Niva Devi vs New India Assurance Company Ltd.

Jayanta Kumar Biswas, J.—The appellant is aggrieved by an award of the Motor Accident Claims Tribunal, Asansol dated June 30, 2012. She is aggrieved only as to grant of interest under Section 171 of the Motor Vehicles Act, 1988. The claims Tribunal ordered that should the Insurance Company fail to pay the amount of compensation within the time mentioned in the award, it would pay the appellant 8% p.a. interest on the amount. According to the appellant, the claims Tribunal ought to have granted interest from November 10, 2006 when the application claiming fault liability compensation was filed.

In the accident caused by the offending vehicle the appellant''s minor son (Manish), one of the two victims, suffered injuries that caused him permanent disability.

The offending vehicle was insured by the first respondent. The second respondent is the owner of the offending vehicle. He did not contest the case before the claims Tribunal. The Insurance Company contested the case. The claims Tribunal accepted the appellant''s case, found that she was entitled to compensation and ordered the Insurance Company to pay her Rs. 2 lakh compensation. Accepting the award it paid the amount.

Mr. Singh appearing for the Insurance Company has submitted that in the face of a large number of Supreme Court decisions answering the interest question in the affirmative, it will be inappropriate for him to say that the claims Tribunal was at liberty not to grant the appellant interest from the date of filing of the application for compensation.

Mr. Singh has accepted that the claims Tribunal ought have granted the appellant interest from the date of filing of application for compensation till the date of payment. He has not disputed that interest not granted by the claims Tribunal, can be granted by this Court in this appeal. The question is only of rate.

Mr. Das appearing for the insurance companies as Senior Counsel has prayed for leave to make submissions on the question. Mr. Singh has said that he has no objection.

Mr. Roy appearing for the appellant has relied on National Insurance Co. Ltd. Vs. Keshav Bahadur and Others, ; Mr. Das has cited Dharampal and Others Vs. U.P. State Road Transport Corpn., and Mr. Singh has relied on N. Manjegowda Vs. The Manager, the United India Insurance Co. Ltd., .

We have closely examined the question of rate of interest under Section 171 of the Motor Vehicles Act, 1988 to be granted to a successful claimant. We have mentioned to the Advocates the decisions in Narcinva V. Kamat and Another Vs. Alfredo Antonio Doe Martins and Others, ; R.K. Tandon v. Om Prakash & Anr., 2000 (1) TAC 212 and Smt. Kaushnuma Begum and Others Vs. The New India Assurance Co. Ltd. and Others, .

It appears that from 1985 till 1999 the Supreme Court generally granted 12% p.a. interest. In R.K. Tandon the Supreme Court granting 12% interest referred to galloping inflation and erosion of rupee value. In Kaushnuma Begum the question was reviewed in 2001.

Referring to change in economy, Reserve Bank of India''s policy and fixed deposit interest rates of nationalised banks, it was held that the interest rate should be lowered from 12% to 9%. In Dharampal it was held that the claimant should be paid 7.5% interest that was the bank rate on May 18, 2005 when the award was passed by the claims Tribunal.

From the foregoing analysis it is evident that the Supreme Court has laid down the principle that the rate of interest to be granted under Section 171 should be fixed on the basis of the term deposit interest rates of nationalized banks. There is no dispute that the date relevant for fixing the interest rate is the date of the award.

From the foregoing discussion the following conclusions can reasonably be drawn. In awards passed from 1985 to 2000 interest should be granted at 12% p.a. In awards passed from 2001 to 2004 interest should be granted at 9% p.a. In awards passed in 2005 interest should be granted at 7.5% p.a.

The question is what should be the rate of interest in cases in which the awards have been passed from 2006.

As noted hereinbefore, the term deposit interest rates of nationalized banks should normally be the basis for fixing the rate of interest. We have given reasonable opportunity to Advocates for the parties to produce before us documents showing the term deposit interest rates of nationalized banks from 2006 till date.

In spite of repeated opportunities none has produced anything before us; on the contrary, expressing their inability, all the Advocates have requested us to fix the rate exercising our discretion.

In Keshav Bahadur the award was passed on February 23, 1998. Hence this cannot give any guidance for ascertaining the term deposit interest rates of nationalized banks from 2006 till date. In Manjegowda the award was passed on December 11, 2006. The Supreme Court just maintained the 6% p.a. interest of the claims Tribunal. No specific reason was given for fixing the rate at 6%. Hence it cannot be said that in 2006 the bank term deposit interest rate was 6% p.a.

While Mr. Roy has strenuously argued that interest in awards passed from 2006 till date should be at least 9% as was granted in Keshav Bahadur, Mr. Singh has forcefully argued that the rate should be 6% as was recently granted in Manjegowda. And Mr. Das has said that the rate should be 7.5% as was granted in Dharampal.

We do not think rate granted in any of these three cases should be the rate for the cases in which the awards have been passed by the claims Tribunals from 2006 till date.

While the claimants before us are asking for 9% interest, the insurance companies are asking for 6% and if not at a maximum of 7.5%. We have already mentioned that nothing has been produced before us to show the term deposit interest rates of nationalized banks from 2006 till date.

We have asked Advocates to examine why the interest rates declared by the employees'' provident funds organisation for the benefit of millions of its members should not be the deciding factor. We have been informed that recently this organisation has declared 8.5% interest for its members. But Mr. Das and Mr. Singh have submitted that the bank rate should be followed. We are minded to accept the submission.

It has been submitted that a large number of cases involving the issue concerning rate of interest are pending before this Court. Hence we are of the view that it is necessary to follow a consistent rate fixed on the basis of sound principles.

After examining all aspects, especially the inflation, we think it will be fair and reasonable to fix 8% p.a. interest for awards passed from 2006 till date. On this basis, we hold that the appellant in this appeal is entitled to 8% p.a. interest from November 10, 2006 till the date of payment. For these reasons, we allow the appeal and order as follows. The award is modified saying that the Insurance Company shall pay the appellant 8% p.a. interest on the amount of compensation from November 10, 2006 till the date of payment within a fortnight from the date this order is served. No costs. Certified xerox.