Failure To Follow Binding Precedents Gives Rise To Substantial Question Of Law In ESI Act Appeals: Kerala High Court
The Kerala High Court recently held that a failure to follow binding precedents by the Employees' Insurance courts would give rise to a substantial question of law in ESI appeals. [2026 LiveLaw (Ker) 455]
The Bench of Justice S. Manu held:
“the EI Court has not analysed the dispute in tune with the law laid down in the judgment referred above and hence the impugned judgment cannot be sustained. Failure to follow the law laid down in the binding judgments give rise to a substantial question of law…”
The Court was considering an appeal filed by the Employees' State Insurance (ESI) Corporation challenging a judgment of the EI Court, which ruled in favour of an insured toddy tapper.
The toddy tapper/respondent met with an accident, which resulted in an injury diagnosed as “Stable Compression Fracture L2” and he was treated as an in-patient for more than a week. He was referred to the Medical Board on three occasions to assess the loss of earning capacity and it was assessed at 20%.
Challenging this, the respondent came before the EI court. He contended that the loss of earning capacity ought to have been fixed at 100%. The ESI Corporation argued that the Medical Board was the competent authority to decide on loss of earning capacity and its decision was in tune with the ESI Act, Rules and Regulations.
Referring to a medical certificate issued by the Medical Board of General Hospital certifying loss of earning capacity as 100%, the EI court was of the view that finding of the ESI Medical Board was unrealistic. The EI court ruled in favour of the respondent and held that he was entitled to get Permanent Disability Benefit (PDB) for 100% disability.
Assailing the judgment, the ESI Corporation came before the High Court and contended that the binding precedents were not following while deciding the case. It referred to E.S.I Corporation v. Pushkaran [1993 (2) KLT 187] and another recent decision in Ins.Appeal No. 27/2020.
The Corporation further contended that as per the medical evidence, the respondent is not incapacitated to do any work, he just became disabled to do the job that he was performing at the time of the employment injury.
The respondent, on the other hand, submitted that the Corporation took no efforts to cross-examine him or to adduce evidence to show that he was capable of doing any other work. She distinguished the afore judgment on this ground.
After hearing the parties, the Court looked in detail into the afore judgment as well as a Full Bench decision in Vanajakshan v. Joseph [2003 (2) KLT 462], which had held that compensation has to be determined considering loss of earning capacity and the loss of ability to perform the job that he was during at the time of the accident.
Since the law laid down in the afore decision was not considering by the EI court while deciding the case, the Court felt that the same required interference. However, the respondent sought an opportunity to adduce evidence showing that he has actually become incapable of performing any physical labour.
Considering all the aspects, the Court was of the view that the matter can be remitted to the EI court for fresh consideration. It thus set aside the impugned judgment and directed the EI court to try to pass fresh orders within 6 months after the parties appear before it.
Case No: Ins.App No. 13 of 2021
Case Title: ESI Corporation v. Mohandas
Citation: 2026 LiveLaw (Ker) 455
Counsel for the appellant: Adarsh Kumar - Additional Standing Counsel - E.S.I. Corporation, Shashank Devan
Counsel for the respondent: Manu Govind, A. Jayasankar