Commissioner Can Hold Insurer Liable for Compensation u/s 19 of Employee’s Compensation Act | SC

Case Details: Alok Kumar Ghosh vs. New India Assurance Company Ltd. - [2025] 179 taxmann.com 515 (SC)

Judiciary and Counsel Details

• Manoj Misra & Nongmeikapam Kotiswar Singh, JJ.
• Anand, Muddam Thirupathi Reddy, Paras Chauhan, N.maylsamy, Deepak Bahl, Advs. & Abhijit Sengupta, AOR for the Appellant.
• Ms Sakshi Mittal, Ms Rajeshri Nivuratirao Reddy, AORs, S L Gupta, Asutosh Sharma, Swathana Bhaarath, Ms Gunjan Sharma, Ms Neeta, Sanjeev Kumar & Ms Shivani Jain, Advs. for the Respondent.

Facts of the Case

In the instant case, the Respondent No.1 -insurer filed an appeal before the High Court against the order of the Commissioner directing it to pay compensation to the workman. The High Court allowed appeal of insurer in part and modified the order of the Commissioner to the extent that the direction to insurer to pay compensation was substituted with a direction to the appellant-employer to pay compensation and seek reimbursement from insurer.

Against the said order, the appellant-employer filed an instant appeal. It was noted that Section 19 of the Employee’s Compensation Act, 1923, enables the Commissioner to determine who would be liable to pay compensation, and therefore, it can determine the liability of an insurer.

Supreme Court Held

The Supreme Court noted that 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 compensation awarded would have a deleterious effect on the very purpose which legislation seeks to achieve and would render the remedy illusory.

The Supreme Court held that, notwithstanding the absence of a provision such as Section 149 of the Motor Vehicles Act, 1988 in 1923 Act, by virtue of the power to determine liability under Section 19 of the Act, the Commissioner would have the power to make insurer jointly and severally liable with employer to pay compensation if the same falls within the scope of contract of insurance.

Thus, the High Court was not justified in modifying the order of the Commissioner and shifting liability to the employer alone.

List of Cases Reviewed

• Order of the High Court at Calcutta in FMA-610-2012, dated 09.04.2015 (para 20) set aside
• New India Assurance Co. Ltd. v. Harshadbhai Amrutbhai Modhiya 2006 taxmann.com 2369 (SC) (para 16)
• P. J. Narayan v. Union of India [2006] 5 SCC 200 (para 17) distinguished

List of Cases Referred to

• Mahendra Rai v. United India Insurance Company Ltd. [Civil Appeal No.6697 of 2014, dated 23-7-2014] (para 7)
• Gottumukkala Appala Narasimha Raju v. National Insurance Co. Ltd. 2007 taxmann.com 1976 (SC) (para 8)
• New India Assurance Co. Ltd. v. Harshadbhai Amrutbhai Modhiya 2006 taxmann.com 2369 (SC) (para 8)
• P. J. Narayan v. Union of India [2006] 5 SCC 200 (para 8).