Interest on compensation under the Motor Vehicles Act is limited to the principal amount, and not applicable on amounts already settled.

JUDGEMENT

1. This petition has been preferred by the United India Insurance Co. Ltd. which seeks quashing of order dated 11.05.2016 passed in execution petition bearing File No. 11/Exe titled “Rupinder Kour Narsinghia and others v. United India Insurance Company Ltd.”

2. The above titled Claim Petition came to be decided by Motor Accidents Claims Tribunal, Jammu vide award dated 18.01.2010 and compensation of Rs. 24,41,863/- along with 7.5% interest from the date of institution till realization was granted in favour of claimants.

3. The petitioner deposited an amount of Rs. 24,41,863/- vide cheque No. 813584 dated 30.08.2010 towards the principal amount of compensation and also an amount of Rs. 4,00,198/- vide Cheque No. 813585 dated 30.08.2010 towards the interest awarded at the rate of 7.5% after deducting the Tax at Source as per the guidelines. Thus, the total amount deposited by the petitioner is Rs. 28,42,161/-.

4. The claimants/respondent Nos. 2 to 4 filed execution petition against the petitioner on 20.04.2013 seeking deposit of balance amount stating that the interest over the principal amount was calculated only up to 18.01.2010 whereas the same was required to be calculated up to 30.08.2010, when the amount was deposited by the petitioner. The Executing Court, accordingly, directed the petitioner to deposit the balance amount.

5. It is admitted by the petitioner that inadvertently while calculating the interest over the principal amount, the same was calculated only up to 18.01.2010 i.e. for a period of 997 days, whereas, it was required to be calculated up to 30.08.2010 i.e. for 1222 days and, as such, deposited the balance amount of interest of Rs. 1,12,895/- on 08.01.2016.

6. That even after the deposit of the interest, learned Tribunal has directed the petitioner to deposit interest w.e.f. 30.08.2010 @ 7.5% on balance amount till deposit and has kept the execution petition pending.

7. Learned counsel for the petitioner submits that the Tribunal has erred in observing that the amount awarded is to be calculated as a whole along with interest @ 7.5%. The respondents/claimants have admittedly withdrawn and received the said amount. It is also submitted that the Tribunal has made an error while directing the petitioner to deposit the interest on the balance amount because admittedly Rs. 1,12,895/- which was interest payable on the principal amount of compensation has already been deposited. The entire amount of compensation along with interest in full and final satisfaction of the award was to the tune of Rs. 29.55.056/- which the petitioner has deposited and there is nothing outstanding against the same. The shortfall in payment could have been passed to deposit the same but interest over the balance interest is not permissible as such requires to be set aside.

8. The petitioner has deposited the entire amount and there is nothing outstanding against the Insurance Company. The MOTOR VEHICLES ACT provides for payment of simple interest on the amount of compensation under Section 171 of the Act. Section 171 of the MOTOR VEHICLES ACT reads as under:-

“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.”

9. Thus, in view of the provision, simple interest is to be awarded on the amount of compensation awarded. It is submitted that by passing the impugned order, the learned Tribunal directed the petitioner to deposit interest over the balance amount of interest which is impermissible especially when principal a