Sobat Singh vs Ramesh Chandra Gupta and Another

J.R. Midha, J.—The learned Counsel for the appellant submits that the cheque towards the award amount has been released to the appellant by the Claims Tribunal but the cheque has become stale and, therefore, needs to be revalidated. The learned Counsel for the appellant submits that no notice of deposit of the award amount was received by the appellant from respondent No. 2 or from the Claims Tribunal.

The learned Counsel for the appellant submits that the Nazirs of the Claims Tribunals do not properly maintain the record of the receipt of the award amount. It is further pointed out that neither the Insurance Companies give any notice of deposit to the claimants nor the Claims Tribunals give notice of deposit to the claimants and the claimants keep on making oral enquiries from the Nazir who most of the times does not give correct information to the claimants. It is submitted by the counsel that there are number of other aberrations involved in the process which the Court would not like to detail.

The learned Counsel for the appellant submits that apart from the harassment suffered, the appellant could not utilize the award amount and has lost interest for six months.

Respondent No. 2 is directed to file affidavit within two weeks as to the date of deposit pf the award amount, date of notice under Order XXI Rule 1(2) of the CPC and the amount of interest due under Order XXI Rule 1(4) of the Code of Civil Procedure. The responsible Officer of respondent No. 2 shall also remain present in Court on the next date of hearing along with the original file containing the aforesaid particulars.

This was, in so far as the present case is concerned. The matter being of wider ramifications, it is necessary to take note of the submissions and examine the same with a view to prevent injustice.

The learned Counsel points out that the Claims Tribunals are not following the principles laid down in Order XXI Rule 1 of the Code of Civil Procedure. It is further pointed out that when the cheques are released to the claimants, Claims Tribunals do not ensure the compliance of Order XXI Rule 1(2) of the CPC and do not award interest to the claimants in terms of Order XXI Rule 1(4) of the Code of Civil Procedure.

If the submissions made by the learned Counsel for the appellant are correct, there is serious violation of the principles laid down in Order XXI Rule 1 of the CPC by the Insurance companies as well as the Claims Tribunals. The net result is that apart from unreasonable delay in releasing of the award amount to the claimants, the claimants suffer undue harassment and also loss of interest on the award amount. On the other hand, the Insurance companies are unjustly enriched because the award amount remains in their account till the cheques are cleared and they utilize the award amount without paying the interest under Order XXI Rule 1(4) of the Code Of Civil Procedure.

Order XXI Rule 1(a) and (2) of the CPC provides that the judgment debtor (Insurance company) shall give notice of deposit of the award amount to the decree-holder (claimant) either through Court or directly to the decree-holder (claimant). Order XXI Rule 1(4) of the CPC provides that the interest shall cease to run from the date of service of the notice referred to in Sub-rule (2). Order XXI Rule 1 of the CPC is reproduced hereunder:

Order XXI Rule 1. Modes of paying money under decree.- (1) All money, payable under a decree shall be paid as follows, namely:

(a) by deposit Into the Court whose duty it is to execute the decree, or sent to that Court by postal money order or through a bank; or

(b) out of Court, to the decree-holder by postal money order or through a bank or by any other mode wherein payment is evidenced in writing; or

(c) otherwise, as the Court which made the decree, directs.

(2). Where any payment is made under Clause (a) or Clause (c) of Sub-rule (1), the judgment-debtor shall give notice thereof to the decree-holder either through the Court or directly to him by registered post, acknowledgement due.

(3) Where money is paid by postal money order or through a bank under Clause (a) or Clause (b) of Sub-rule (1), the money order or payment through bank, as the case may be, shall accurately state the following particulars, namely:

(a) the number of the original suit;

(b) the names of the parties or where there are more than two plaintiffs or more than two defendants, as the case may be, the names of the first two plaintiffs and the first two defendants;

(c) how the money remitted is to be adjusted, that is to say, whether it is towards the principle, interest or costs;

(d) the number of the execution case of the Court, where such case is pending; and

(e) the name and address of the prayer.

(4) On any amount paid under Clause (a) or (c) of Sub-rule (1), interest, if any, shall cease to run from the date of service of the notice referred to in Sub-rule (2).

(5) On any amount paid under Clause (b) of Sub-rule (1), interest, if any shall cease to run from the date of such payment;

Provided that, where the decree-holder refuses to accept the postal money order or payment through a bank, interest shall cease to run from the date on which the money was tendered to him, or where he avoids acceptance of the postal money order or payment through bank, interest shall cease to run from the date on which the money would have been tendered to him in the ordinary course of business of the postal authorities or the bank, as the case may be.

It is well settled that interest will not cease to run merely by reason of making the deposit into Court unless it is followed by the service of notice as required by Sub-rule (2), and that is only when the factum of deposit is brought to the knowledge of the decree-holder by service of such notice that the deposit will amount to payment within the meaning of Order XXI Rule 1. The provision for notice rather indicates that the decree-holder''s right should be affected only after he is informed that the decretal amount is available for him and that he can draw it out of Court.

