Dharampal & Ors. Vs. U.P.State Road Transport Corp.  INSC 886
CIVIL APPELLATE JURISDICTION CIVIL
APPEAL NO. OF 2008 (Arising out of S.L.P.(Civil) No. 12917 of 2007) Dharampal
& Ors. .... Appellants versus U.P. State
Road Transport Corpn. .... Respondent
Dr. Mukundakam Sharma, J.
1. Leave granted.
2. The present appeal revolves
around a very short issue, namely, the quantum of interest to be awarded on the
compensation awarded to the legal representatives of the deceased who died in
an accident. Before we deal with the issue that arises for our consideration,
we will deal with the factual matrix out of which the aforesaid issue arises.
3. Deceased, Pradeep Kumar was
driving a motorcycle along with his wife, two minor daughters and a minor son.
When they reached village Dadiaki on the Muzaffarnagar - Roorkee Road, Bus No.
UP15L 7640, allegedly driving at a very high speed, rashly and negligently, hit
the motorcycle. All the five persons traveling on the motorcycle died on the
spot due to the aforesaid accident. The driver of the bus fled away from the
place of occurrence immediately after the accident, leaving behind the bus. The
age of the deceased Pradeep Kumar was 28 years and as per appellants he was
earning an amount of Rs.4,200/- per month. The appellants filed a petition
No.202 of 2004 before the Motor Accident Claim Tribunal, Udham Singh Nagar,
Rudrapur. Several witnesses were examined. On perusal of the evidence on record
the Tribunal passed a judgment and awarded Rs.3,50,100/- as compensation to the
appellants along with interest @ 6% per annum from the date of application till
the date of payment. The Tribunal upon consideration of the evidence held that
the deceased was earning Rs.2,400/- per month and not Rs.4,200/- as claimed.
Being aggrieved by the aforesaid award of the Motor Accident Claim Tribunal the
appellants preferred an appeal being Appeal No.102 of 2007 in the High Court of
Uttrakhand at Nainital contending inter alia that it was clearly proved that
the deceased was doing a work of mason and was earning Rs.4,200/- and the
Tribunal erred in determining the 3 income of the deceased on the presumption
that the job of the mason is not available everyday. Challenge was made in the
said appeal also in respect of the interest awarded contending inter alia that
the rate of interest was on the lower side and the Tribunal should have awarded
higher rate of interest.
4. The respondent - UP State Road
Transport Corporation also filed an appeal which was registered as Appeal No.386
of 2005. Both the aforesaid appeals were taken up for consideration together as
the issues that arose for consideration were similar. The Division Bench of the
Uttarakhand High Court considered the evidence on record and dismissed the
appeal filed by the respondent - UP State Road Transport Corporation whereas
the appeal filed by the appellants was allowed to the extent that the
appellants were held to be entitled to get a sum of Rs.3,70,000/- instead
Rs.3,51,100/- as awarded by the Tribunal for the death of Pradeep Kumar. So far
as the rate of interest is concerned, the High Court also maintained the
interest at 6 % p.a. which was awarded by the Tribunal holding that the said
rate of interest does not require any interference. The High Court directed the
State Road Transport Corporation to deposit the enhanced amount of compensation
within two months with interest, with the Tribunal.
5. The appeal is now filed by the
appellants in this Court in respect of the quantum of compensation awarded as
also in respect of the rate of interest which was awarded by the Tribunal as
also by the High Court.
6. Learned counsel appearing for
the appellants, at the time of arguments fairly stated before us that he would
advance his arguments only in respect of the interest and would not like to
press for the enhancement of quantum of compensation in terms of the prayers
made in the memorandum of appeal.
7. Accordingly, we heard the
learned counsel for the appellants only in respect of the issue of enhancement
of rate of interest awarded by the Tribunal and also by the High Court, which
is awarded and maintained as 6% per annum. Counsel for the appellants submitted
before us that there are ample number of cases decided by this Court for such
claim of enhancement of rate of interest and in some cases the rate of interest
has been consistently awarded by this Court at 9% per annum considering the
claim of this nature. The counsel for the respondent - UP State Road Transport
Corporation pointed out that this is not a case for enhancement so far as the
rate of interest is concerned, inasmuch as the prevailing rate of interest on
bank deposit was only 6.5%.
8. As per section 171 of the Motor
Vehicle Act, 1988 (hereinafter referred as 'Act') where the claim for
compensation made under the act is 5 allowed by the Claims Tribunal, the
tribunal may direct that in addition to the amount of compensation simple
interest shall also be paid at such rate from such date not earlier than the
date of making claim.
