30 July 2025 Legal Updates

FATAL ACCIDENT DURING WORK COMMUTE COVERED UNDER EMPLOYEE COMPENSATION ACT: SUPREME COURT

(a) Case Title:

• Daivshala & Ors. v. Oriental Insurance Company Ltd. & Anr.

(b) Court:

• Supreme Court of India

(c) Date of Decision:

• 28th July 2025

(d) Bench:

• Justice Manoj Misra and Justice K.V. Viswanathan

Key Facts

The deceased Shahu Sampatrao Jadhavar, was employed as a night watchman in a sugar factory with duty hours between 3:00 AM to 11:00 AM. On 22nd April 2003, while proceeding to work on his motorcycle, he met with a fatal accident 5 km away from the factory as a result of which he lost his life. He left behind a widow, four children, and his mother.

Legal Issues

Whether an accident occurring while commuting to work can be considered as "arising out of and in the course of employment" under the Employees' Compensation Act, 1923?

Lower Court Decisions

1. Commissioner's Decision:

• Awarded ₹3,26,140/- with 12% interest, holding that the accident arose out of and in the course of employment

2. High Court Decision:

• Reversed the Commissioner's order, relying on Francis De Costa case, ruling that accidents while commuting to work don't arise from employment

Supreme Court's Analysis

Key Legal Principles Established:

1. Beneficial Legislation:

• Both Employees' Compensation Act (EC Act) and Employees' State Insurance Act (ESI Act) are social welfare legislations requiring liberal interpretation

2. Retrospective Application:

• Section 51E of ESI Act (enacted 01.06.2010) is clarificatory in nature and applies retrospectively to accidents before its enactment

3. Statutes in Pari Materia:

• EC Act and ESI Act deal with similar subject matter and should be interpreted harmoniously

4. Theory of Notional Extension:

• Employment doesn't strictly begin and end at workplace premises but extends to reasonable areas of approach

Section 51E of ESI Act (Key Provision):

"An accident occurring to an employee while commuting from his residence to the place of employment for duty... shall be deemed to have arisen out of and in the course of employment if nexus between the circumstances, time and place in which the accident occurred and the employment is established."

Supreme Court's Reasoning

Section 51E was enacted to resolve long-standing judicial confusion about commuting accidents. It established that if there's a clear connection between accident circumstances and employment, compensation should be awarded.

Final Decision

The Court held that the accident arose out of and in the course of employment. A clear nexus existed between the accident and employment (night watchman proceeding dutifully to work). The Commissioner's award of compensation was justified. The High Court judgment set aside; Commissioner's order was restored.

SIMPLICITY NO BAR TO PATENTABILITY, EVEN SIMPLE CHANGES CAN LEAD TO NEW INVENTIONS: DELHI HIGH COURT

(a) Court:

• High Court of Delhi at New Delhi

(b) Date of Decision:

• July 1, 2025

(c) Bench:

• Hon'ble Ms. Justice Mini Pushkarna

Brief Facts

Dong Yang PC, Inc. (appellant) filed a patent application in 2013 for a "Vertical Rotary Parking System" - a mechanism to park multiple vehicles in narrow spaces. The Controller of Patents and Designs rejected the application in April 2024, citing lack of inventive step compared to the appellant's own prior patent from 2003.

Key Issues

• Whether the claimed invention demonstrated sufficient inventive step over prior art?
• Whether the Controller's rejection based on "workshop modification" was justified?
• Whether the appellant's amendment application should have been allowed?

Patent Office's Reasoning (Rejected)

The invention merely interchanged male and female coupling elements between suspension chain and pull gear compared to Appellant’s patent from 2023. This was considered a "workshop modification" without technical advancement. The changes were obvious to a person skilled in the art. Amendment application was rejected.

Court's Analysis and Findings

1. Inventive Step Assessment

Simplicity is no bar to patentability - even simple inventions can be patentable if novel and non-obvious. The Controller failed to demonstrate how the modification was obvious or lacked technical expertise. There was a 10-year gap between the 2003 patent and current application (2013) suggested non-obviousness.

2. "Workshop Modification" Finding Flawed

Controller's determination lacked supporting evidence. There were no authoritative documents supported the "mere workshop modification" conclusion. The Appellant provided technical evidence showing reduced friction, lower noise, and enhanced safety.

3. Common General Knowledge

The Controller invoked "common general knowledge" without substantiation. There was no specific source or reference provided for such knowledge. The Court emphasized that claims of common general knowledge must be proven with specific sources.

4. Amendment Rights Violated

The 2003 Patent was not cited in First Examination Report (FER). When it was introduced later, appellant had right to respond through amendments. Refusing amendment application violated principles of natural justice. Amendments are permissible even at appellate stage if within original scope.

