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2005 Supreme(Cal) 194

High Court Of Calcutta
Prabir Kumar Samanta And Aniruddha Bose, JJ.
PURNIMA SAHA - Appellant
Versus
UNITED INDIA INSURANCE COMPANY LTD. - Respondent
F. M. A. 105 Of 2002
Decided On : 03/21/2005

Advocates Appeared:
KRISHANU BANIK, RAJESH SINGH

The award of interest under section 171 of the Motor Vehicles Act, 1988 is mandatory and the rate of interest should be determined considering the prevailing market rate.

Headnote:

MOTOR ACCIDENT CLAIMS - INTEREST ON AWARD AMOUNT - SECTION 171 OF THE MOTOR VEHICLES ACT, 1988 - INTEREST PAYABLE FROM DATE OF APPLICATION - AWARD OF INTEREST MANDATORY - RATE OF INTEREST TO BE DETERMINED CONSIDERING PREVAILING MARKET RATE.

Fact of the Case:

Claimants, parents of a victim who died in a motor accident, filed a claim before the Motor Accident Claim Tribunal seeking compensation. The Tribunal awarded Rs. 3,00,000/- as compensation but did not award interest or non-pecuniary damages.

Finding of the Court:

The court held that the claimants were entitled to receive interest on the award amount from the date of making the application. The court also directed the insurance companies to pay Rs. 4,500/- under the heads of loss of estate and funeral expenses.

Issues: 1. Whether the claimants are entitled to receive interest on the award amount for the period subsequent to making of the application. 2. Whether the claimants are entitled to non-pecuniary damages.

Ratio Decidendi: 1. Section 171 of the Motor Vehicles Act, 1988 provides for the award of interest on the claim amount from a date not earlier than the date of making the claim. 2. The expression "may" used in section 171 should be construed as "shall", making the award of interest mandatory. 3. The interest is payable from the date of making the claim to compensate the claimant for the delay in receiving the compensation amount. 4. The rate of interest should be determined considering the prevailing market rate.

Final Decision: The court allowed the appeal in part and directed the insurance companies to pay interest at the rate of 7% per annum from the date of making the claim till the date of payment of the awarded amount. The court also directed the insurance companies to pay Rs. 4,500/- under the heads of loss of estate and funeral expenses.

Prabir Kumar Samanta And Aniruddha Bose, JJ.


( 1 ) THE appellants/claimants in the present action are the parents of a victim of a motor accident, who succumbed to injuries suffered from that accident on 23rd June, 2000. The, victim was the "khalasi", which broadly means helper in the common parlance of the transport trade. The death was caused on account of a collision between the bus, of which he was the khalasi, and a lorry.

( 2 ) THE appellants made a claim before the Motor Accident Claim Tribunal, 4th Court, Burdwan under section 163a of the Motor Vehicles Act, 1988 (the "act" in short) for an award of Rs. 3,00,000/- (rupees three lacs) as compensation, impleading the owners and the insurance companies of both the vehicles as opposite parties. Before the Tribunal, the death of the victim on account of accident between the two vehicles was proved, as also the insurance coverage of the vehicles. A sum of Rs. 3,00,000/- (rupees three lacs) was awarded as compensation upon considering the age of the victim, the applicable multiplier as contained in the second schedule to the Act, and the claim statement. The award also contained provision for interest, penal in nature, to be paid at the rate of 15% per annum, in the event of failure to pay the sum awarded within the stipulated time, being sixty days. The two insurance companies were directed to pay the awarded amount jointly, in equal shares.

( 3 ) THE present appeal has been preferred against the said award by the claimants on several grounds, but argument was advanced on behalf of the appellants on the limited ground of non-payment of interest and non-pecuniary damages.

( 4 ) IN connection with the appeal, an application being C. A. N. 1825 of 2005 has been filed, praying for early disposal of the appeal. We decided to take up hearing of the appeal itself at this stage, as the appeal was ready as regards service against the two insurance companies. So far as the owners of the vehicles are concerned, they did not contest before the tribunal, and we decided to dispense with the service of notice upon them.

( 5 ) THE main issue that arises in this appeal as we have indicated above is as to whether the appellants/claimants are entitled to receive interest on the award amount in the present case for the period subsequent to making of the application. The provision relating to grant of interest is contained in section 171 of the Act which was reproduced below: "171. Award of interest where any claim is allowed.- Where any claims Tribunal allows a claim for compensation made under this Act, such Tribunal may 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 it may specify in this behalf. "

( 6 ) AS would be evident from the provision of section 171, though the expression "may" has been used in the statute, while conferring the power on the Tribunal to grant interest, no Legislative guideline has been prescribed in the statute as regards the. conditions under which the Tribunal would award interest to a successful claimant in a motor accident claim case. However, as per the provisions, of section 171 of the Act, the interest becomes payable from a date not earlier from the date when the application for compensation is filed. This clause, in effect divests the Tribunal or the court to award interest on claim for compensation for the pre-litigation period.

( 7 ) BEFORE we proceed to decide the entitlement of the claimants to receive interest in the present appeal, we would like to briefly discuss the rationale for grant of interest in a legal action. The reason for grant of interest broadly can be explained to be the right of an individual to be compensated for being deprived of enjoyment of certain legitimate right from the day such enjoyment ceases by certain acts, against which complain is made. It was observed by the Hon'ble Supreme Court in the case of Sa





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