DHARAMPAL & ORS. v. U.P. STATE ROAD TRANSPORT CORPN

Citation: [2008] 8 S.C.R. 194

Court: Supreme Court of India

Bench: S.B. SINHA, MUKUNDAKAM SHARMA

Case summary

DHARAMPAL & ORS. v. U.P. STATE ROAD TRANSPORT CORPN.pdf

Judgment text

[2008] 8 S. C. R. 194 {: DHARAMPAL & ORS. v. U. P. STATE ROAD TRANSPORT CORPN. (Civil Appeal No. 3501 Of 2008) MAY 12, 2008 [S. S. SINHA AND DR. MUKUNDAKAM SHARMA, JJ] "'·, . , • Motor Vehicles Act, 1988- s. 171 - Fatal Motor Accident - Interest@ 6% p. a. awarded by tribunal as a/so High Court- Enhancement, claim of - Held: At the relevant time, the pre-, vailing rate of interest on bank deposits was 7. 5% p. a. - In view of the same, interest on compensation sum awarded @ 6% p. a. enhanced to 7. 5 % p. a. The question which arose for consideration in this appeal is with regard to the quantum of interest to be J, awarded on th~ compensation awarded to the legal ~epresentatives of the deceased who died in an accident. Disposing of the appeal, the Court HELD: 1.

1 As per section 171 oi the Motor Vehicles Act, 1988 where the claim for compensation made under the Act is allowed by the Claims Tribunal, the tribunal may direct that in addition to the amount of compensation simple interest shall also be paid al such rate from such date no\ earlier than the date of making claim. [Para 8] [198-8,C] · 1. 2 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. [Para 10] [198-E,F] 1. 3 In order to determine such rate, the observationi made by this Court over the years are referred.

The accident in the instant case to~~l{ pl i 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 rati=> 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 de- " prived 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 :- "Jn 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 w, 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 Trans- •' port 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 prevail- ~ ing at the relevant time. Since in th& 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, 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 quan- ,. tum 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. N. J. Appeal disposed of.