Court's Decision

The Court allowed the appeal and directed a fresh hearing to be granted to the appellant to present his patent application.

Key Legal Principles Established

• Simplicity ≠ Non-patentability: Simple inventions can be patentable if they demonstrate novelty and non-obviousness
• Time Gap Test: Long gap between prior art and invention suggests non-obviousness
• Common General Knowledge: Must be substantiated with specific sources and evidence
• Amendment Rights: Applicants have right to amend specifications when new prior art is introduced, even if it belongs to them
• Natural Justice: Fair opportunity must be given to respond to objections based on newly cited prior art

VENUE IS CONSTRUED AS SEAT IN ABSENCE OF CONTRARY INDICIA, IF ARBITRATION AGREEMENT ONLY MENTIONS 'VENUE': ALLAHABAD HC

(a) Case Title:

• Devi Prasad Mishra vs. M/S Nayara Energy Limited (Earlier Essar Oil Limited)

(b) Court:

• Allahabad High Court, Lucknow Bench

(c) Date of Decision:

• 15th July, 2025

(d) Bench:

• Hon'ble Justice Jaspreet Singh

Key Facts

A franchisee agreement was executed between Essar Oil Ltd. (later taken over by Nayara Energy Ltd.) and Devi Prasad Mishra in 2018 for establishing a petrol pump in District Amethi, UP. The petitioner invested ₹1.5 crores but the dealership was terminated by Nayara Energy in August 2023. When the petitioner invoked arbitration and requested appointment of an arbitrator, the respondent did not respond. The petitioner then approached the Allahabad High Court under Section 11(6) of the Arbitration & Conciliation Act, 1996 seeking appointment of a sole arbitrator.

Legal Issue

Whether the Allahabad High Court has territorial jurisdiction to appoint an arbitrator when the arbitration agreement specifies Mumbai as the place of arbitration proceedings and contains an exclusive jurisdiction clause favouring Mumbai courts?

Petitioner's Contentions:

Parties had not agreed to fix the 'seat' of arbitration at Mumbai. The Agreement only mentions Mumbai as 'venue', not 'seat'. The Exclusive jurisdiction clause refers only to non-arbitrable disputes. Since no cause of action accrued in Mumbai, parties cannot confer jurisdiction on Mumbai courts. Dealership was in Amethi (UP), giving Allahabad High Court jurisdiction.

Respondent's Contentions:

Parties had agreed that arbitration proceedings would be held in Mumbai. Clause 22 provided exclusive jurisdiction to Mumbai courts only. The combined effect of arbitration clause and exclusive jurisdiction clause makes Mumbai the 'seat' of arbitration. Only Mumbai courts have jurisdiction to appoint arbitrator.

Court's Analysis and Legal Principles

The court applied the three-condition test from B.G.S. S.G.S. Soma JV v. NHPC Limited (2020) to determine if 'venue' constitutes 'seat':

• Single Place Designation: Agreement should mention only one place
• Anchoring of Proceedings: Arbitral proceedings must be fixed to that place alone
• No Contrary Indicia: No significant contrary indicators showing it's merely venue

Relevant Arbitration Clauses:

• Clause 21: "The arbitration proceedings shall be held in Mumbai and shall be conducted in English language"
• Clause 22: "shall be subject to the exclusive jurisdiction of the courts at Mumbai only"

Court's Decision and Reasoning

1. Findings:

• Mumbai as Seat: The agreement clearly designated Mumbai as the place where arbitration proceedings would be held
• Exclusive Jurisdiction: Clause 22 vested exclusive jurisdiction in Mumbai courts
• No Contrary Indicia: No other clause suggested any other court could have jurisdiction
• Anchoring Effect: All arbitral proceedings were anchored to Mumbai

2. Final Order:

• The petition was dismissed for lack of territorial jurisdiction, with liberty granted to the petitioner to approach the jurisdictional High Court at Mumbai.

Key Legal Principles

1. Seat vs. Venue Distinction:

• When parties designate a single place for arbitration proceedings with exclusive jurisdiction clause, it constitutes 'seat' even if termed as 'venue'

2. Exclusive Jurisdiction Effect:

• Once 'seat' is determined, it operates like an exclusive jurisdiction clause, vesting sole authority in courts of that place

3. Territorial Jurisdiction in Arbitration:

• Unlike regular civil suits, arbitration allows parties to choose neutral venues that may not have traditional cause of action connections

4. Judicial Precedence:

• Recent Supreme Court decisions have moved away from 'closest connection test' to party autonomy in determining arbitration seat