THE HON'BLE THE CHIEF JUSTICE

What is the reasonable interest payable on the amount of compensation awarded to a claimant in a motor accident claim case is the issue involved in these matters referred to by a Division Bench of this Court for an authoritative pronouncement. The awards passed by the respective Tribunals, out of which, the present appeals arose, were challenged on various grounds including the ground that the Tribunals ought not to have granted interest at 12% per annum on the amount of compensation awarded. When the appeals came up for admission together with the interlocutory applications for stay of the awards, on a consideration of the decisions of the Supreme Court in S. KAUSHNUMA BEGUM vs. NEW INDIA ASSURANCE CO. LTD.1 and the Full Bench decision of this Court in GENERAL MANAGER vs. SANGUM BHAGYAMMA2 wherein it was held that the claimants are entitled to interest at 9% per annum, on one hand, and the decisions of the Supreme Court in SMT. CHAMELI WATI vs. DELHI MUNICIPAL CORPORATIOIN OF DELHI3, JAGBIR SINGH vs. GENERAL MANAGER, PUNJAB ROADWAYS4, Dr. K.R. TANDON vs. OM PRAKASH5 and a Division Bench decision of this Court in SHOBHA RANI vs. NEW INDIA ASSURANCE COMPANY LTD.6 wherein interest at 12% p.a. was granted, on the other hand, a Division Bench of this Court opined that there is some uncertainty in granting interest on the compensation amount and the matter requires consideration by a Larger Bench of this Court. While admitting the appeals, the Bench granted stay of the award of the Tribunals on condition of appellants depositing 3/4th of the compensation amount with costs and interest at 9 per annum. At this stage, the matters are referred to the Larger Bench for appropriate decision on the question of interest.

We have heard Smt. Nanda R Rao, learned Standing Counsel appearing for the appellants -A.P. State Road Transport Corporation and Sri V. Tulsi Reddy, Sri Kota Subba Rao, Sri K. Mahender Reddy, Mr. K.L.N. Rao and Mr. Sairam Goud, learned counsel appearing for the respondents-claimants. Smt. Nanda R Rao, learned Standing Counsel appearing for the A.P. State Road Transport Corporation would submit that lending rate of interest by the Banks is different from the interest paid on deposits and the Court cannot grant lending rate of interest on the compensation amount. She would submit that in Kaushnuma Begum's case, taking notice of the change in economy and the policy of the Reserve Bank of India being adopted in matter of interest from time to time, the Apex Court came to the conclusion that interest at the rate of 9% per annum would be reasonable one. She has also placed reliance on the Full Bench decision of this Court in General Manager vs. Sangum Bhagyamma7 wherein this Court held that rate of interest on compensation amount should not exceed 9%. She has also placed reliance on the recent decisions of the Apex Court in H.S. Ahammed Hussain vs. Irfan Ahammed8 and United India Insurance Co., Ltd. vs. Patricia Jean Mahajan9 wherein the Apex Court has granted interest only at 9% per annum. She has also placed reliance on various decisions of the Apex Court wherein interest was granted only at 6% per annum.

She further submits that in view of the change in the economy and the policy being adopted by the Reserve Bank of India from time to time in matter of interest to be followed by the nationalised banks, the rate of interest at 9% per annum granted by the Apex Court in Kaushnuma Begum vs. The New India Assurance Co. Ltd., and H.S. Ahammed Hussain vs. Irfan Ahammed, United India Insurance Co., Ltd. vs. Patricia Jean Mahajan which was followed by the Full Bench this Court in General Manager vs. Sangum Bhagyamma and it being the latest decision of the Supreme Court on the issue should be taken as the reasonable rate of interest. Reliance has also been placed on the decision of the Apex Court in Karnataka State Road Transport Corporation vs. R. Sethuram10 wherein the Supreme Court reduced th