member for each state appointed by State Government.
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Resignation of membership

The resignation of a member of the Corporation is complete when a notice for the same, in writing, is delivered to the Central Government, and his seat shall fall vacant upon acceptance of his resignation.

Cessation of Membership

A member of the ESIC shall cease to be a member of his respective body (Corporation, Standing Committee or Medical Council) upon failing to attend three consecutive meetings. However, the same member can be restored by the concerned body via the rules made by the Central Government.

If in the opinion of the Central Government, any employer, employee or medical representative fails to represent their qualification, they shall cease to be members of ESIC.


A person can be disqualified as a member of ESIC if:

  • If he is declared to be of unsound mind by a qualified court.
  • If he is an undischarged insolvent.
  • If at any time, he has been convicted of an offence regarding moral turpitude.

Filling of vacancies

Any vacancy in the office of ESIC shall be filled by appointment or election, as the case may be.

A member of ESIC can only hold the ex-member’s spot in the respective committee, if the original holder of that position was found to be eligible for the same. Otherwise, the position is void.

Fees and allowances

The fees which are payable to the members of the ESIC for their services can be payable at any time, at the discretion of the Central Government. There is no definitive schedule.

Principal Officers

The Principal Officers referred to under this Section are the Director-General and/or Financial Commissioner, to act as the CEO for ESIC.

They serve as whole-time officers and are not permitted to undertake any work outside of office jurisdiction without the sanction of the Central Government.

The time period for the appointment of any principal officer may not exceed 5 years.

The operation of their fees, disqualification, and cessation of seats operate in the same manner as that of their subordinates.


ESIC has the jurisdiction to employ staff of officers as may be necessary for the optimum running of the corporation, however, according to the prerequisites in Section 17, the sanction for creating any staff position has to be acquired from the Central Government. Their salary shall be prescribed by the Central government within a particular range, which cannot be exceeded.

The scale of pay will be determined on the basis of their educational qualifications, method of recruitment, duties, and responsibilities, etc.

Powers of the Standing Committee

The Standing Committee, with its powers defined in Section 18, shall administer the affairs of the Corporation and may exercise any of the powers and perform any of the functions of the Corporation, while authorised and under the jurisdiction of the corporation.

The Standing Committee shall submit for the consideration and decision of the Corporation all such cases and matters as may be specified in the regulations made in this behalf.

The Standing Committee also, in its discretion, may submit any other case or matter for the decision of the Corporation.

Corporation’s Power to promote measures for the health  of insured persons

ESIC, in its jurisdiction, may take initiatives that promote health and welfare amongst its employees, while also promoting rehabilitation and re-employment for past employees who were injured or disabled in the course of employment.

The funding and expenditure for such initiatives is at the discretion of the Central Government.


ESIC, its Standing Committee, and its Medical Council shall meet periodically to observe rules and procedures in regard to the efficient functioning of the corporation. Such observations can be specified as per the regulations in regard to the meeting.

Supersession of the Corporation and Standing Committee

The supersession of the Corporation and the Standing Committee occurs when there is a persistent failure to perform the duties prescribed to both parties. In such a case, the Central Government, via a notification in the Official Gazette, can take the place of the corporation, or with the consultation of the corporation, can take the place of the Standing Committee.

The supersession of the corporation will take place by rendering all of the seats of the corporation, previously occupied by the members, as vacant.

In the case of the Standing Committee, a new one shall be constituted immediately as per Section 8 of the ESI Act.

Duties of the Medical Benefit Council

The Medical Council’s functions are as follows:

  • Advise the other two ESIC bodies on matters relating to the implementation that would be beneficial in the medical field. It acquires certification for the grant of medical benefits.
  • Investigate against complaints lodged against medical practitioners with relevance to the medical relief offered.

Duties of Director General and the Financial Commissioner

The duties of the Director-General and Financial Commissioner are prescribed by the ESI Act itself in accordance with the Central Government. These tasks may concern various arenas from management to miscellaneous tasks.

Validity of the act of the Corporation

No act of any ESIC body shall be termed as invalid with respect to their own rules and regulations. Invalidity cannot be claimed on the eligibility or ineligibility of a particular member of that office.

