Overview
In a significant ruling with wide implications for employer-employee relations and insurance liability, the Supreme Court of India has held that an insurance company cannot be made liable to pay the statutory penalty imposed under Section 4A(3)(b) of the Employees' Compensation Act, 1923. In New India Assurance Co. Ltd. v. Rekha Chaudhary & Others1The judgment, delivered on February 23, 2026, by a bench comprising Justice Aravind Kumar and Justice Prasanna B. Varale, draws a firm line between the contractual obligations of an insurer and the personal accountability of an employer for wilful delay in paying compensation.
The Facts of the Case
The case arose from a tragic incident on February 13, 2017, when Sandeep, a commercial driver employed by one Manoj Kumar, collapsed while driving a Maruti Swift Dzire cab and was pronounced dead upon arrival at hospital. His legal heirs his widow and dependants filed a compensation claim before the Commissioner, Labour Department,
