SUPREME COURT OF INDIA Page 1 of 10

PETITIONER:
THE REGIONAL DIRECTOR,E.S.I. CORPORATION & ANR.

Vs.

RESPONDENT:
FRANCIS DE COSTA & ANR.

DATE OF JUDGMENT: 11/09/1996

BENCH:
CJI, SUHAS C. SEN, SUJATA V. MANOHAR

ACT:
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HEADNOTE:

JUDGMENT:
J U D G M E N T
SEN, J.
Francis De Costa, the first respondent herein, met with
an accident on June 26, 1971 while he was on his way to his
place of employment, a factory at a Koratty. The accident
occurred at a place which was about one kilometer away to
the north of the factory. The time of occurrence was 4.15
P.M, It has been stated that the duty-shift of the
respondent would have commenced at. 4.30 P.M . The
respondent was going to his place of work bicycle. He was
hit by a lorry belonging to his employers, M/S J and P
Coats(P) Ltd.
The respondent’s collar- bone was fractured as a
result of the accident and he had to remain in hospital
for 12 days, His claim for disablement benefit was allowed
by the Employees’ State Insurance Court. The appeal filed
against that order was dismissed by the Kerala High Court
which also dismissed an application for a certificate of
fitness to appeal to the Supreme Court. The petitioner filed
an application for Special Leave to this Court on 16,4.1979.
Special leave was given by this Court, but the employers’
state Insurance Corporation was directed to pay the first
respondent the compensation due to him in terms of the
order of the Employees’ State Insurance Court and also of
this appeal in any event. It has been stated that the
compensation money has already been paid to the first
respondent.
Since there was difference of opinion between the two
Judges who heard the appeal, the matter was directed to be
placed before a larger Bench for deciding the controversy .
In order to appreciate the scope of the controversy, it
will be necessary to set out the relevant, provisions of
the Employees’ State Insurance Act, 1948:
"2(8)" "employment injury" means
a personal injury to an employee
caused by accident. or an
occupational disease arising out of
and in the course of his
employment, being an insurable
employment, whether the accident
 SUPREME COURT OF INDIA Page 2 of 10
occurs or the occupational disease
is contracted within or outside the
territorial limits of India;
51. Disablement benefit.- Subject
to the provisions of this Act-
(a) a person who sustains
temporary disablement for not
less than three days
(excluding the day of
accident) shall be entitled to
periodical payment at such
rates and for such period and
subject to such conditions as
may be prescribed by the
Central Government;
(b) a person who sustains
permanent disablement,
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whether total or partial,

shall be entitled to
periodical payment at such
rates and for such period and
subject to such conditions as
may be prescribed by the
Central Government.
51-C. Accidents happening while
travelling in employer’s
transport.-(1) An accident
happening while an insured person
is, with the express or implied
permission of his employer
travelling as a passenger by any
vehicle to or from his place of
work shall, notwithstanding that he
is under no obligation to his
employer to travel by that vehicle,
be deemed to arise out of in the
course of his employment, if-
(a) the accident would have been
deemed so to have arisen had
he been under such obligation;
and
(b) at the time of the accident,
the vehicle-
(i) is being operated by or on
behalf of his employer or
some other person by whom it
is provided in pursuance of
arrangements made with his
employer, and
(ii) is not being operated in the
ordinary course of public
transport service.
(2) In this section" vehicle"
includes a vessel and an aircraft."
That the first respondent has suffered a personal
injury is not in dispute. The only dispute is whether the
injury will amount to "employment injury" with in the
meaning of Section 2(8), so as to enable the respondent to
claim benefit under the Act. The definition given to
"employment injury" in sub-section (8) of Section 2
envisages a personal injury to an employee caused by an
accident or an occupational disease "arising out of and in
the course of his employment", Therefore, the employee, in
the order to succeed in this case, will have to prove that
the injury that he had suffered arose out of and was in the
 SUPREME COURT OF INDIA Page 3 of 10
course of his employment. Both the condition will have to be
fulfilled before he could claim any benefit under the Act.
It does not appear that the injury suffered by the employee
in the instant case arose in any way out of his employment.
The injury was sustained while the employee was on his way
to the factory where he was employed. the accident took
place one kilometer away from the place of employment.
Unless it can be said that his employment began as soon as
he set out for the factory from his home, it cannot be said
that the injury was caused by an accident "arising out of
...his employment". A road accident may happen any where at
any time. But such accident cannot be said to have arisen
out of employment. unless it can be shown that the employee
was doing something incidental to his employment.
In our judgment, by using the words "arising out
of....his employment ", the legislature gave a restrictive
meaning to "employment injury ". the injury must be of such
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an extent as can be attributed to an accident or an

