Supreme Court Expresses Anguish At Insurance Companies Filing Unnecessary Appeals Raising Technical Pleas

The Supreme Court observed that the entire burden of compensating an employee injured during the course of work cannot be shifted onto the employer alone, as the insurer is jointly and severally liable to pay compensation along with the employer.

A bench of Justices Manoj Misra and N. Kotiswar Singh set aside the Calcutta High Court's ruling that had absolved the insurer of liability to compensate the employee along with the employer, despite the existence of an insurance contract that made the insurer liable for such compensation under the Employees' Compensation Act, 1923.

The Commissioner for Workmen's Compensation ordered both the employer and insurer to pay compensation jointly and severally. The Calcutta High Court modified the award, making only the employer liable, who could then seek reimbursement from the insurer, leading to the filing of an instant appeal on the employer's behalf before the Supreme Court, which reversed the High Court, reinstating the Commissioner's order.

“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.”, the court held.

“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.”, the court observed.

Moreover, the Court also expressed concern over the practice of insurance companies filing frivolous appeals on technical grounds to evade their liability under insurance contracts and delay the timely release of the compensation to the beneficiary. A cost of Rs. 50,000/- was imposed on the insurance company for filing frivolous appeal before the High Court.

“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.”, the court said.

The appeal was allowed.

Cause Title: ALOK KUMAR GHOSH VERSUS THE NEW INDIA ASSURANCE COMPANY LTD & ANR.

Citation : 2025 LiveLaw (SC) 1022

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Appearance:

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.