17 February 2025 Employees State Insurance Act >> Labor Law  

The Supreme Court has ruled that interest under the Employee’s Compensation Act 1923 must be awarded at a minimum rate of 12% per annum from the date of the accident, when there is a default in making timely compensation payments. The Court clarified that while the Commissioner has discretion to award a higher interest rate (not exceeding the scheduled bank lending rate), the 12% rate is mandatory. 

The judgment also limited the ability of insurance companies to recover awarded interest from the insured, particularly when they did not challenge the initial award and were explicitly directed to pay the compensation, interest, and penalty. The Court emphasized that the legislative intent of the Act is to ensure prompt compensation to employees or their legal representatives in case of accidents.

EMPLOYEES STATE INSURANCE ACT, 1948