occupational disease arising out of his employment. "Out
of" in this context, must mean caused by employment., Of
course, the phrase "out of" has an exclusive meaning also.
If a man is described to be out of his employment, it means
he is without a job. The other meaning of the phrase "out
of" is "influenced, inspired, or caused by: out of pity;
out of respect for him". (Webster Comprehensive Dictionary-
lnternational Edition-1984). In the context of Section 2(8),
the words "out of" indicate that the injury must be caused
by an accident which had its origin in the employment. A
mere road accident, while an employee is on his way to his
place of employment cannot be said to have its origin in his
employment in the factory. The phrase "out of-the
employment" was construed in the case of South Maitland
Railways Pty. Ltd. v. James, 67 C.L.R 496, where construing
the phrase "out or the employment", Starke, J,, held "the
words ’out of’ require that the injury had its origin in the
employment".
Unless an employee can establish that the injury was
caused or had its origin in the employment, he cannot
succeed in a claim based on Section 2(8) of the Act. The
words "accident . . . arising out of . . . his employment"
indicate that any accident which occurred while going to the
place of employment or for the purpose of employment, cannot
be said to have arisen out of his employment. There is no
causal connection between the accident and the employment.
The other words of limitation in sub-section(8) of
Section 2 is "in the course of his employment". The
dictionary meaning of "in the course of" is "during (in the
course of time, as time goes by), while doing (The Concise
Oxford Dictionary, New Seventh Edition). The dictionary
meaning indicates that the accident must take place within
or during the period or employment. If the employee’s work
shift begins at 4.30 P.M., any accident before that time
will not be "in the course of his employment". The journey
to the factory may have been undertaken for working at the
factory at 4.30 P.M. But this journey was certainly not in
course of employment. If employment begins from the moment
the employee sets from his house for the factory, then even
if the employee stumbles and falls down at the door-step of
his house, the accident will have to be treated as to have
taken place in the course of his employment. This
interpretation leads to absurdity and has to be avoided.
We were referred to a number of cases on this point. In
the case of Regina v. National Insurance Commissioner. Ex
parte Michael, (1977) 1 Weekly Law Reports 109 the Court
of Appeal in England had to construe a phrase "caused by
 SUPREME COURT OF INDIA Page 4 of 10
accident arising out of and in the course of his employment"
in Section 5(1) of the National Insurance (Industrial
Injuries) Act, 1965. Lord Denning M.R. started his judgment
with the observation:-
"So we come back, once again, to
those all too familiar words
’arising out of and in the course
of his employment’. They have been
worth-to lawyers-a King’s ransom.
The reason is because, although so
simple, they have to be applied to
facts which very infinitely. Quite
often the primary faces are not in
dispute: or they are proved beyond
question. But the inference from
them is matter of law. And matters
or law can be taken higher. In the
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old days they went up to the House