The Claims Tribunal possess inherent jurisdiction to enforce its own award in accordance with the provisions of the Motor Vehicles Act and also according to the provisions of the CPC as applicable to execution of orders and decree passed by a Civil Court. Reference in this regard may be made to the Full Bench judgment of the Madhya Pradesh High Court in the case of Smt. Sarmaniya Bai and Others Vs. Madhya Pradesh Rajya Parivahan Nigam and Others, ) where the Full Bench held as under:

We are of the view that the Claims Tribunal possesses inherent jurisdiction to enforce its own award in accordance also with the provisions of CPC as applicable to execution or orders and decree passed by a Civil Court.

The Hon''ble Supreme Court, in the case of Rajasthan State Road Transport Corporation, Jaipur Vs. Smt. Poonam Pahwa and others, held that Order XXI Rule 1 of the CPC is applicable to motor accident claim cases. In that case, the appellant Corporation, deposited the award amount before the Tribunal on 27th June, 1986. However, no intimation was given to the claimants either by the Court or by the judgment debtor about the deposit and the claimant - decree holder came to know of the deposit only on 19th April, 1989. The decree-holder made a claim for interest from 27th June, 1986 to 19th April, 1989 which was opposed on the ground that there was no obligation of the appellant-Corporation to give intimation about the deposit to the decree-holder and the provisions of Order XXI Rule 1(2) of the CPC were not applicable in respect of the award passed by the Motor Accident Claims Tribunal and, in any event, it is failure of the Court to give such intimation and the judgment debtor would not suffer on account of mistake committed by the Court the Claims Tribunal rejected the above contentions and directed deposit of interest amount by the judgment debtor against which the appellant-Corporation filed a revision petition before the Punjab and Haryana High Court which was dismissed. The Hon''ble Supreme Court dismissed the appeal holding that Order XXI Rule 1 of the CPC was applicable to the motor accident cases. The findings of the Hon''ble Supreme Court are as under:

Order XXI Rule 1 CPC as amended in 1976 expressly provides that the judgment debtor shall give notice of the deposit of the decretal amount to the decree holder either through the Court or directly to the decree holder. The obligation of giving the notice to the decree holder is not absolved by simply depositing the amount without taking steps to ensure service of the notice of such deposit to the decree holder through Court or otherwise. Therefore, the appellant cannot escape its liability to pay interest to the decree holder for the period between the date of deposit of the decretal amount and the date of notice of such deposit of the decree holder.

It appears to us that the provisions of Order XXI Rule 1 are not in any way inconsistent with the provisions for awarding just and fair compensation in Motor Accident Claims. The real purpose of awarding just and fair compensation to the victim of the accident or the legal heirs of such victim will be fulfilled by applying the principle of Order XXI Rule 1 CPC so that the awardee is not deprived of the opportunity of gainfully utilising the amount under the award for want of notice about the deposit made by judgment debtor resulting in the sum remaining unutilised. In our view, therefore, there is no difficulty to apply the underlying principles under Order XXI, Rule 1 CPC in executing the award of compensation passed by the Motor Accidents Claims Tribunal and the Tribunal must be held to be competent to invoke the beneficial provisions of Order XXI Rule 1 Civil Procedure Code.

It is also pointed out that the Claim Tribunals are not following the directions passed by this Court in the case of The New India Assurance Co. Ltd. Vs. Kashmiri Lal and Others, This Court gave the following directions to ail Motor Accident Claims Tribunals in the aforesaid case:

In view of the above pleas, the following directions are issued which are required to be followed by all Motor Accidents Claims Tribunals.

(a) While filing the written statement, the concerned insurance company is required to furnish details of its Bank account and the Bank to the Court. In case a written statement has already been filed in an existing claim, all insurance companies are required to furnish the name of the concerned Bank and their account numbers within 3 months from today,

(b) Within a period of 30 days of the award, which is the period prescribed for depositing the amount u/s 168(3) of the Act to the High Court, the insurance company is required to tender the payment awarded by the MACT by issuing cheques in the name of the claimant(s) unless and until a stay order has been obtained from the High Court. The names of the claimants who are to be paid the amounts along with the amount payable is required to be stated in the award.

(c) If after the expiry of 90 days which is the prescribed period for preferring an appeal u/s 173(1) of the Act, payment of the amount awarded by the MACT has not been made, notice must be issued to the Bank named by the Insurance Company directing such Bank to deposit the cheque drawn in the name of the claimant/claimants legally entitled as per the award covering the amount(s) as per the MACT award within a week of receipt of such orders and cheques should be retained for being given to the claimant.

