Penalty for Delay in Compensation Must be Paid by Employer, Not Insurance Company: Supreme Court

The Supreme Court ruled that an employer must personally pay the penalty for delaying compensation under the Employees’ Compensation Act, 1923, even if the compensation amount is covered by insurance.

The Court clarified that the penalty under Section 4A(3)(b) arises from the employer’s own default and cannot be shifted to the insurance company.

The case arose after an employee died in a work-related accident and compensation was not paid within the statutory period.

While the insurer may pay compensation and interest, the Court held that the penalty must be borne by the employer to ensure timely payment and maintain the deterrent purpose of the law.