of Lords. Nowadays they have to
be determined, not by the courts,
but by the hierarchy of tribunals
set up under the National
Insurance Acts."
Under the Employees’ State Insurance Act 1948, a
tribunal has been set up to decide, inter alia, any claim
for recovery of a benefit admissible in this Act. A
reference lies to the High Court on a question of law. In
other words, the decision of the Insurance Court set up
under the statute is final and bindings, so far as the
findings of fact are concerned. But, if any error of law has
been committed the Courts are expected to correct it and to
give guidance to the Insurance Court.
Construing the meaning of the phrase "in the course
of his employment", it was noted by Lord Denning that the
meaning of the phrase had gradually been widened over the
last 30 years to include doing something which was
reasonably incidental to the employee’s employment. The
test of "reasonably incidental" was applied in a large
number of English decisions. Buts Lord Denning pointed out
that in all those cases the workman was at the premises
where he or she worked and was injured while on a visit to
the canteen or other place for a break. Lord Denning,
however, caution that the words "reasonably incidental"
should be read in that context and should be limited to the
cases of that kind. Lord Denning observed:-
"Take a case where a man is going
to or from his place of work on
his own bicycle, or in his own
car. He might i.e said to be doing
something "reasonably incidental"
to his employment. But if he has
an accident on the way it is well
settled that it does not "arise
out of and in the course of his
employment". Even if his employer
provides the transport, so that he
is going to work as a passenger in
his employer’s vehicle (which is
surely reasonably incidental" to
his employment) nevertheless if he
is injured in an accident, it does
not arise out of and in the course
of his employment. It needed a
special "deeming" provision in a
statute to make it "deemed" to
 SUPREME COURT OF INDIA Page 5 of 10
arise out of and in the course of
his employment."
This is precisely the case before us. Here also, we
have at case of a person going from his home to his place of
work. But he suffers injury in an accident on the way. It
cannot be said that the accident arose out of and in the
course of his employment. It was faintly suggested by Mr.
Chacko, appearing on behalf of the respondent that the
bicycle was bought by taking a loan from the employer. That
however, is of no relevance. He might have borrowed money
from his Company or from somewhere else for purchasing the
bicycle. But the fact remains that the bicycle belonged to
him and not the employer. If he meets with an accident
while riding his own bicycle on the way to his place of
work, it cannot be said that the accident was reasonably
incidental to the employment and was in the course of his
employment. The deeming provision of Section 51-C which came
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into force by way of an amendment effected by Employee’s

Life Insurance (Amendment) Act of 1966 (Act No.44 of 1966),
enlarged the scope of the phrase "in the course of
employment" to include tavelling as a passenger by the
employer’s vehicle to or from the place of work. The legal
fiction contained in Section 51-C, however, does not come
into play in this case because the employee was not
travelling as a passenger in any vehicle owned or operated
by or on behalf of the employer or by some other person in
pursuance of an arrangement made by the employer.
The meaning of the words "in the course of his
employment" appearing in Section 3(1) of Workmen’s
Compensation Acts 1923. was examined by this Court in the
case of Saurashtra Salt Manufacturing Co. v, Bai Valu Raja,
AIR 1958 SC 881. There, the appellant, a salt manufacturing
company, employed workmen both temporary and permanent. The
salt works was situated near a creek opposite to the town of
Porbandar. The salt works could be reached by at least two
ways from the town, one an over land route nearly 6 to 7
miles long and the other via a creek which had to be crossed
by a boat. In the evening of 12.6.1952, a boat carrying some
of the workmen capsized due to bad weather and over-loading.
As a result of this, some of the workmen were drowned. One
of the questions that came up for consideration was whether
the accident had taken place in the course of the employment
of the workers. S. Jafer Imam, J., speaking for the court,
held "As a rule, the employment of a workman does not
commence until he has reached the place of employment and
does not continue when he has left the place of
employment, the journey to and from the place of employment
being excluded." After laying down the principle broadly, S.
Jafer Imams, J., went or to observe that there might be some
reasonable extension in both time and place to this
principle. A workman might be regarded as in the course of
his employment even though he had not reached or had left
his employer’s premises in some special cases. The facts and
circumstances of each case would have to be examined very
carefully in order to determine whether the accident arose
out of and in the course of the employment of a workman,
keeping in view at all times this theory of notional
extension. But, examining the facts of the case in
particular, after noticing the fact that the workman used a
boat, which was also used as public ferry for which they had
to pay the boatman’s dues, S.Jafer Imam, J. observed:-
"It is well settled that when a
workman is on a public road or a
public place or on a public
transport he is there as any other
 SUPREME COURT OF INDIA Page 6 of 10
member of the public and is not
there in the course of his
employment unless the very nature
of his employment makes it
necessary for him to be there. A
workman is not in the course of
his employment from the moment he
leaves his home and is on his way
to his work. He certainly is in
the course of his employment if he
reaches the place of work or a
point or an area which comes within
the theory of notional extension,
outside of which the employer is
not liable to pay compensation for
any accident happening to him. In
the present case, even if it be
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assumed that the theory of notion