Regional Boards, Local Committees, Regional and Local Medical Benefit Council

The Corporation may appoint Regional Boards, Local Committees and Regional and Local Medical Benefit Councils in such areas and in such manner, and delegate to them powers and functions.

Finance and Audit

Employees’ State Insurance Fund

The Employees’ State Insurance Fund is the primary monetary source for the ESIC to perform its functions. All contributions paid under this Act and all other money received on behalf of the Corporation shall be paid into this fund to be held and administered by the Corporation.

These could be in the form of grants, donations or gifts by the government.

Expenses of the fund

The ESI Fund is responsible for maintaining the expenses of ESIC, which are as follows:

  • Payment of benefits and provision of medical treatment and attendance to insured persons and their families, if required.
  • Payment of fees and allowances to members of the Corporation, the Standing Committee and the Medical Benefit Council, the Regional Boards, Local Committees and Regional and Local Medical Benefit Councils.
  • Payment of salaries, leave and joining time allowances, travelling and compensatory allowances, gratuities and compassionate allowances, pensions, etc.
  • Establishment and maintenance of hospitals, dispensaries, and other institutions and the provision of medical and other ancillary services for the benefit of insured persons and their families, if required.
  • Payment of contributions to any State Government, local authority or any private body or individual, towards the cost of medical treatment and attendance provided to insured persons and their families, if required.

Administrative expenses

Administrative expenses are termed so, those expenses which cover the costs of administration of ESIC, prescribed by the Central Government.

Holding of Property

ESIC is subject to conditions prescribed by the Central Government, in terms of acquiring, hold, sell or transfer any property, movable or immovable, vested in or acquired by it, so as to fulfill the purposes of the corporation. The ESIC also has the ability to invest in property as and when required, under the jurisdiction of the Central government. It can also delegate property for the benefit of its staff.

Vesting of the property in the Corporation

Any and all property acquired by ESIC, before its establishment, will be brought into the accounting books of the corporation.

Budget Estimates

Every year, ESIC frames and projects a potential budget showcasing how much expenditure it proposes to incur, and how it will discharge its liabilities during the following year. This is then submitted to the Central Government for approval.


The Corporation shall maintain correct accounts of its income and expenditure in such form and in such manner as may be prescribed by the Central Government.


The Corporation prepares accounts regularly which are audited annually by the comptroller and Auditor-General of India, and any audit which leads to an expenditure will be payable to the above parties.

Any person appointed by the Comptroller and Auditor-General to act on their behalf will temporarily have the same powers as the above parties and are authorised to demand the production of books, accounts, connected vouchers, and other documents and papers. They shall also be authorised to inspect any offices of ESIC at any time.

The accounts of the Corporation, before being forwarded to the Central Government, have to be verified by the Comptroller and Auditor-General, or any of their representatives. After verification, the accounts can be forwarded to the Central Government along with any comments on the report, given by the above parties.

Annual report

The Corporation shall submit an annual report of its work and activities to the Central Government.

Budget etc. to be placed before Parliament

The annual report, the audited accounts of the Corporation along with the report of the Comptroller and Auditor-General of India, and the comments of the Corporation on such report under section 34 and the budget, as finally adopted by the Corporation, shall be placed before the Parliament.

Valuation of assets and liabilities

The Corporation shall, at intervals of three years, have a valuation of its assets and liabilities made by a valuer appointed with the approval of the Central Government: Provided that it shall be open to the Central Government to direct a valuation to be made at such other times as it may consider necessary.


All employees to be insured

All employees employed in the factories which meet ESIC prescribed rules (under Section 2) are insured for all the benefits offered by it.


  • The contribution is a determinable amount of money payable by both the employer and the employee, as per the situation, to the corporation.
  • The rates, while usually prescribed by the government, are not set in stone, and are subject to change. Rates defined by the government are mostly set as the unit standard for the contribution payable by the employer.
  • In the case of the employee’s contribution, the wage period in relation to the respective employee shall be held as a unit to determine the compensation payable, and are normally due on the last day of the wage period.
  • Failure to pay contributions by the employer will make him liable to pay an interest rate of 12%.

