Supreme Court Raps Insurance Companies For Filing Unnecessary Appeals On Technical Grounds

This observation came while deciding an appeal filed by an employer against a Calcutta High Court order that had modified a compensation award under the Employees' Compensation Act, 1923.

A Bench of Justice Manoj Misra and Justice Nongmeikapam Kotiswar Singh, while making the observation, remarked that “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.”

Advocate Abhijit Sengupta, AOR, represented the appellants, while Advocate Sakshi Mittal, AOR, represented the respondents.

Background

The matter arose from an accident involving an employee who had sustained a disabling injury in the course of employment. The Commissioner for Workmen’s Compensation directed both the employer and the insurer to pay compensation jointly.

However, the insurer filed an appeal before the Calcutta High Court, contending that the award should have been issued against the employer alone, who could then seek reimbursement from the insurer. The High Court accepted this technical argument and altered the award accordingly.

Aggrieved, the employer approached the Supreme Court, arguing that the insurer’s appeal was frivolous and had delayed payment of compensation to the workman.

Court’s Observation

Stating that “the first respondent unnecessarily filed an appeal before the High Court”, the Supreme Court expressed its disapproval of this practice by the Insurance companies where they file technical appeals when their liability under the contract of the insurance is undeniable.

The Bench noted that such appeals undermine the social welfare intent of the Workmen’s Compensation Act, which aims to ensure speedy and effective relief to injured employees. In the matter at hand, the Bench observed that it was for this reason that “compensation could not be timely released in favour of the second respondent.”

The Apex Court further held that the Calcutta High Court had also erred in adopting “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 Bench observed that there was no justification for the Calcutta High Court to modify the order of the Commissioner and shift liability on the employer alone, while clarifying that "the appropriate course would have been to make the employer and the insurer jointly and severally liable."

As a corrective measure, the Apex Court imposed costs of ₹50,000 on the insurer for causing a delay in disbursement and restored the Commissioner’s original award directing joint liability of the employer and insurer.

Conclusion

Allowing the appeal, the Supreme Court restored the compensation award passed by the Commissioner and ordered the immediate release of the deposited amount with accrued interest to the workman.

The insurer was further directed to pay ₹50,000 in costs for needlessly prolonging the litigation.

Cause Title: Alok Kumar Ghosh v. The New India Assurance Company Ltd. & Anr. (Neutral Citation: 2025 INSC 1239)

Appearances

Appellant: Advocates Anand, Abhijit Sengupta, Muddam Thirupathi Reddy, Paras Chauhan, N. Maylsamy, and Deepak Bahl

Respondent: Advocates Sakshi Mittal, S.L. Gupta, Asutosh Sharma, Swathana Bhaarath, Gunjan Sharma, Neeta, Sanjeev Kumar, Rajeshri Nivuratirao Reddy, Shivani Jain

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