extension extends upon point D,
the theory cannot be extended
beyond it. The moment a workman
left point B in a boat or left
point A but had not yet reached
point B, he could not be said to
be in the course of his employment
and any accident happening to him
on the journey between these two
points could not be said to have
arisen out of and in the course of
his employment. Both the
Commissioner for Workmen’s
Compensation and the High Court
were in error in supposing that the
deceased workmen in this case
were still in the course of their
employment when they were crossing
the creek between points A and B.
The accident which took place when
the boat was almost at point A
resulting in the death of so many
workmen was unfortunate, but for
that accident the appellant cannot
be made liable."
The point raised before us can be answered on the basis
of the principle laid down in the aforesaid two cases. But
Mr. Chacko, appearing on behalf of the respondent has
contended that proximity of time end place is a factor to
the borne in mind. The employee was to report for duty at
4.30 P.M. The accident took place at 4.15 P.M. only one
kilometer away from the factory. In our view this cannot be
a ground for departing from the principle laid down by the
aforementioned cases that the employment of the workman does
not commence until he has reached she place of employment.
What happens before that is not in course of employment. It
was also pointed out by Lord Denning in the aforesaid case
of Regina v. National Insurance Commissioner, Ex. Parte
Michael (supra) that the extension of the meaning of the
phrase "in the course of his employment" has taken place in
some cases but in all those cases, the workman was at the
premises where he or she worked and was injured while on a
visit to the canteen or some other place for a break. The
test of what was "reasonably incidental" to employment, may
be extended even to cases while an employee is sent on
errand by the employer outside the factory premises. But in
such cases it must be shown that he was doing something
 SUPREME COURT OF INDIA Page 7 of 10
incidental to his employment. There may also be cases where
an employee has to go out of his workplace in the usual
course of his employment. Latham, C.J. in South Maitland
Railways Proprietary Limited v. James (67 CLR 496) observed
that when the workmen on a hot day in course of their
employment had to go for a short time to get some cool
water to drink to enable them to continue to work without
which they could not have otherwise continued, they were in
such cases doing something in the course of their employment
when they went out for S water. But the case before us does
not fall within the exceptions mentioned by Lord Denning or
Latham, C.J. The case squarely comes within the proposition
of law propounded by S. Jafar Imam, J.
Strong reliance was placed by Shri Chacko on a
decision of this Court in General Manager, B.E.S.T.
Undertaking, Bombay v. Mrs. Agnes (1964 (3) SCR 930). In
this case, one bus driver of the appellant- Corporation
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after finishing the day’s work left for home in a bus

