The Supreme Court held that under the Employee’s Compensation Act, 1923, an insurer can be made a party and held jointly and severally liable for compensation if the employer’s liability is covered by the insurance policy. The Court clarified that Section 19 of the Act empowers the Commissioner to determine the liability of the insurer, ensuring the workman’s remedy is effective and not illusory.
Facts Of The Case:
The case originated from a claim filed by a workman (the second respondent), who was employed as a driver by the appellant, Alok Kumar Ghosh. The workman suffered a disabling injury due to an accident arising out of and in the course of his employment. He filed for compensation under the Workmen’s Compensation Act, 1923, against both his employer (the appellant) and The New India Assurance Company Ltd. (the first respondent), with whom the employer had insured the vehicle. The Commissioner for Workmen’s Compensation awarded compensation of ₹2,58,336 with statutory interest, holding the insurance company liable to pay the amount directly to the workman. The insurer appealed to the Calcutta High Court on the technical ground that the award should have been directed solely against the employer, who could then seek reimbursement from the insurer. The High Court accepted this plea and modified the Commissioner’s order, making the employer primarily liable. Aggrieved by this modification, which shifted the immediate payment burden onto him despite undisputed insurance coverage, the employer appealed to the Supreme Court.
Procedural History:
The procedural history of this case began with the workman filing a claim under the Workmen’s Compensation Act, 1923, before the Commissioner in West Bengal. The Commissioner, in 2011, awarded compensation and held the insurance company directly liable to pay the workman. The insurer then appealed to the Calcutta High Court, which, in 2015, modified the order to make the employer primarily liable, with a right to seek reimbursement from the insurer. Dissatisfied, the employer appealed to the Supreme Court, which heard the matter and, in its 2025 judgment, allowed the appeal, set aside the High Court’s order, and restored the Commissioner’s original award, thereby reinstating the joint and several liability of the insurer
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Court Observation:
The Supreme Court made several key observations in its judgment. It emphasized that the Employee’s Compensation Act, 1923, is a social welfare legislation designed to provide a speedy and efficacious remedy to workers. The Court held that Section 19 of the Act empowers the Commissioner to determine who is liable to pay compensation, which includes the liability of an insurer if the employer’s risk is covered by an insurance policy. The Bench observed that excluding the insurer from joint and several liability would defeat the purpose of the Act, as it would leave the worker without recourse if the employer failed to pay. It rejected the insurer’s technical plea, noting there was no dispute over the policy coverage, and criticized both the insurer for unnecessary litigation and the High Court for adopting a hyper-technical approach that overlooked the beneficial intent of the statute.
Final Decision & Judgement:
The Supreme Court allowed the employer’s appeal and set aside the order of the Calcutta High Court. It restored the original award passed by the Workmen’s Compensation Commissioner, thereby holding the insurance company (The New India Assurance Company Ltd.) jointly and severally liable with the employer for the compensation amount. The Court directed that the amount already deposited by the insurer be released to the workman, along with any accrued interest, within one month. Additionally, imposing costs for the unnecessary litigation, the Court ordered the insurance company to pay ₹50,000 to the workman for the delay caused by its technical appeal. The judgment affirmed that the Commissioner has the authority to fasten direct liability on the insurer under the contract of insurance to ensure the workman receives an effective and timely remedy.
Case Details:
Case Title: Alok Kumar Ghosh vs. The New India Assurance Company Ltd. & Anr. Civil Appeal No(s). 10482 of 2017 Date of Judgment: October 09, 2025 Judges/Justices Name: Justice Manoj Misra and. Justice Nongmeikapam Kotiswar Singh
Download The Judgement Here