9. In National Insurance Co. Ltd.
vs. Keshav Bahadur reported in (2004) 2 SCC 370 this court has held that the
provisions require payment of interest in addition to compensation already
determined. Even though the expression "may" is used, a duty is laid
on the Tribunal to consider the question of interest separately with due regard
to the facts and circumstances of the case. It was clearly held in the said
decision that the provision of payment of interest is discretionary and is not
and cannot be bound by rules.
10. Interest is compensation for
forbearance or detention of money, which ought to have been paid to the
claimant. No rate of interest is fixed under section 171 of the Act and the
duty has been bestowed upon the court to determine such rate of interest. In
order to determine such rate we may refer to the observations made by this
court over the years. In the year 2001 in the case of Kaushnuma Begaum (Smt.)
and others vs. New India Assurance Co.
Ltd. & others reported in
(2001) 2 SCC 9 on the question of rate of interest to be awarded it was held
that earlier, 12% was found to be the reasonable rate of simple interest but
with a change in economy and the policy of Reserve Bank of India the interest
rate has been lowered and the nationalized banks are now 6 granting interest @
9% on fixed deposits for one year. Accordingly, interest @ 9% was awarded in
the said case. We may at this stage also refer to the following observations of
their Lordships in the aforesaid decision which are relevant to the present
"24. Now, we have to fix up
the rate of interest. Section 171 of the MV Act empowers the Tribunal to direct
that `in addition to the amount of compensation simple interest shall also be
paid at such rate and from such date not earlier than the date of making the claim
as may be specified in this behalf'. Earlier, 12% was found to be the
reasonable rate of simple interest. With a change in economy and the policy of
Reserve Bank of India the interest rate has been lowered. The nationalized
banks are now granting interest at the rate of 9% on fixed deposits for one
year. We, therefore, direct that the compensation amount fixed hereinbefore
shall bear interest at the rate of 9% per annum from the date of the claim made
by the appellants........"
11. In the year 2002, in United
India Insurance Co. Ltd. and others vs. Patricia Jean Mahajan and others
reported in (2002) 6 SCC 281 this Court held that the interest is payable on
the equitable grounds to the aggrieved person who is deprived of using the
money which is due and payable to him.
Following the observations made in
the case of Kaushnuma Begaum (supra) interest @ 9 % was awarded in this case
also. It was held as follows :- "In our view the reason indicated in the
case of Kaushnuma Begum (supra) is a valid reason and it may be noticed that
the rate of interest is already on the decline. We therefore, reduce the rate
of interest to 9% in place of 12% as awarded by the High Court."
12. In the year 2003 in the case
of Abati Bezbaruah v. Dy. Director General, Geological Survey of India and
Another reported in (2003) 3 SCC 148 it was held that the question as to what
should be the rate of interest, in the opinion of this court, would depend upon
the facts and circumstances of each case. Award of interest would normally depend
upon the bank rate prevailing at the relevant time. After referring to the
aforementioned decisions interest @ 9% was awarded in the said case.
13. However, in the year 2005 in
Tamil Nadu State Transport Corpn. Ltd. vs. S. Rajapriya reported in (2005) 6
SCC 236 this Court again taking note of the then prevailing rate of interest on
bank deposits directed for lowering the rate of interest fixed by the Tribunal
at 9% per annum and altered the same to 7.5% per annum.
14. In the backdrop of the
aforesaid legal position, we may now examine the facts of the present case. The
accident in the present case had taken place on 1.9.2004 and the Tribunal had
passed the award on 18.5.2005.
Rate at which the interest is to
be awarded would normally depend upon the bank rate prevailing at the relevant
time. Since in the case of State of Tamil Nadu
State Transport Corpn. Ltd. (supra) decided
in the month of April, 2005, the prevailing rate of interest on bank deposits
was found and held to be 7.5% per annum, we consider it appropriate to award
the same rate of interest, 8 as the same was the prevailing rate of interest on
the date of the passing of the award i.e. 18.05.2005 in the present case.
Consequently, we hold that the appellants would be entitled to be paid interest
at the rate of 7.5% from the date of application till the date of payment.
15. In terms of the above
directions and observations the appeal stands disposed of directing the payment
of interest at the aforesaid rate. So far as the issue with regard to enhancement
of compensation is concerned, the same was not pressed before us and
consequently the prayer for enhancement of quantum of compensation as raised in
the memorandum of appeal stands dismissed.
However, in the circumstances of
the case there will be no order as to costs.
(S.B. Sinha) .................................J.