The Jammu & Kashmir and Ladakh High Court[1] has held that an employer is liable to pay interest and penalty on the compensation awarded to an employee who died in a road accident, even if the employer had taken an insurance policy under the Employees’ Compensation Act, 1923. The court rejected the contention of the employer that the liability to pay interest was solely on the insurer and not on the employer. The court observed that unless there is a specific contract of insurance between the employer and the insurer, the insurer would indemnify the employer in respect of interest and penalty also, no liability can be fastened on the insurer to indemnify the employer for the amount of interest and penalty that may become payable by the employer for committing default in making the payment of compensation due under the Act within one month from the date of accident.
[1] MA No. 155/2007
