Employer’s Statutory Liability Under the Employees’ Compensation Act: Supreme Court Clarifies Penalty Cannot Be Shifted to Insurer
I. INTRODUCTION: PENAL LIABILITY FOR DELAY UNDER A SOCIAL WELFARE STATUTE The recent judgment of the Supreme Court of India clarifies a crucial issue under the Employees' Compensation Act (formerly the Workmen’s Compensation Act, 1923): who bears the liability to pay penalty for delay in depositing compensation — the employer or the insurer? A bench comprising Justices Aravind Kumar and P.B. Varale held that the statutory obligation to pay compensation within the prescribed period rests squarely upon the employer. Consequently, the penalty imposed under Section 4A for delay cannot be shifted onto the insurance company. The Court reiterated that the Act is a social welfare legislation intended to provide expeditious relief to employees and their dependents, and must be interpreted liberally and purposively. II. FACTUAL MATRIX A. The Accident and Claim The deceased employee was working as a commercial driver. In February 2017, he died while driving the insured vehicle during the cour...