Alok Kumar Ghosh vs The New India Assurance Company Ltd

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

the High Court at Calcutta1 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 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 Digitally signed by CHETAN ARORA (insured - employer) to pay the compensation 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,

19233 (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

Amrutbhai Modhiya & Anr4; P. J. Narayan v.

Union of India5; and Gottumukkala Appala

Narasimha Raju and others v. National

Insurance Co. Ltd.6 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)