Kolkata: The Supreme Court has set aside a Calcutta High Court order that had absolved an insurance company of direct liability and made the employer solely responsible for paying compensation to an injured workman.
The Bench of Justices Manoj Misra and Nongmeikapam Kotiswar Singh in Alok Kumar Ghosh vs The New India Assurance Co. Ltd. held that when an employer’s liability is covered under a valid insurance policy, the insurer cannot escape direct liability to pay compensation under the Workmen’s Compensation Act, 1923 (now Employees’ Compensation Act).
The case arose after a driver, Alok Kumar Ghosh, sustained serious injuries during the course of employment. The Commissioner for Workmen’s Compensation awarded him Rs 2,58,336 with 12 per cent interest, holding both the employer and insurer liable.
However, the Calcutta High Court modified the award, ruling that the employer alone must first pay the compensation and then seek reimbursement from the insurer. This effectively relieved the insurance company of any immediate obligation to the injured worker. The Supreme Court disagreed, terming the High Court’s approach “contrary to the spirit of social welfare legislation.” The Bench observed that forcing a workman to chase an employer who may not have the means to pay defeats the object of the Act, which seeks to ensure speedy and certain compensation.
Restoring the Commissioner’s award, the apex court directed that the amount deposited by the insurer be released to the claimant within one month, along with accrued interest. It also imposed Rs 50,000 as costs on the insurer for pursuing a technical appeal that delayed payment.
Legal experts said the ruling reaffirms that insurers cannot sidestep direct liability and that employers and insurers share joint responsibility for compensation under the Act.