New Delhi, Dec. 25: The Supreme Court today ruled that non-payment of employers’ contribution to the Employees Service Insurance (ESI) fund would not affect the payment of insurance money to the employee concerned.
A division bench of Justice S.S.M. Quadri and Justice Arijit Passayat observed that irrespective of employers paying their contribution towards ESI, employees would get the benefit in case of death, accident and/or medical exigencies.
“The payment or non-payment of contributions and action or non-action prior to or subsequent to the date of the accident is really inconsequential as far as payment of insurance cover to the employee is concerned,” the bench ruled.
The judgment — which will benefit crores of employees throughout the country — came on a petition by the legal heirs of one Balakrishnan, an employee in Chennai, who died in service.
The certificate of registration under the ESI scheme was issued after his death. But the ESI corporation refused to pay the money on grounds that the registration certificate was issued to Balakrishnan only after his death.
Rejecting this argument, the apex court said: “The date of commencement of the insurance cover for the employee under the ESI scheme was the date from when he was employed by the employer.”
The bench observed that it was the “obligation” of the employer to pay the contribution from the date the ESI Act applied to an establishment.
The apex court also made it clear that it was “not open” to an employer to withhold payment of his part of contribution to the ESI. Several establishments take the plea that employees are not “traceable”.
The court added that employers couldn’t take the plea that their contribution towards ESI was not made as the employees’ contribution was not deducted from their wages.
Further, employers cannot argue that their businesses had been closed down and they could not pay the ESI contribution, it said.
“The scheme of the ESI Act and the rules and regulations clearly spell out that the insurance covered under the Act is distinct and different from the contract of insurance in general,” the judges observed.
Under Rule 58(2)(b) of the Act, a person who becomes an employee for the first time within the meaning of the Act, the contribution period under Regulation (4) commences from the date of such employment from the contribution period current on that day.
In cases where injuries result in death before the commencement of the first benefit period, Rule 58(2)(b)(ii) provides the method of computation of the dependant benefit, they pointed out.
“It provides for computation of dependant benefits in the case of an employee dying as a result of employment injuries sustained before the first benefit period and before the expiry of the first wage period,” the bench said.