Legal Provisions Involved: Section 4A(3)(a), Section 4A(3)(b) and Section 30 of the Employees’ Compensation Act, 1923. 

Judgement by: Supreme Court of India

Judge/Bench: Justice Aravind Kumar and Justice Prasanna B. Varale

Facts

The deceased was employed as a commercial driver by Respondent No. 4. One day, while driving, he collapsed and was pronounced dead. The legal heirs filed a compensation claim. The Commissioner awarded Rs. 7,36,680/- with 12% interest and imposed a 35% penalty on the employer for delay. The High Court, on the other hand, fastened the entire liability, upon the Insurance Company.

Key Legal Provisions

Section 4A(3)(a), Section 4A(3)(b) and Section 30 of the Employees’ Compensation Act, 1923. 

Issues raised

Whether the Insurance Company can be held liable for penalty under Section 4A(3)(b) of the EC Act?

Arguments of the case

The Appellant argued that the penalty under Section 4A(3)(b) arises from the employer’s personal fault in failing to pay compensation within one month while the Respondent argued that Section 4A does not distinguish between employer and insurer’s liability. The insurer stepped into the shoes of the employer and bears joint and several liability for all components

Judgement

The Supreme Court allowed the appeal, holding that the penalty under Section 4A(3)(b) is the result of personal fault of the employer for defaulting on timely payment. The 1995 amendment severed the penalty from compensation and interest, indicating legislative intent to place penalty liability solely on the employer.

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