belonging to employer’s undertaking which met with an
accident as a result of which he died. His widow claimed
compensation under the Workmen’s Compensation Act and the
question was whether the accident had arisen out of and in
course of employment. It was held by Subba Rao and
Mudholkar, JJ. (Raghubar Dayal, J. dissenting) that the bus
driver was given facility by the management to travel in any
bus belonging to the undertaking. It was given because
efficiency of the service demanded it. Therefore, the right
of the bus driver to travel in the bus was to discharge his
duty punctually and efficiently. This was a condition of
service and there was an obligation to travel in the said
the buses as a part of his duty. It was held that in the
case of a factory, the premises of an employer was a limited
one but in the case of City Transport Service, the entire
fleet of buses forming the service would be "premises". This
decision in our view does not come to the assistance of the
employee’s case. An employee of a Transport Undertaking was
travelling in a vehicle provided by the employer. Having
regard to the purpose for which he was travelling and also
having regard to the obligation on the part of the employee
to travel in the said buses as a part of his duty, the Court
came to the conclusion that this journey was the Course of
his employment because the entire fleet of buses formed the
premises within which he worked.
But in the case before us, the facts are entirely
different. The employee was not obliged to travel in any
particular way under the terms of employment nor can it be
said that he was travelling in a transport provided by the
employer.
In the case of Sadgunaben Amrutlal and others v. The
Employees State Insurance Corporation, Ahmedabad (1981 LAB.
I.C 1653), it was held by the Division Bench of the Gujarat
High Court that though as a rule, employment of a workman
did not commence until he reach the place of employment and
did not continue after he has left the place of
employment, the proposition was subject to the theory of
notional extension of the employer’s premises. The notional
extension theory could not be related to the place of
employment only. It could also be taken recourse to in order
to extend the time in a reasonable manner. The court took
the view in the case, where an employee on his way to the
factory died of acute cardiac arrest, that it was caused by
accident arising out of and in course of employment. The
employee was employed as a jobber in the Wrapping Department
of the mill. He worked in the premise from 8 A.M. to 4.30
P.M. On December 22,1974, while was on duty in the mill, he
 SUPREME COURT OF INDIA Page 8 of 10
felt unwell. He took medical treatment on the next day
(December 23,1974) which was an off-day for him. On December
24, 1974, he left his residence at about 7.20 A.M. i.e. 40
minutes before the reporting time. Hi walked a short
distance from his house to the nearest bus stop and was
waiting for a bus to take him to the mill. While waiting for
the bus, he felt unwell. He complained to an ex-employee of
the mill who was also waiting to board the that it was due
to the excessive and strenuous nature of work which he was
required to do at the mill that he was feeling unwell. When
the bus arrived, Amrut Lal, the employee was about to step
into the bus when he collapsed and became unconscious. The
postmortem reavealed that he died of cardiac failure. Both
the Employees Insurance Court and the single Judge of the
High Court held that the employee had not died as a result
of an accident in the course of employment. On appeal, the
Division Bench held that both the Employees Insurance Court
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and the single Judge were in error in holding that the death
was not in course of employment.
It is doubtful whether this decision can be reconciled
with the principle laid down by S. Jafer Imam, J. in the
case of Surashtra Salt Manufacturing Co.(supra). It is also
to be noted that the death was not caused by an accident.
The death was due to acute cardiac failure. The causal
connection between the death and employment had not been
established. Moreover, walking to the bus stop from the
employee’s residence and boarding the bus for going to the
place of work cannot be acts in course of employment.
In the case of Bhagubai v. Central Railway, Bombay,
(1954) L.L.J., a Division Bench of Bombay High Court dealt
with a case where a workman on his way to work was murdered.
There was no evidence to show that he murder was due to any
motive against the deceased workman. It was held that the
death took place because of an accident arising out of
employment. Chagla, C.J. emphasised that there must be a
causal connection between the accident and the death before
it could be said that the accident arose out of employment
of the concerned workman. In that case, the deceased was
employed by Central Railway at Kurla Station and he lived in
the railway quarters adjoining the station. It was found as
a fact that the only access for the deceased from his
quarters to the Kurla railway station was through the
compound of the railway quarters. On December 20,1952, the
decease left his quarters a few minutes before midnight in
order to join duty. While on his way, he was stabbed by some
unknown persons. It is not disputed by the railway company
that the deceased died as a result of an accident nor was it
disputed that the accident arose in the course of his
employment. The dispute was limited to the question whether
the accident arose out of the employment of the deceased.
It is of significance that the deceased used to live in
the railway quarters adjoining the railway station and the
compound through which he had to go the place of work
belonged to the railway company. In other words he died on
the premise belonging to the railways. It was found as a
fact that the stabbing which led to the death was not due
to any personal enmity. That means it was an occupational
hazard of the employee who went to join work at midnight
from the railway quarter to the railway station through the
railway compound. The facts of the case before us are quite
dissimilar to the facts on the basis of which the case of
Bhagubai (supra) was decided.
We were also referred to two American decisions. The
first case is J.J.O’ Leary, Deputy Commissioner Fourteenth
Compensation District, Etc. v. Brown-Pacific-Maxon, Inc., et
 SUPREME COURT OF INDIA Page 9 of 10
al (95 L.ed. 483=340 us 504-510). In this case an employee
of a Government contractor was at a recreation center
maintained by his employer near an ocean shore along which
ran a channel so dangerous for swimmers that its use was
forbidden and signs to that effect erected. On perceiving
that two men standing on a reef beyond the channel were
signalling for help, he undertook with others, to swim the
channel, and was drowned. The Administrative Tribunal found
that the employee’s death arose "out of and in course of his
employment". Six member of the U.S. Supreme Court concurred
with the opinion of Frankfurter J. that the administrative
decision was supported by "substantial evidence" and
therefore was beyond the scope of permissible judicial
review. Minton, J., with whom Jackson and Burton ,JJ. agreed
was of the opinion that the administrative finding was
without any evidence.
This case really is an authority on the scope and
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extent of power of judicial review of an administrative