Principal employer to pay contribution in the first instance

  • The primary employer has to collectively pay the contribution, both his own and that of his employees, regardless of whether they are directly employed under him or are working through an immediate employer.
  • If a directly employed employee fails to pay his contributions, then the employer can recover that contribution only by deducting the wages of said employee.
  • The employer bears all the transfer costs of the payment to the Corporation.

Recovery of contribution from the immediate employer

In the case of an employee who is indirectly employed under the principal employer, via an immediate employer, the principal employer shall be entitled to recover the payment made on behalf of an indirect employee, from the immediate employer, as a debt payable to him.
The immediate employer also has to prepare a list of all the employees under him and submit the same to the principal employer, before paying his dues.

General provisions as to payment of contribution

In case an employee’s wage falls below the prescribed wage range prescribed by the Central Government, the employee shall not be liable for his contribution and it shall not be payable.

Method of payment of contributions

The manner for payments which the Act provides regulations for, has been elaborated in the following conditions:

  • The nature and time of contribution being paid.
  • Payment which involves the usage of stamps or other adhesives fixed upon the books of accounts, or any other documents.
  • The evidence of the contributions, which reaches the Corporation, is to be dated.
  • The different entries in the books of accounts along with the details of the insured persons.
  • The replacement of documents which have been lost, destroyed or defaced.

Employers to furnish returns and maintain registers in certain cases

According to the provisions given as per the ESI Act, the principal and immediate employers are to submit all the investment profits, as well as any and all details relating to their employees in any factory under their jurisdiction. In case of failure to submit a return, that the corporation had reasonable cause to believe, should have been submitted, the corporation can require the employers to present all the details.

Social Security Officers and their functions

ESIC has the power to appoint persons as Social Security Officers. Their functions are mostly to serve a role in inspecting the function of the corporation.

  • If required, he can acquire any information from any employer as he sees fit.
  • He can enter any corporation at any time and can get all the accounts, books and other employment documents presented to him without any due notice. This can include information like wages, expenses, etc.
  • He can inspect and look into any matter regarding the employers and employees as and when required under the jurisdiction of the court.
  • He can make copies or take extracts from any register or account back as per his discretion.

Determination of Contribution in certain cases

A Social Security offer is restricted from exercising his functions and discharging his duties, if the accounting statements of the factory/establishment are not submitted, or not maintained in accordance with Section 44 of the ESI Act. As such, the Corporation may, with the available information, determine the contribution(defined under Section 39) amount payable to employees. However, this procedure will not take place until after the person in charge has been given a reasonable opportunity to be heard regarding the absence of such records.

Appellate Authority

In the scenario specified in Section 45A, once the employer in charge is heard, and he is not satisfied with the verdict given by the corporation, he may prefer an appeal to an appellate authority as may be provided by regulation, within sixty days of the date of the verdict. He must also pay a sum of 25% of his calculated contribution, in order to file the appeal. In case he is successful, the corporation will also refund the contribution paid by him.

Recovery of contributions

Any and all contributions which are payable under the provisions of ESI Act, can be recovered, termed as ‘arrears of land revenue’.

Issue of certificate to the Recovery Officer

In lieu of Section 45B, where the contribution is to be recovered, an authorised officer of the corporation issues a certificate bearing his signature and the amount to be recovered, to a Recovery Officer, who then proceeds to recover the amount specified from the factory where the default took place. He does this via:

  • Attachment or sale of the property of the factory, or the employer, as per the situation.
  • The arrest of the employer and getting him detained in prison.
  • Appointing a receiver for the management of the property acquired, be it from the factory or the employer.

Recovery Officer to whom the certificate is to be forwarded

For the contribution certificate to be forwarded to the Recovery Officer, the factory employer must be under the jurisdiction of the Officer in the following ways:

  • The location where the employer carries on his business and where the factory is located.
  • The location where the employer resides or he has any personal property situated within the Officer’s jurisdiction.
  • The inability to recover the amount solely through the sale of property alone.

The inability to recover the amount solely through the sale of property alone

The analysis of the recovery amount, as per the certificate issued to the Recovery Officer, operates on his word only. The factory or any authority related to it cannot question the Officer on the correctness of the mount, and no objection shall be entertained. However, with a prior intimation, an arithmetical mistake can be corrected by an authorised officer, along with any orders about withdrawal or cancellation of a certificate.

