SC – Section 4A(3)(b) of the Employees Compensation Act – Penalty on Insurer

Deceased Sandeep, commercial driver, whole driving the offending vehicle had collapsed and died.

The compensation under the Employees Compensation Act was granted.  Further, the show cause notice was issued for penalty not exceeding of the compensation on the respondent no.4 employer under Section 4A(3)(b) for default in paying the compensation within one month from the due date.

The respondent no.4 did not appear and did not give reply to the notice.   By the order dated 8.2.2021, the Commissioner imposed penalty of 35% i.e. Rs.2,57,838/- on the employer.

The claimants filed appeal for enhancement of compensation and also challenging the order of imposing primary liability to pay compensation on respondent no.4 and not the insurer.

The High Court did not enhance the compensation but set-aside the order to the extent of liability of compensation, interest and penalty of the employer and fastened on the insurer.

whether the High Court has committed an error to fasten the liability of paying the penalty component under Section 4A(3)(b) of the Employees’ Compensation Act, 1923 upon the Appellant-Insurance Company in addition to the compensation and interest component?

Judgment dated of the Supreme Court in Civil Appeal No.174 of 2026 of New India Assurance Co. Ltd  Vs.   Rekha Chaudhary and others