(d) Once the amount is deposited by cheque as per the aforesaid procedure the MACT is required to ensure that within a period of six weeks thereafter the amount is disbursed to the claimants under the supervision of the Presiding Officer by issuing the said cheque to the claimant so that the claimants are not put to undue harassment.

(e) In case for some reason it is not possible to make the payment to the claimant within six months of the issue of the cheques in the name of the claimant, then the MACT should ensure that such cheques are returned to the Insurance Companies'' in lieu of fresh cheques drawn in favor of the appropriate account of the MACT which are required to be deposited in an interest bearing short term fixed deposit for a six monthly period by the MACT.

(f) In case the MACT has to resort to the procedure prescribed under sub para (c) above which requires it to secure the amount through the banks upon a failure of the insurance company to deposit the amount within the time stipulated by Section 168(3) and the above procedure, cost of Rs. 5000/- payable to the claimant is required to be imposed on the Insurance Companies.

(g) If directions given by the MACT to the Banks are not complied with, the MACT may order freezing of Bank Accounts to the extent covered by the award.

All the Claim Tribunals are directed to send a report of compliance of Order XXI Rule 1(2) and (4) of the CPC within a period of two weeks. The report be filed initially in respect of last one year. The report should contain the following particulars in tabular form:

(i) Case title and number.

(ii) Date of award.

(iii) Award amount.

(iv) Date of deposit of cheque of the award amount.

(v) Date of notice by the Insurance company to the claimant.

(vi) Date of notice by the Claims Tribunal to the claimant.

(vii) Date of release of the cheque towards the award amount to the claimant.

(viii) Period for which the claimant is entitled to interest under Order XXI Rule 1(4), CPC.

(ix) Amount of interest to which the claimant is entitled under Order XXI Rule 1(4), CPC.

(x) Amount of the interest actually awarded to the claimant under Order XXI Rule 1(4), CPC.

The Report should also indicate as to how many cheques are presently deposited with the Claims Tribunals for being released to the claimants, how many cheques have expired and whether any cheques have been lost.

A separate report should indicate the format in which the Nazirs are maintaining the record; to consider whether it enables convenient access to the relevant information. Further, if there be room for improvement, the Claims Tribunals may indicate a possible revised format.

The Claims Tribunals are also directed to submit a report whether the Insurance companies have furnished the details of the bank account and the bank in all pending cases in terms of the judgment dated 9th December, 2005 of this Court in the case of New India Assurance Co. Ltd. (supra). The number of cases in which such details have been furnished and the number of cases in which such details have not been furnished be mentioned in the report. The list of cases in which the recovery of the award amount and the cost of Rs. 5,000/- has been effected by attachment of Bank account during last one year in terms of the directions of this Court be also furnished.

The Report of all the Claims Tribunals be submitted before the Registrar (Vigilance) of this Court within two weeks. The Registrar (Vigilance) shall also examine the records maintained by the Nazirs of all the Claims Tribunals. The Claims Tribunals shall direct their Nazirs to produce the records maintained by them before the Registrar (Vigilance), who shall submit a report to this Court as to whether the records are being properly maintained. The Registrar (Vigilance) may also suggest measures for due implementation of the aforesaid provisions of law and the directions of this Court.

All the Insurance companies are directed to file the affidavit of compliance of Order XXI Rule 1 of the CPC as well as the directions dated 9th July, 1997 passed by this Court. The affidavit shall initially contain the data for the last one year. The affidavit shall contain the following particulars in tabular form:

(i) Case title and number.

(ii) Date of award.

(iii) Award amount.

(iv) Date of deposit of the award amount.

(v) Date of notice of deposit under Order XXI Rule 1(2) of the Code of Civil Procedure.

(vi) Date of clearance of the cheque of the award amount by the Bank.

(vii) Amount of interest payable under Order XXI Rule 1(4) of the CPC (If no notice was given, the interest be calculated from the date of cheque up to the date of clearance of the cheque).

(viii) Amount of interest actually paid.

The affidavit shall also state whether the bank account number and the name of the Bank has been furnished in all pending cases to the Claims Tribunals in terms of directions of this Court. The affidavit be filed by all the Insurance companies within two weeks. The responsible officer of all the Insurance companies shall remain present in the Court on the next date of hearing along with all the relevant records.

Dr. Arun Mohan, Senior Advocate and Mr. O.P. Mannie, Advocate are appointed as amicus curiae to assist this Court in this matter.

List for hearing on 23rd February, 2010.

Copy of this order be sent to all the Claims Tribunals through Registrar (Vigilance) to this Court.

Copy of this order be given ''Dasti'' to learned Counsel for the parties as well as the nominated counsels for all the Insurance companies under signature of the Court Master, for compliance. Copy of this order be also given ''Dasti'' to the learned Amicus Curiae under the signature of the Court Master. The amicus curiae shall send a copy of this order to all the Insurance companies by e-mail.