Stay of proceedings under certificate and amendment or withdrawal thereof

It is at the discretion of the Recovery Officer, within the boundaries of the ESI Act, to halt legal proceedings if the time he has allocated for the recovery of an amount, has expired.
The Recovery Officer is also entitled to receive constant updates about the status of payment of any due amount.
If, as a result of an appeal, the amount due is decreased, then the Recovery Officer temporarily halts the recovery of the now decreased amount.

Other modes of recovery

Some of the other modes of recovery are elaborated within Section 45G. These are rarer modes of recovery, due to the primary modes of recovery often being preferred:

  • The defaulting employer may be required to pay a sum which was deducted from the arrears after the sale of the property.
  • There might not be any penalty issued but the defaulting employer would be required to pay the entire outstanding amount directly to the Director-General of the Corporation.
  • Any joint shareholders who held money with the defaulting employer might be forced to give up their shares to the Corporation until they are equal to the defaulting employer’s shares, as compensation.

Application of certain provisions of the Income-tax Act

The arrears of the amount of contributors, which are to be sold to cover the remaining costs, can be affected by decisions from the Assessing Tax Officer or Tax Recovery Officer. They can make changes which shall apply to all the interests and damages.


Section 46 of the ESI Act grants benefits to employees as social security in case of injury, which can be availed during the course of employment. There are 6 types of benefits that can be availed: 

  • Medical benefit.
  • Sickness benefit.
  • Maternity benefit.
  • Dependants’ benefits.
  • Disablement benefits.
  • Other benefits.

Medical Benefits

These benefits are guaranteed to the employee as soon as he/she is hired, with the benefits extending to their family members as well.

This benefit covers the payment of all treatment expenses in lieu of medical issues faced by the employee

Sickness Benefits

The employees covered by the ESI Act can avail periodical payments in case of sickness as per Section 46(1)(a), as long as the medical condition is verified by the appointed medical practitioner.

The compensation is approximately 70% of their wages, with the upper limit for availing compensation being 91 days in a year.

In a period of 6 months of employment, the employee must have been working for a minimum of 78 days, else the benefit cannot be claimed.

Maternity Benefits

As per Section 46(1)(b) of the ESI Act, an insured woman can claim periodical payments in case of occurrence of any of the following situations:

  • confinement (labour leading to birth or birth after 26 weeks)
  • miscarriage
  • sickness arising out of pregnancy
  • premature birth of child

The benefit is payable for three months, with an extension of one month, if required. The minimum work duration must be 70 days in the year preceding the year of pregnancy. 

Dependants’ Benefits

Section 46(1)(d) prescribes periodical payments(often made monthly) to the dependants/family members of the person who dies during the course of employment, with the cause of death being an employment injury or an occupational hazard. Compensation is generally 90% of the employee’s wages.

Disablement Benefits

In case an employee suffers an injury during the course of employment which results in their disablement. The nature of the disablement may be temporary or permanent. Unlike the other benefits, there is no minimum work contribution required to avail the disablement benefit, although eligibility for the same will be determined by the Medical Board.

This determination also affects the amount of compensation granted, if any, with the general percentage of wages granted being around 90%.

Other Benefits

‘Other benefits’ refer to the miscellaneous benefits apart from the five major benefits that can be availed by the employees. These are as follows:

  • Funeral Expenses: Compensation of Rs. 10,000 is granted to the eldest surviving member of an employee’s family to perform his last rites.
  • Vocational Rehabilitation: The benefit is payable to disabled employees undergoing rehabilitation.
  • Old age medical care: This benefit is available for retired employees, or those who eft employment after suffering an injury, with general compensation being Rs. 120 p/m.

Scheme for other beneficiaries

Scope of Section 53 and 61 

Section 53 of the ESI Act acts as a deterrent for employees, in order to prevent them or their families from claiming benefits provided under the scope of Workmens’ Protection Act, so long as they are still insured under the reliefs offered by the ESI Act.

Section 61 acts like an extension to Section 53, in the sense that while Section 53 only bars employees from receiving compensation under the Workmens’ Compensation Act, Section 61 bars employees from receiving compensation from any other enactment so long as they are still insured under the ESI Act.

