1. Claim for compensation under the Employee's Compensation Act, 1923 — Dispute over whether the insurer can be directly held liable for payment. (Para 2 , 3 )
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2025 Supreme(SC) 1822
SUPREME COURT OF INDIA
Manoj Misra, Nongmeikapam Kotiswar Singh, JJ.
Alok Kumar Ghosh – Appellant
Versus
The New India Assurance Company Ltd & Anr. – Respondents
Civil Appeal No(s). 10482 of 2017
Decided On : 09-10-2025
Advocates appeared:
For the Appellant(s) : Mr. Anand, Adv. Mr. Abhijit Sengupta, AOR Mr. Muddam Thirupathi Reddy, Adv. Mr. Paras Chauhan, Adv. Mr. N.maylsamy, Adv. Mr. Deepak Bahl, Adv.
For the Respondent(s): Ms. Sakshi Mittal, AOR Mr S L Gupta, Adv. Mr Asutosh Sharma, Adv. Mr Swathana Bhaarath, Adv. Ms Gunjan Sharma, Adv. Ms Neeta, Adv. Mr Sanjeev Kumar, Adv. Ms. Rajeshri Nivuratirao Reddy, AOR Ms. Shivani Jain, Adv.
For the Appellant(s) : Mr. Anand, Adv. Mr. Abhijit Sengupta, AOR Mr. Muddam Thirupathi Reddy, Adv. Mr. Paras Chauhan, Adv. Mr. N.maylsamy, Adv. Mr. Deepak Bahl, Adv.
For the Respondent(s): Ms. Sakshi Mittal, AOR Mr S L Gupta, Adv. Mr Asutosh Sharma, Adv. Mr Swathana Bhaarath, Adv. Ms Gunjan Sharma, Adv. Ms Neeta, Adv. Mr Sanjeev Kumar, Adv. Ms. Rajeshri Nivuratirao Reddy, AOR Ms. Shivani Jain, Adv.
IMPORTANT POINT
Injury suffered in course of employment – Insurer would be liable only to reimburse employer, in the event employer fails to make payment for any reason.
Headnote:
Workmen’s Compensation Act, 1923 [Now, Employee’s Compensation Act, 1923)] – Sections 3 and 19 – Disabling injury suffered in course of employment – Compensation of Rs. 2,58,336 with 12% statutory interest awarded by Commissioner – Insurer would be liable only to reimburse employer, in the event employer fails to make payment for any reason whatsoever, including financial incapacity, question of reimbursement would not arise and workman /employee, for whose benefit legislation has been made, would be left high and dry – Notwithstanding absence of a provision such as Section 149 of Motor Vehicles Act, 1988 in 1923 Act, by virtue of power to determine liability under Section 19, Commissioner would have power to make Insurer jointly and severally liable with employer to pay compensation if the same falls within scope of contract of insurance – In instant case, Insurer has undertaken liability to indemnify Insured (Employer) and has not contracted out of his liability – There is no finding of Commissioner or High Court that insurance contract excluded liability to pay interest – There was no justification for High Court to modify order of Commissioner and shift liability on employer (Appellant) alone – Rather, appropriate course would have been to make employer and Insurer jointly and severally liable – However, amount awarded by Commissioner has already been deposited by Insurance Company – Award of Commissioner restored. (Paras 13, 16, 17, 18, 19 and 20)
Facts of the case:
Short question that arises for consideration is:
Whether in a proceeding initiated under the 1923 Act for compensation payable under the said Act, Insurer could be made a party respondent? If yes, whether compensation can be awarded against it if otherwise admissible under contract of insurance?
Findings of Court:
Costs of Rs.50,000 shall also be paid by the first respondent to the second respondent within same period. If the compensation amount has not been deposited or some amount remains to be deposited, the same shall be recovered in terms of Commissioner’s award.
Result : Appeal allowed.
