Section 19 Empowers Commissioner to Fasten Joint and Several Liability on Insurer Under the Employees’ Compensation Act Where Risk Is Covered

1. Introduction

Alok Kumar Ghosh v. The New India Assurance Company Ltd & Anr. (2025 INSC 1239, decided on 09.10.2025) concerns whether, in proceedings under the Workmen’s Compensation Act, 1923 (now the Employees’ Compensation Act, 1923), an insurer can be impleaded and made liable to pay compensation directly to the employee when the employer’s liability is covered by insurance.

The appellant was the employer/insured. The first respondent was the insurer. The second respondent was the workman/employee (a driver) who suffered a disabling injury in an accident arising out of and in the course of employment.

The Commissioner awarded compensation of Rs. 2,58,336 with 12% statutory interest and held the insurer liable on the finding that the risk was covered. The Calcutta High Court, however, modified the award on a “technical” basis—directing the employer to pay first and then seek reimbursement from the insurer—while keeping the quantum intact. The employer appealed to the Supreme Court.

2. Summary of the Judgment

The Supreme Court set aside the High Court’s modification and restored the Commissioner’s award.
It held that, by virtue of Section 19 of the 1923 Act and the Act’s social-welfare object, the Commissioner can determine the insurer’s liability and (where coverage exists) make the insurer jointly and severally liable with the employer for payment to the employee.
Since the insurer had already deposited the award amount, the Court directed release to the workman (including accrued interest on deposit), within one month.
The Court imposed costs of Rs. 50,000 on the insurer for raising unnecessary technical objections and delaying disbursement.

3. Analysis

3.1 Precedents Cited

(a) Gottumukkala Appala Narasimha Raju and others v. National Insurance Co. Ltd.

This decision is treated as dispositive. The Court extracted and relied on the proposition that there is no bar under the 1923 Act to impleading the insurer and that Section 19 contemplates determination, within the same proceeding, of the liability of a person who is required to indemnify the employer.

The present Court draws two key implications from the quoted passages:

Procedural permissibility: the insurer may be made a party in a 1923 Act claim.
Adjudicatory competence: the Commissioner can decide questions relating to the insurer’s obligation to indemnify, and therefore can determine the insurer’s liability for satisfying the award when the contract covers the risk.

(b) Mahendra Rai v. United India Insurance Company Ltd. & Anr.

The appellant relied on this case because it had rejected the contention that the Commissioner lacks jurisdiction to direct the insurer to pay. The insurer attempted to neutralize it by arguing that Mahendra Rai is per incuriam.

The Supreme Court did not accept the insurer’s attempt to downgrade Mahendra Rai. Instead, it treated the reasoning in Gottumukkala Appala Narasimha Raju and the text of Section 19 as settling the matter, and noted that Mahendra Rai had rejected a similar insurer plea on comparable facts where insurance coverage existed.

(c) New India Assurance Co. Ltd. v. Harshadbhai Amrutbhai Modhiya & Anr.

The insurer cited this case to stress the absence of a statutory analogue to Section 149 of the Motor Vehicles Act, 1988, and to argue that the insurer’s role is merely contractual indemnity (reimbursement to the employer).

The Court distinguished it on its own terms: Harshadbhai Amrutbhai Modhiya concerned whether an insurer must bear interest as part of indemnification. Here, there was no dispute that the insurer had undertaken indemnity for the covered risk, nor was there any demonstrated contractual exclusion relevant to payment of the award as framed by the Commissioner.

(d) P. J. Narayan v. Union of India

This case was invoked to reinforce that, absent statutory compulsion, insurance terms are contractual and insurers can refuse to insure or set terms. The Supreme Court found it inapposite because (i) the insurer did not even place the policy on record, and (ii) there was no finding (nor sustained plea) that the policy excluded liability for interest or otherwise limited coverage in a manner relevant to the award.

