If personal injury is caused to an employee by accident arising out of and in the course employment his employer shall be liable to pay compensation in accordance with the provisions of this chapter:
Provided that the employer shall not be so liable:-
   a) In respect of any injury which does not result in the total or partial disablement of the employee for a period exceeding three days
  b) In respect of any injury not resulting in death or permanent total disablement caused by an accident which is directly attributable to
The employee having been at the time thereof under the influence of drink or drugs or
The willful removal or disregard by the employee of any safety guard or other device which he know to have been provided for the purpose of securing the safety of employee.

If an employed in any employment specified in part A of schedule III contacts any disease specified therein as an occupational disease peculiar to that employment or if an employee whilst in the service of an less than six months which period shall not include a period of services under ,any other employer in the same kind of employment specified in Part B of Schedule III, contracts any diseases specified therein as an occupational disease peculiar to that employment or if an employee whilst in the service of one or more employers in any employment specified in Part C of Schedule III for such continuous period as the Central Government may specify m respect of each such employment, contracts any disease specified therein as an occupational disease peculiar to that employment, the contracting of the disease shall be deemed to be an injury by accident within the meaning of this section and, unless the contrary is proved, the accident shall be deemed to have arisen out of, and in the course of, the employment:

Provided that if it is proved :-
a) That [an employee] whilst in the service of one or more employers in any employment specified in Part C of Schedule III has contracted a disease specified therein as an occupational disease peculiar to that employment during a continuous period which is less than the period specified under this sub-section for that employment; and
b) That the disease has arisen out of and in the course of the employment, the contracting of such disease shall be deemed to be an injury by accident within the meaning of this section:
Provided further that if it is proved that [an employee] who having served under any employer in any employment specified in Part B of Schedule III or who having served under one or more employers in any employment specified in Part C of the Schedule, for a continuous period specified under this sub-section for that employment and he has after the cessation of such service contracted any disease specified in the said Part B or the said Part C, as the case may be, as an occupational disease peculiar to the employment and that such disease arose out of the employment, the contracting of the disease shall be deemed to be an injury by accident within the meaning of this section.
If [an employee] employed in any employment specified in Part C of schedule III contracts any occupational disease peculiar to that employment, the contracting whereof is deemed to be an injury by accident within the meaning of this section and such employment was under more than one employer, all such employers shall be liable for the payment of the compensation in such proportion as the commissioner may, in the circumstances, deem just.
(3)[The Central Government or the State Government], after giving, by notification in the Official Gazette, not less than three months’ notice of its intention so to do, may, by a like notification, add any description of employment to the employments specified in Schedule III and shall specify in the case of employments so added the diseases which shall be deemed for the purposes of this section to be occupational diseases peculiar to those employments respectively, and thereupon the provision of sub section 2 shall apply in the case of notification by the central government within the territories to which this act extends or in case of notification by the state government within the state as if such diseases had been declared by this act to be occupational diseases peculiar to those employments.
(4)Save as provided by sub-sections (2), (2A) and (3) no compensation shall be payable to an employee in respect of any disease unless the disease is directly attributable to a specific injury by accident arising out of and in the course of his employment.
5. Nothing herein contained shall be deemed to confer any right to compensation on an employee in respect of any if he has instituted in a Civil Court a suit for damages in respect of the injury against the employer or any other person; and no suit for damages shall be maintained by an employee in any court of law in respect of any injury-

a) If he has instituted a claim to compensation in respect of the injury before a commissioner; or
b) If an agreement has been come to between the employee and his employer providing for the payment of compensation in respect of the injury in accordance with the provisions of this Act.
Liability for compensation -

In order to attract sub-section (1) of section 3 three conditions must be fulfilled (a) personal injury; (b) accident; and (c) arising out of and in the course of employment; It is no doubt true that in order to succeed in an application for getting compensation under section 3 the following points are required to be established that-
(1) the accident must arise out of and in the course of the workman’s employment;
(2) there must be causal connection between the injury and the accident and the work done in the course of the employment;
(3) the workman has to say that while doing a part of his duty or incidental thereto it has resulted into an accident. It is necessary that the workman must be actually working at the time of the injury or the accident. Therefore, the three factors, that there must be injury, which must be caused in an accident, it must be caused in the course of and out of the employment must be established;

Meaning of the expression “arising out of employment”
(i) The expression "arising out of employment” means that there must be casual relationship between the accident and the employment. If the accident has occurred on account of the risk which is an incident of employment, it has to be held that the accident has arisen out of the employment; (ii) The words "out of employment" is not limited to mere nature of the employment, but it (arising out of employment) applies to its nature, its conditions and obligations and its incidents. An accident which occurs on account of a risk, which is an incident of employment, then the claim for compensation can succeed provided the workman has not exposed himself to an added peril by his own imprudent act.