Full Judgment Text
REPORTABLE
2025 INSC 1239
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
Civil Appeal No(s). 10482 /2017
ALOK KUMAR GHOSH Appellant
VERSUS
THE NEW INDIA ASSURANCE COMPANY LTD & ANR. Respondent(s)
O R D E R
1. Heard learned counsel for the parties.
2. The present appeal arises from an order of
1
the High Court at Calcutta 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,
st
Workmen’s Compensation (1 Court), West
2
Bengal 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
Signature Not Verified
(insured - employer) to pay the compensation
Digitally signed by
CHETAN ARORA
Date: 2025.10.16
11:18:56 IST
Reason:
and seek reimbursement from the insurer.
1
High Court
2
Commissioner
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,
3
1923 (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
3
1923 Act
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
4
Amrutbhai Modhiya & Anr ; P. J. Narayan v.
5
Union of India ; and Gottumukkala Appala
Narasimha Raju and others v. National
6
Insurance Co. Ltd. have been cited. It has
also been argued that the decision in
Mahendra Rai (supra) is per incuriam as it
overlooked the statutory scheme of the 1923
Act as well as earlier decisions of this
Court interpreting the statutory provisions.
9. We have considered the rival submissions and
have perused the record. In our view, the
short question that arises for our
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 the contract
of insurance?
4
(2006) 5 SCC 192
5
(2006) 5 SCC 200
6
(2007) 13 SCC 446
10. The aforesaid issue is no longer res integra
as it stands answered by this Court in
Gottumukkala Appala Narasimha Raju (supra).
The question that fell for consideration in
Gottumukkala Appala Narasimha Raju (supra)
was whether there could be no award against
the insurer in a proceeding under the 1923
Act. There a claim under the 1923 Act was
made against the tactor owner on death of a
tractor driver by impleading the insurer with
whom the tractor was insured. The
Commissioner awarded compensation holding the
owner and insurer jointly and severally
liable. An appeal was preferred before the
High Court which held that no award could be
passed against the insurer by the
Commissioner. On appeal to this Court, though
this Court did not disturb the decision upon
finding that the deceased was the husband of
the tractor owner and there existed no
employer and employee relationship between
them, it was held:
“21. Thus, if the vehicle is covered by
an insurance, the insurer may be made a
party and it may be liable to indemnify
the owner, but the situation in this case
is entirely different, as would appear
from the discussions made hereinafter.”
11. Section 19 of the 1923 Act, which was
considered in the aforesaid decision,
provides as follows:
Section 19. Reference to Commissioners.-
(1) If any question arises in any
proceedings under this Act as to the
liability of any person to pay
compensation including any question as to
whether a person injured is or is not an
employee or as to the amount or duration
of compensation (including any question
as to the nature or extent of
disablement), the question shall, in
default of agreement, be settled by a
Commissioner.
(2) No civil court shall have
jurisdiction to settle, decide or deal
with any question which is by or under
this Act required to be settled, decided
or dealt with by a Commissioner or to
enforce any liability incurred under this
Act.
12. By relying on Section 19, in Gottumukkala
Appala Narasimha Raju (supra), it was held:
“26. Our attention has been drawn to some
decisions of the High Courts which have
taken different views in regard to the
liability of the insurer to be joined as
a party in a proceeding under the 1923
Act. It is not necessary for us to go
into the correctness or otherwise of the
said decisions, as in our opinion, there
does not exist any bar in the 1923 Act in
this behalf. Section 19 of the 1923 Act
specifically provides that any question
in regard to the liability of a person
who is required to indemnify the employer
must be determined in the proceeding
under the said Act and not by way of a
separate suit. Thus, a question of this
nature should be gone into the proceeding
under the 1923 Act.”
(Emphasis supplied)
13. In our view, the aforesaid decision settles
the issue. Otherwise also, Section 19 of the
1923 Act is clear. It enables the
Commissioner to determine as to who would be
liable to pay the compensation and, therefore,
it can determine the liability of an insurer.
This we say so, because the 1923 Act is a
social welfare legislation. The object of the
Act is not merely to provide compensation but
also to provide a speedy and efficacious
remedy to a workman/ employee, or his or her
dependent, to realize compensation for injury,
or death, suffered by accident arising out of
and in the course of his or her employment.
No doubt, Section 3 of the 1923 Act fixes
liability to pay compensation on an employer
but where the liability of an employer is
covered by a contract of insurance, exclusion
of the insurer from being jointly and
severally liable for payment of the
compensation awarded would have deleterious
effect on the very purpose which the
legislation seeks to achieve and would render
the remedy illusory. This we say so, because
if we hold that the insurer would be liable
only to reimburse the employer, in the event
employer fails to make payment for any reason
whatsoever, including financial incapacity,
question of reimbursement would not arise and
the workman /employee, for whose benefit
legislation has been made, would be left high
and dry. In our view, therefore,
notwithstanding absence of a provision such
as Section 149 of Motor Vehicles Act, 1988 in
the 1923 Act, by virtue of power to determine
liability under Section 19, the Commissioner
would have power to make the insurer jointly
and severally liable with the employer to pay
compensation if the same falls within the
scope of the contract of insurance.