3.2 Legal Reasoning

Framing of the core question: The Court identified the real issue as whether the insurer can be made a party in 1923 Act proceedings, and whether compensation can be awarded against it when admissible under the insurance contract.
Textual anchor—Section 19 of the 1923 Act: Section 19 empowers the Commissioner to settle “any question” as to liability of any person to pay compensation. The Court reads this broadly enough to include an insurer where the insurer’s liability arises because it has contracted to cover the employer’s statutory liability.
Purposive interpretation (social-welfare lens): The Court emphasizes that the 1923 Act is a social welfare legislation aimed at speedy and efficacious realization of compensation. If the insurer were relegated to a mere reimbursement role, the remedy could become illusory whenever the employer cannot pay (e.g., financial incapacity), leaving the employee “high and dry.”
Answer to the “no Section 149” argument: The insurer argued that unlike motor accident claims, the 1923 Act lacks an express provision like Section 149 of the Motor Vehicles Act, 1988. The Court’s answer is functional: even without Section 149, Section 19 supplies adjudicatory power to determine who must pay in the proceeding, and the Act’s purpose supports fastening joint and several liability on the insurer where coverage is admitted/found.
Critique of hyper-technical appellate interference: Since (i) coverage was not disputed, (ii) the employer’s reimbursement right was not disputed, and (iii) quantum was not challenged, the High Court’s shifting of “first instance” liability to the employer was held unjustified—especially because it operated to the claimant’s disadvantage and delayed payment.
Costs as a deterrent: The Court explicitly deprecated the practice of insurers filing appeals on technical pleas while not denying ultimate liability, and granted costs to compensate for delay and discourage such litigation conduct.

3.3 Impact

Claimant-protective enforcement model: The decision strengthens a payment architecture in employees’ compensation claims whereby, if coverage exists, the insurer can be directed to satisfy the award (jointly and severally with the employer), reducing the risk that compensation becomes uncollectible.
Expanded practical utility of Section 19: Section 19 is affirmed not merely as a forum-allocating provision, but as a substantive-enabling provision for determining insurer liability within the same proceeding—minimizing multiplicity of proceedings.
Limits on “reimbursement only” arguments: Insurers may find it harder, in covered-risk cases, to insist on an award solely against the employer with reimbursement as the only route—particularly where such an approach delays or jeopardizes payment to the workman.
Litigation behaviour signal: The imposition of costs (and strong language on “unnecessary” technical appeals) signals potential judicial intolerance toward dilatory tactics that postpone disbursement in welfare statutes.

4. Complex Concepts Simplified

Section 19 (Employees’ Compensation Act, 1923): A provision that gives the Commissioner power to decide disputes about liability and quantum in compensation proceedings and bars civil court jurisdiction over those questions. Here, it is treated as enabling determination of insurer liability where the insurer indemnifies the employer.
Indemnity (insurance context): A contractual promise by the insurer to cover the insured’s liability, typically by paying amounts the insured becomes legally obliged to pay. The Court treats this as capable of supporting direct satisfaction of the award to protect the employee where coverage is established.
Joint and several liability: Both employer and insurer can be held responsible for the full amount, allowing the claimant to recover from either. Between themselves, the employer-insurer relationship may still be adjusted by the insurance contract.
Per incuriam: A label sometimes used to argue that a prior decision should not be followed because it ignored binding law or precedent. The insurer attempted to use this against Mahendra Rai, but the Court resolved the issue via Section 19 and Gottumukkala Appala Narasimha Raju, and did not accept the insurer’s effort to avoid liability on that basis.
“No longer res integra”: A phrase meaning the issue is already settled by precedent. The Court uses it to indicate that Gottumukkala Appala Narasimha Raju has already answered the central question.

5. Conclusion

This judgment cements a claimant-centric rule in employees’ compensation litigation: when the employer’s statutory liability is covered by insurance, the insurer may be impleaded and, by virtue of Section 19 and the welfare purpose of the Act, can be held jointly and severally liable to satisfy the compensation award. It rejects hyper-technical reshaping of awards that delays payment, distinguishes precedents about the insurer’s statutory obligations (especially around interest), and uses costs to discourage dilatory appeals. The decision thereby strengthens the enforceability and effectiveness of the Employees’ Compensation Act’s remedial scheme.