Power to frame scheme

The Central Government holds the power to frame schemes for other beneficiaries and their family members, mostly for providing medical facilities in ESI hospitals. However, this must be within the framework of the ESI Act and must be notified in the Official Gazette.

Scheme for other beneficiaries

Schemes implemented for beneficiaries may cover for a number of matters such as:

  • The time and nature of the usage of medical facilities.
  • The presentation of particulars and details about the beneficiary and his family as per the needs of the Corporation.
  • Miscellaneous matters which may be necessary to fully implement the scheme.

Power to amend schemes

Via a notification in the Official Gazette, the Central Government may add to, amend, introduce variations, or rescind the scheme.

Adjudication of Disputes and Claims

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Constitution of Employees’ Insurance Court

Via a notification in the Official Gazette, an Employees’ Insurance Court will be constituted by the State Government, with a set amount of judges as per the decision of the State Government.

The same court may be appointed for two or more local areas, or two courts or more courts may be appointed for the same local area.

Power of Employees’ Insurance Court

The Employees’ Insurance Court will function with the same powers as that of a Civil Court, in which, to enforce the provisions of the ESI Act, it can enforce witness attendance, compel document and material evidence to be presented, it can administer an oath and can record evidence.

All expenses incurred before a proceeding are subject to the discretion and liability of the court itself.

Reference to High Court

An Employees’ Insurance Court, according to Section 81 may submit any question of law for the decision of the High Court and if it does so, the answer to the question shall hold precedence before any judgment.


Section 82 defines that no appeal can be laid down as against an order from the Employees’ Insurance Court. However, appeals from the High Court can stand if they involve a substantial question of law.



Sections 84, 85, and 85A cover all the punishments for default listed within the ESI Act.

  • False Statement: Any person caught increasing the payment or benefit to avoid payment by himself is known to make a false statement. Punishable with up to six months and/or with fine not greater than Rs. 2000. Insured persons convicted of this will not be entitled to cash benefits.
  • Failure to pay contribution: Persons failing to pay the contribution, unlawfully deducts wages or benefits, unfairly punishes an employee, obstructs inspector’s duties, etc. can be punishable for up to three years, no less than one year with a fine up to Rs. 10000.
  • Subsequent Punishment: If a person is found committing the same offence twice, he shall be punished with imprisonment for a term extending up to two years with a fine of Rs. 5000 for each subsequent offence.

Power to recover damages

If an employer fails to pay the contributions due in any aspect, whether it be from his side or his employee’s side, the Corporation can recover the deficit from him by way of penalty.
However, this recovery of contribution will not take place until after the person in charge has been given a reasonable opportunity to be heard regarding the failure to pay the contribution.

Power of Court to make orders

Along with the power of the court to recover damages, it also has provisions to enforce judicial orders. If the defaulting employer fails to meet the time conditions for payments that have been stated by the Court, the employer will be deemed to have committed another offence, which can be punishable with imprisonment and/or fines.


Section 86 dictates that any sort of prosecution cannot take place under the provisions of ESI Act unless it has previously obtained the sanction of the Insurance Commissioner or any other authorised authority such as the Director-General of the Corporation. No court lower than a First Class Magistrate can try an offence under the ESI Act, and no Court will take cognizance of any offence reported under this Act.

Offences by companies

Taking inference from the concept of business entity, where every company is its own individual i.e. it is a separate legal entity of its own and can sue or be sued in a court of law accordingly.

As such, when an offence is said to have been committed by a company, all of its managerial employees, who were responsible for the company at the time, will be tried along with the company, deemed to be guilty of the same offence. They are liable for punishment accordingly.



Sections 87, 88, 90, 91 and 91A list the criteria under which certain exceptions to benefits can be made under ISA. Via a notification in the Official Gazette, the appropriate government(appropriate here meaning the government exercising more authority, in a closer proximity), can exempt the following from the benefits of the ESI Act(if they were enjoying those same benefits before):

  • Factory/establishment or a class of factories/establishments.
  • Persons or classes of persons.
  • Factories or establishments belonging to the Government or any local authority.
  • Any of the above from a particular provision of the Act.
  • Any of the above to be exempted prospectively for a specified time period.

