Supreme Court Restores Commissioner Award and Directs Insurer and Employer to Be Jointly Liable for Compensation
A bench of Justice Manoj Misra and Justice Nongmeikapam Kotiswaram Singh heard an appeal by an employer challenging a Calcutta High Court order that modified a Workmen’s Compensation award so as to direct the employer alone to pay compensation with liberty to seek reimbursement from the insurer. The core issue was whether, in proceedings under the Workmen’s Compensation Act, 1923, an insurer could be made a party and be ordered to satisfy compensation that fell within the scope of the insurance contract.
The Supreme Court allowed the appeal, set aside the High Court order and restored the award of the Commissioner, directing that the amount already deposited by the insurer be released to the workman. The Court observed that Section 19 empowered the Commissioner to determine liability and that excluding the insurer from joint and several liability would frustrate the social welfare object of the Act. The Court, in its reasoning, observed: The Court also recorded its displeasure, noting that “we must express our anguish at the practice of Insurance Companies unnecessarily filing appeals by raising technical pleas more so when they do not deny their ultimate liability under the contract of insurance,” and directed costs of Rs.50,000 to be paid by the insurer to the claimant.
Background The workman, employed by the appellant as a driver, claimed compensation under the Workmen’s Compensation Act, 1923, alleging a disabling injury arising out of and in the course of employment. The Commissioner (Workmen’s Compensation) awarded compensation of Rs.2,58,336 with statutory interest at 12% per annum and made an award that ultimately resulted in the insurer depositing the awarded amount. The insurance company appealed to the High Court on a technical ground that the award should have been against the employer alone with liberty to seek reimbursement from the insurer under the insurance contract; the High Court partly allowed that appeal and modified the Commissioner’s order accordingly while affirming the quantum and interest.
The employer challenged the High Court modification before the Supreme Court. The appellant did not dispute coverage under the policy, the right of reimbursement, or the amount awarded; it contended that there was no justification to direct the employer alone to pay when the insurer had accepted contractual liability. The insurer relied on the statutory scheme and prior decisions to contend that, unlike the Motor Vehicles Act, the 1923 Act did not statutorily fasten liability on insurers and that rights between insured and insurer were contractual.
The Supreme Court examined precedent, including Gottumukkala Appala Narasimha Raju and Mahendra Rai, and concluded that Section 19 permitted the Commissioner to determine questions of liability, including liability of an insurer, so as to secure the Act’s remedial purpose. Finding no reason to disturb the Commissioner’s order and noting that the insurer had already deposited the award, the Court restored the Commissioner’s award, directed release of principal and accrued interest to the workman within one month of production of the order, ordered Rs.50,000 costs to be paid by the insurer to the workman within the same period, and directed recovery as per the award if any amount remained unpaid.
Case Details: Case No.: 2025 INSC 1239; Civil Appeal No. 10482/2017 Case Title: Alok Kumar Ghosh v. The New India Assurance Company Ltd. & Anr. Appearances: For the Petitioner(s): Mr. Anand, Adv.; Mr. Abhijit Sengupta, AOR; Mr. Muddam Thirupathi Reddy, Adv.; Mr. Paras Chauhan, Adv.; Mr. N. Mayilsamy, 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.