The Supreme Court reiterated that while an Insurance Company is liable to indemnify the employer for the principal compensation amount and interest, it cannot be fastened with the liability to pay the penalty component.
2026 INSC 177
Labour Law
None
The Supreme Court reiterated that while an Insurance Company is liable to indemnify the employer for the principal compensation amount and interest, it cannot be fastened with the liability to pay the penalty component. It also noted that the penalty under Section 4A(3)(b) is imposed due to the “personal fault and negligence” of the employer for failing to deposit compensation within the stipulated one month.
When the statute itself has obligated the employer to make the payment within one month, such obligation cannot be countenanced as sub-servient to any contractual obligation or bypassing the statutory obligation, as the same would tantamount to disregard of the legislative intent envisaged under the said provision.
The Supreme Court reiterated that while an Insurance Company is liable to indemnify the employer for the principal compensation amount and interest, it cannot be fastened with the liability to pay the penalty component. It also noted that the penalty under Section 4A(3)(b) is imposed due to the “personal fault and negligence” of the employer for failing to deposit compensation within the stipulated one month.
When the statute itself has obligated the employer to make the payment within one month, such obligation cannot be countenanced as sub-servient to any contractual obligation or bypassing the statutory obligation, as the same would tantamount to disregard of the legislative intent envisaged under the said provision.