Misuse of benefits

In case of any misuse of benefits by the insured persons, the Central Government can, at its discretion, publish a notice in the Official Gazette that disentitles such persons from their benefits that they have under ESI Act.

Delegation of powers

The bodies of ESIC possess authority that they can delegate to authorised personnel, at their discretion. These authorised personnel can exercise the powers given to them by their specific ESIC bodies, but only for a temporary period.

Medical care for the families of insured persons 

Medical care is guaranteed for family members of the insured person, covered at the cost of the Corporation if the funds at the time permit the coverage.

Judicial Precedences

Mr. A. Tehan V/S M/S. Associated Electrical Agencies & Anr.

In this case, the plaintiff was under the employment of defendant 1 for carrying out television repairs. On July 17, 1987, he was injured during the course of employment while repairing a television set, when a component burst and he suffered injuries on his face.

After claiming relief from the ESIC Corporation under Section 46 of the Act, he then filed an appeal asking for compensation under the Workmens’ Compensation Act, which required an amount paid by the defendant. 

This was challenged by the defendant in the Bombay High Court via an appeal, which contested their payment of the compensation, and called into usage Sections 38 and 46 of the ESI Act, which lay the foundation for the insurance offered by the Act. (Section 38 guaranteeing that every worker is insured and Section 46 defining the relief available to workers).

This was further verified by the High Court, whose Division Bench further stated that the worker’s appeal for the amount to be paid by the plaintiff could not be upheld. Instead, he would receive appropriate relief, to be determined by the ESIC.

Western India Plywood Ltd V/S Shri. P. Ashokan

In this case, the defendant, P. Ashokan, was appealing to claim damages from the appellant, his employer, ‘Western India Plywood Ltd.’ as compensation for an injury which he had suffered during the course of employment. However, the defendant had already claimed compensation from ESIC for his injuries as he was insured under the ESI Act.

The appeal was filed in lieu of the existence of Articles 53 and 61, the former restricting compensation to be availed from the Workers’ Compensation Act, and the latter restricted compensation being availed from any law or action other than the ESI Act. This bar would only hold if the employee who had suffered the injury had received adequate compensation for the same.

The Full Bench assigned to this judgment then attempted to define what could constitute as ‘adequate compensation’ if an injury had been suffered, for which the reliefs received by the ESIC under Sections 38 and 46 of the ESI Act were eligible as ‘adequate compensation’.

The final judgment laid down by the bench was to both, restrict the employee from getting double relief as compensation from his employer, and to define the objective of Section 53, which was then laid down as not only a bar to guarantee only the required amount of relief for an injury by ESIC, but also to save the employer from facing more than one claim in relation to the same accident, i.e. an indirect form of double jeopardy, in which he may have to compensate twice for the same injury.

Kerala CBSE School Management vs State Of Kerala

This is one of the premier landmark judgments in relation to the ESI Act as the basis of this case is the determination of whether a particular institution can be covered under the ESI Act or not.

The matter originally under contention was the release of a new notification by the Kerala State Government in the Official Gazette, which extended the scope of the ESI Act, i.e. which organisations could fall under it, was extended to schools and other educational institutions. The matter was then decided through the interpretation of the statute in Section 1 of the ESI Act.

It was held that educational institutions, while not being commercial in nature, nor having the functions of a traditional factory, was not completely excluded from the statute itself, and could still be applied as an instrument under the ESI Act.

The deciding contention was when the final responsibility towards educational institutions was discussed. Since the Central Government had a priority to control and manage most educational institutions, the notification which extended the provision of the ESI Act to schools was held valid.


For a working-class employee in India, the ESI Act is an essential utility that works in their favour, while also being beneficial for sectors outside that of the working class.

The ESI Act is unique in the fact that it works in advantageous ways for both employees and employers. While employees are insured under the act and get financial aid in case of an injury, the employers are also protected from being jeopardized twice in lieu of paying compensation to the employees.

The Employees’ State Insurance Act, apart from medical benefits provided to employees, also controls many more indirect aspects of efficiently managing the Corporation established by the Act, be it its sales proceedings, account management or separation of powers amongst its various officers.



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