14. A similar issue arose before this Court in
Mahendra Rai (supra). There, on behalf of the
insurance company , a similar plea was raised,
which was rejected while observing as under:
“The learned Counsel for the Insurance
Company submitted that the Commissioner
has no jurisdiction under the Act to
direct the Insurance Company to pay the
compensation; it is the owner who is
liable to pay. However, such submission
cannot be accepted in view of the fact
that the vehicle is insured with the
insurance company and that without giving
any reason the High Court held that the
Insurance Company at the first instance
had no liability to meet the award of
compensation and doubted the
maintainability of the order passed by
the Commissioner. We are of the view that
after such observations already made the
remand of the case will be futile. In
fact, we find no error in the order
passed by the Commissioner under the
Workmen’s Compensation Act, 1923. ”
15. Now, we shall consider the decisions cited by
the learned counsel for the first respondent.
In Harshadbhai Amrutbhai Modhiya (supra), the
issue was whether interest is payable by an
insurer while indemnifying the insured for
the amount of compensation awarded against
him under the 1923 Act. In that context, it
was held by this Court that under the
provisions of the 1923 Act the insurer is not
statutorily liable as is the case under the
Motor Vehicles Act. However, where a contract
of insurance is entered into by and between
the employer and the insurer, the insurer
would be liable to indemnify the employer. It
was also held that as there is no statutory
liability on the insurer, it is open to the
Insurance Company to refuse to insure.
16. In the instant case, there is no dispute that
the insurer has undertaken the liability to
indemnify the insured (i.e., the employer)
and has not contracted out of his liability.
In such circumstances, in our view, the
aforesaid decision is of no help to the first
respondent.
17. In J.P. Narayan (supra), this Court dismissed
a writ petition seeking a direction upon
Insurance Companies to delete the clause in
the Insurance Policy which provided that in
cases of compensation under the 1923 Act, the
Insurance Company will not be liable to pay
interest. While dismissing the writ petition,
this Court held that in absence of statutory
liability, it is a matter of contract between
the Insurance Company and the insured and,
therefore, it is always open to the Insurance
Company to refuse to insure. In our view,
this decision is of no help to the first
respondent as no plea has been set up that
the insurer is not liable to reimburse the
interest amount payable under the claim. In
fact, the first respondent has not even
brought the insurance policy on record.
Besides that, there is no finding of the
Commissioner or the High Court that the
insurance contract excluded liability to pay
interest.
18. In view of the discussion above, in our view,
there was no justification for the High Court
to modify the order of the Commissioner and
shift liability on the employer (the
appellant) alone. Rather, the appropriate
course would have been to make the employer
and the insurer jointly and severally liable.
However, as we are informed that the amount
awarded by the Commissioner has already been
deposited by the insurance company (the first
respondent) in terms of the award, we do not
deem it necessary to modify the award passed
by the Commissioner. Consequently, the appeal
is entitled to be allowed and the award of
the Commissioner restored.
19. Before parting, 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. As the first respondent
unnecessarily filed an appeal before the High
Court and for this reason compensation could
not be timely released in favour of the
second respondent, we deem it appropriate to
compensate the second respondent with costs
of Rs.50,000 to be paid by the first
respondent. In our view, the High Court also
adopted a hyper technical approach and
overlooked the provisions of Section 19 of
the 1923 Act while modifying the award passed
by the Commissioner to the disadvantage of
the employee (i.e., the claimant) when there
was no dispute regarding the liability of the
insurance company under the contract of
insurance.
20. We, accordingly, allow the appeal and set
aside the order passed by the High Court and
restore the award of the Commissioner with a
direction that the amount deposited by the
insurance company shall be released in favour
of the workman (the second respondent) in
terms of the award passed by the Commissioner.
If the amount so deposited has earned
interest, the interest accrued thereon shall
also be released in favour of the second
respondent along with the principal within a
period of one month from the date this order
is produced before the court/ authority
concerned. Costs of Rs.50,000 shall also be
paid by the first respondent to the second
respondent within the 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.
21. Pending applications, if any, shall also
stand disposed of.
………………………………………………………………………….J
[MANOJ MISRA]
……………………………………………………………………………..J
[NONGMEIKAPAM KOTISWAR SINGH]
New Delhi
October 09, 2025
ITEM NO.124 COURT NO.15 SECTION XVI
S U P R E M E C O U R T O F I N D I A
RECORD OF PROCEEDINGS
Civil Appeal No(s). 10482/2017
ALOK KUMAR GHOSH Appellant(s)
VERSUS
THE NEW INDIA ASSURANCE COMPANY LTD & ANR. Respondent(s)
Date : 09-10-2025 This appeal was called on for hearing today.
CORAM :
HON'BLE MR. JUSTICE MANOJ MISRA
HON'BLE MR. JUSTICE NONGMEIKAPAM KOTISWAR SINGH
For 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 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.
UPON hearing the counsel the Court made the following
O R D E R
1. The civil appeal is allowed in terms of the signed order which
is placed on the file.
2. Pending application(s), if any, shall stand disposed of.
(CHETAN ARORA) (CHETNA BALOONI)
ASTT. REGISTRAR-cum-PS COURT MASTER (NSH)