Supreme Court of India
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|Monday, 23 February 2026SC Rules on Insurance Liability for Penalty in New India Assurance Co Ltd vs Rekha Chaudhary
Bench
Hon'ble Sh. Justice Sanjeev Kumar
Aravind Kumar
SC Rules on Insurance Liability for Penalty in New India Assurance Co Ltd vs Rekha Chaudhary (2026) held that The Supreme Court clarified that the imposition of penalty under Section 4A(3)(b) of the Employees' Compensation Act is primarily the responsibility of the employer and cannot be transferred to the insurance company.
The case involves New India Assurance Co. Ltd. challenging a Delhi High Court decision that imposed a penalty on the insurer under the Employees' Compensation Act for failing to pay compensation in a timely manner. The deceased, a commercial driver, died during employment, leading to claims by his legal heirs for compensation. The Supreme Court ultimately ruled on the liability for the penalty, focusing on the interpretation of the relevant provisions of the Act and the responsibilities of the employer and insurer.
The Supreme Court clarified that the imposition of penalty under Section 4A(3)(b) of the Employees' Compensation Act is primarily the responsibility of the employer and cannot be transferred to the insurance company.
The Court emphasized the importance of timely compensation payments under the Employees' Compensation Act as a social welfare measure.
The ruling reaffirmed that the liability for penalties due to delays in compensation payments lies with the employer, not the insurer.
Claim petition filed by legal heirs of deceased employee
Commissioner issued order determining employer's liability for compensation
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Penalty imposed on employer for delay in compensation payment
Delhi High Court ruling on appeal regarding liability for penalty
Final judgment delivered by the Supreme Court
