N.K. Balakrishnan, J.

The short question that arises for consideration is whether the direction made by the Tribunal to pay interest at the rate of 12% per annum from the date of petition till the date of realisation, on the appellants' failure to deposit the compensation with interest at 9% within three months from the date of the award is penal in nature and if so whether it is illegal and unsustainable.

2. The learned Tribunal directed that the appellant should deposit the amount deter- mined as compensation with interest at 9% per annum from the date of petition till the date of realisation. The learned Tribunal further directed that if the amount is not deposited within a period of three months from the date of the award, the amount of compensation awarded will carry interest at the rate of 12% per annum from the date of the petition till the date of realisation. The learned counsel for the respondent would submit that there is nothing illegal in the direction so issued by the learned Tribunal, for, the object and purpose of the default clause as aforesaid is to put pressure on the insurance company not to delay but to make them prompt to deposit the amount within the time directed by the Tribunal. It is further contended that the learned Tribunal has only exercised the discretion judicially and judiciously to ensure that the claimants are not compelled to wait indefinitely for getting the award amount.

3. Since the appellant-insurance company raised an interesting question that the direction to pay interest at an enhanced rate after prescribing a specific period of time for deposit is not justified and that it is without jurisdiction, we requested the learned counsel for the claimant and appellant to research and make detailed submissions. We requested Adv. Mr. K.M. Firoz and Adv. Mr. V.P.K. Panicker also to help us as Amicus Curiae. We have heard in detail the learned counsel for the appellant, the counsel appearing for the claimant and also Adv. Mr. V.P.K. Panicker and Adv. Mr. K.M. Firoz.

4. The learned counsel Mr. K. M. Firoz has cited the decisions in Rajendra Kumari v. Shanta Trivedi (AIR 1989 SC 1074); State of Karnataka v. Gopal Ramachandra Madagouda [(2010) 2 SCC 327: (AIR 2010 SC 1438)]; Dharampal v. U. P. State Road Transport Corporation [(2008 (2) KLT 691 (SC) : (AIR 2008 SC 2312)]; Thazhathe Purayil Sarabi v. Union of India (AIR 2009 SC 3098) and Kaushnuma Begum v. New India Assurance Co. Ltd. [(2001) 2 SCC 9: (AIR 2001 SC 485)].

5. In Kaushnuma Begum v. New India Assurance Co. Ltd. (supra) it was held by the Apex Court:

"Now, we have to fix up the rate of interest. Section 171 of the M. V. 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 nationalised 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......"

This decision has been quoted with approval by the Apex Court in subsequent decisions also (See : United India Insurance Co. Ltd. v. Patricia Jean Mahajan [(2002) 6 SCC 281: (AIR 2002 SC 2607)] and Dharampal v. U. P. State Road Transport Corporation (2008 (2) KLT 691 (SC) : (AIR 2008 SC 2312)). These decisions have been cited by Mr. Firoz to enlighten the Court that the question as to what should be the rate of interest 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. In Kaushnuma Begum v. New India Assurance Co. Ltd. (supra) depending on the bank rate th