The Supreme Court has voiced clear displeasure with the conduct of insurance companies which, despite acknowledging their contractual liability, often initiate unnecessary appeals on technical grounds to delay or evade paying compensation owed to injured workers. The Court was seized of an appeal concerning a case in which an employer and his insurer were held jointly and severally liable to compensate an employee injured during employment under the Employees’ Compensation Act of 1923. The insurer, via the employer, had appealed a prior High Court decision absolving it of direct liability and sought to escape liability through hyper-technical arguments.
A bench comprising Justices Manoj Misra and N. Kotiswar Singh reversed the High Court’s modification of the Compensation Commissioner’s award, reinstating that both employer and insurer remain jointly accountable. The Supreme Court emphasised that where an insurance contract clearly contemplates indemnification of the employer, the insurer cannot use technical loopholes to undermine that obligation. The Court noted that in this instance there was no dispute regarding the existence of contract, or its coverage, and the insurer had not expressly excluded its liability. Therefore the attempt to evade obligation could not withstand judicial scrutiny.
Beyond the case’s specifics, the Court expressed broader concern about a troubling pattern: insurance companies regularly lodge appeals on peripheral or procedural points even when they do not dispute the core liability. These tactics, the Court held, unjustifiably postpone relief to genuine claimants. The Court said it must register its “anguish” at this practice, especially in matters relating to compensation for injury or death where delay may cause hardship to dependents. In disapproving of this litigation strategy, the Court imposed costs of ₹50,000 on the insurance company responsible for the frivolous appeal.
The Supreme Court stressed that the High Court’s approach in modifying compensation without due regard to Section 19 of the Employees’ Compensation Act ought not to have occurred, particularly when the insurer’s contractual responsibility was undisputed. In doing so, the Supreme Court reinforced the statutory scheme that does not permit insurers to wriggle out of liability by raising subterfuges once a valid contract exists. The Court observed that downstream courts, including High Courts, must guard against being drawn into hyper-technical battles that subvert the purpose of social welfare legislation.
With its decision, the Supreme Court drew a clear line: insurers must honor their contractual commitments in compensation matters and should not exploit procedural or jurisdictional technicalities to frustrate claimants. The order underlines that judicial proceedings in such cases should focus on substantive justice over formalist stratagems, and sets a deterrent tone for insurers contemplating undue litigation tactics.
0 Comments
Thank you for your response. It will help us to improve in the future.