order. The important fact which was noted in that case was
that the deceased along with other employees had discovered
that third persons who were in danger were in a recreation
area maintained by his employer for the benefit of the
employees. This finding was held to be based on substantial
evidence. Frankfurter, J. observed that "We do not mean that
the evidence compelled this interference; we do not suggest
that when the Deputy Commissioner had decided against the
claim, the court had been justified in disturbing his
conclusion. We hold only that on this record, the decision
of the District Court that the award should not be set aside
should be sustained". In other words, Frankfurter, J. was of
the view that from the evidence on record, either of the
two conclusion could have been drawn. It is well settled
that the Court will not disturb a finding of an
administrative tribunal merely because it could have taken a
contrary view had it heard the case on evidence, when the
view taken by the Tribunal is also a plausible view.
The other American decision is in the case of O’
Keeffe, Deputy Commissioner. v. Smith, Minchman & Grylls
Associates, Inc., et al.(13 L.ed.2d 895). In that case, a
private engineering concern’s employee hired to work in
South Korea on a 365-day basis was drowned while boating on
a South Korea lake. The Deputy Workmen’s Compensation
Commissioner determined that the employee’s death arose out
of and in course of employment so as to entitle his widow
and minor child to death benefits. The decision being
challenged by a writ, a panel of the Court of Appeals for
the Fifth Circuit reversed the award. The Supreme Court held
that there was no scope for reviewing the decision of the
Deputy Commissioner. The Court of Appeal erred in summarily
reversing the judgment. It was observed that "while this
Court may not have reached the same conclusion as the Deputy
Commissioner, it cannot be said that his holding that the
decedent’s death, in a zone of danger, arose out of and in
the course of his employment is irrational or without
substantial evidence on the record as a whole."
Here again, the U.S. Supreme Court declined to
intervene with the decision reached by the Deputy
Commissioner on evidence and reversed the decision of the
Court of Appeal for doing what it should not have done by
adopting what appeared to the Court to be a better view.
We fail to understand how these tow American decision
which really dealt with the scope and extent of judicial
review of a decision based essentially on finding of fact
can come to the aid of the employee in this case.
It has to be borne in mind that this is not a case of
 SUPREME COURT OF INDIA Page 10 of 10
judicial review. The Employees’ State Insurance Act, 1948
provides for reference to the High Court by the statutory
court set up under the Act, any question of law arising out
of its decision (Section 81). There is also a provision for
appeal in certain cases on a substantial question of
law(Section 82).
We are of the view that in the facts of this case, it
cannot be said that the injury suffered by the workman one
kilometer away from the factory while he was on his way to
the factory was caused by an accident arising out of and in
the course of his employment.
In the case of Dover Navigation Company Limited v.
Isabella Craig(1940 A.C 190), it was observed by Lord Wright
that-
"Nothing could be simpler than the
words" arising out of and in the
course of the employment." It is
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clear that there are two condition

to be fulfilled. What arise "in
the course of" the employment is to
be distinguished from what arises "
out of the employment." The former
words relate to time conditioned by
reference to the man’s service. the
latter to causality. Not every
accident which occur to a man
during the time when he is on his
employment, that is directly or
indirectly engaged on what he is
employed to do, gives a claim to
compensation unless it also arises
out of the employment . Hence the
section imports a distinction which
it does not define. The language is
simple and unqualified."
Although the facts of this case are quite dissimilar,
the principle laid down in this case, are instructive and
should be borne in mind. In order to succeed, it has to be
proved by the employee that (1) there was an accident,(2)
the accident had a causal connection with the employment and
(3) the accident must have bee suffered in course of
employment. In the facts of this case, we are of the view
that the employee was unable to prove that the accident had
any causal connection with the work he was doing at the
factory and in any event, it was not suffered in the course
of employment.
The appeal, therefore , succeeds. The judgement dated
25.11.1977 passed by the High Court is set aside. However,
in terms of the order passed by this Court on 16.4.1979, the
appellants will have to bear the costs of this appeal in any
event. The costs are assessed at Rs.3000/- and will be paid
by the appellant to the fist respondent within a period of
four week from date. The first respondent will also be
entitled to retain the money paid to them by the Regional
Director, Employees’ State Insurance Corporation pursuant to
the order of this Court passed on 16.4.1979.