Legal Category Hierarchy
Table of Contents
2. Whether the insurer is statutorily liable to pay compensation directly or only liable to indemnify the employer under the contract of insurance. (Para 7 , 8 )
3. The Act is social welfare legislation; requiring reimbursement only would render the remedy illusory if the employer is financially incapable. (Para 13 , 19 )
4. Under Section 19 of the 1923 Act, the Commissioner can make the insurer jointly and severally liable with the employer if covered by insurance. (Para 10 , 12 , 13 )
5. Appeal allowed — High Court order set aside — Commissioner's award restored — Insurer directed to pay costs to the workman. (Para 18 , 20 )
6. Can an insurance company be made a party respondent in proceedings under the Employee's Compensation Act, 1923?
Yes. Section 19 of the Act allows the Commissioner to settle any question regarding the liability of any person to pay compensation, and there is no bar to impleading the insurer. (Para 10 , 11 , 12 )
7. Can the Commissioner award compensation directly against the insurer under the 1923 Act?
Yes. If the liability is covered by a contract of insurance, the Commissioner can make the insurer jointly and severally liable with the employer to ensure a speedy and efficacious remedy for the employee. (Para 13 )
8. Does the absence of a provision similar to Section 149 of the Motor Vehicles Act, 1988, prevent the insurer from being held liable?
No. Despite the absence of such a specific provision, the Commissioner's power to determine liability under Section 19 enables making the insurer jointly and severally liable if the risk is covered by insurance. (Para 13 )
ORDER :
1. Heard learned counsel for the parties.
2. The present appeal arises from an order of the High Court at Calcutta1[High Court] dated 09.04.2015 whereby the appeal of the first respondent (insurer - the insurance company) was allowed in part and the order of the Commissioner, Workmen’s Compensation (1st Court), West Bengal2[Commissioner] dated 04.03.2011, in Claim Case No. 12/2006, was modified to the extent that direction to the insurer (the first respondent) to pay the compensation to the workman (the second respondent) was substituted with a direction to the appellant (insured - employer) to pay the compensation and seek reimbursement from the insurer. However, while doing so, the order of the Commissioner awarding compensation of Rs. 2,58,336 with statutory interest of 12% per annum to the workman was affirmed.
3. Record reflects that the second respondent, employed as driver of the appellant, made a claim, under the Workmen’s Compensation Act, 19233[1923 Act] (now known as Employee’s Compensation Act, 1923), against the appellant and the first respondent for compensation, by alleging, inter alia, that claimant suffered a disabling injury by accident arising out of and in the course of employment. Based on the pleadings of the parties, Commissioner framed multiple issues for consideration. One of them, namely, issue no.4, being as to whether insurance company is liable to pay compensation. The said issue was decided against the insurance company upon finding that the risk was covered under the certificate of insurance issued by the first respondent to the appellant.
4. Against the order of the Commissioner, the insurance company (the first respondent herein) filed an appeal before the High Court on a technical ground that the award should have been against the employer (i.e., the appellant herein) with liberty to the employer to seek reimbursement from the insurer under the contract of insurance.
5. High Court accepted the aforesaid plea and, accordingly, modified the order of the Commissioner in terms supra.
6. Aggrieved by the order of the High Court, the employer is in appeal before us.
7. The submission on behalf of the appellant is that there is no dispute regarding the claim being covered by the contract of insurance. Further, there is no dispute regarding appellant’s right of reimbursement; and there is no challenge to the amount of compensation awarded. In such circumstances, there was absolutely no justification for the High Court to modify the award in the aforesaid terms. Additionally, it has been argued that the High Court erroneously brushed aside the decision of this Court in Mahendra Rai vs. United India Insurance Company Ltd. & Anr. (Civil Appeal No.6697 of 2014, decided on July 23, 2014), where a similar plea raised on behalf of the insurance company was rejected.
8. Per contra, the learned counsel for the first respondent (insurance company) supported the decision of the High Court by submitting, inter alia, that the 1923 Act imposes liability on the employer; and there is no provision therein for compulsory insurance or fastening liability on the insurer to satisfy judgment and awards against persons insured, as is there in Section 149 of MOTOR VEHICLES ACT , 1988. Hence, rights of insured and insurer are governed by the contract of insurance, which is to indemnify the insured, and therefore, the claimant would have no right to directly claim compensation from the insurer. As a result, the appropriate course for the Commissioner is to award compensation against the employer only, who may seek reimbursement from the insurer in terms of the contract of insurance. In support of his submissions, decisions of this Court in New India Assurance Co. Ltd. v. Harshadbhai Amrutbhai Modhiya & Anr., (2006) 5 SCC 192; P. J. Narayan v. Union of India , (2006) 5 SCC 200; and Gottumukkala Appala Narasimha Raju and others v. National Insurance Co. Ltd. , (2007) 13 SCC 446 have been cited. It has also been argued that the
