Supreme Court of India
DHARAMPAL & ORS.versusU.P. STATE ROAD TRANSPORT CORPN.
- Citation
- 2008 INSC 631
- Decided
- 12 May 2008
- Disposal
- Disposed off
- Bench
- S B SINHA
Holding
Interest on the compensation is to be awarded at 7.5% per annum, reflecting the prevailing bank deposit rate at the time of the Tribunal's award, and the prayer for enhancement of compensation is dismissed.
Summary
The case arose from a fatal road accident on 1 September 2004 in which a bus collided with a motorcycle, killing five occupants. The claimants filed a petition before the Motor Accident Claim Tribunal, which awarded Rs.3,50,100 in compensation with interest at 6% per annum. The Uttarakhand High Court enhanced the compensation to Rs.3,70,000 but retained the 6% interest rate. On appeal to the Supreme Court, the issue was the appropriate rate of interest under Section 171 of the Motor Vehicles Act, 1988, and whether the compensation could be further enhanced. Referring to earlier Supreme Court decisions and the prevailing bank deposit rate at the time of the award (May 2005), the Court held that interest should be fixed at 7.5% per annum. The Court dismissed the request for further enhancement of compensation as it was not pressed before it. Consequently, the appeal was disposed of with the direction to pay interest at 7.5% from the date of filing the claim until payment.
Issues considered
- What rate of interest should be awarded under Section 171 of the Motor Vehicles Act, 1988 for compensation in a fatal accident?
- Whether the quantum of compensation can be enhanced beyond the amount awarded by the Tribunal and affirmed by the High Court.
Legislation cited
- Motor Vehicles Act, 1988s. 171
Subjects
Motor Vehicles ActSection 171interest ratecompensationfatal accidentclaims tribunalbank deposit rateSupreme Court
Judgment
[2008] 8 S.C.R. 194
{:
A DHARAMPAL & ORS.
v.
U.P. STATE ROAD TRANSPORT CORPN.
(Civil Appeal No.3501 Of 2008)
MAY 12, 2008
B
[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-
c 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
D appeal is with regard to the quantum of interest to be
J,
awarded on th~ compensation awarded to the legal ~ep-
resentatives of the deceased who died in an accident.
Disposing of the appeal, the Court
E 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\
F earlier than the date of making claim. [Para 8] [198-8,C] ·
1.2 Interest is compensation for forbearance or de-
tention 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 ·
G 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 acci-
H dent in the instant case to~~l{ pl<ice on 1.9.2004 and the J
I '1 4 l
DHARAMPAL & ORS. v. U.P. STATE ROAD 195
TRASNPORT CORPN.
tribunal had passed the award on 18.5.2005. Rate at which A
the interest is to be awarded would normally depend upon
the bank rate prevailing at the relevant time. Since in the
case of Tamil Nadu State Transport Corpn. Ltd. 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, s
' it is 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. Consequently, the
appellants would be entitled to be paid interest at the rate
of 7.5% from the date of application till the date of pay- c
ment. [Paras 10 and 14] [198-F, 200-C,D,E]
Tamil Nadu State Transport Corpn. Ltd. vs. S. Rajapriya
(2005) 6 sec 236 - relied on.
National Insurance Co. Ltd. vs. Keshav Bahadur (2004)
0
2 SCC 370; Kaushnuma Begaum (Smt.) and others vs. New
India Assurance Co. Ltd. & others (2001) 2 SCC 9; United
India Insurance Co. Ltd. and others vs. Patricia Jean Mahajan
and others (2002) 6 SCC 281; Abati Bezbaruah v. Dy Direc-
tor General, Geological Survey of India and Another (2003) 3
.......
SCC 148 - referred to. E
2. The issue with regard to enhancement of compen-
sation is not pressed before this Court and consequently
the prayer for enhancement of quantum of compensation
as raised in the memorandum of appeal is dismissed. F
[Para 15] [200-F,G]
CIVILAPPELLATE JURISDICTION: Civil Appeal No. 3501
of 2008
From the final Judgment and Order dated 22/3/2007 of G
~ the High Court of Uttarakhand at Nainital in Appeal from Order
(A.O.) No. 102/2007
Yun us Malik, Abhishek Vikas, Ravi Kishore and P1ash::mt
Chaudhary for the Appellant.
H
196 SUPREME COURT REPORTS (2008] 8 S.C.R.
A Sangeeta Kumar and Ashwani Garg for the Respondent.
The Judgment of the Court was delivered by
DR. MUKUNDAKAM SHARMA, J. 1. Leave granted.
2. The present appeal revolves around a very short issue,
B namely, the quantum of interest to be awarded on the compen-
sation awarded to the legal representatives of the deceased
who died in an accident. Before we deal with the issue that arises
for our consideration, we will deal with the factual matrix out of
which the aforesaid issue arises.
c
3. Deceased, Pradeep Kumar was driving a motorcycle
along with his wife, two minor daughters and a minor son. When
they reached village Dadiaki on the Muzaffarnagar - Roorkee
Road, Bus No. UP15L 7640, allegedly driving at a very high
speed, rashly and negligently, hit the motorcycle. All the five
0
persons traveling on the motorcycle died on the spot due to the
aforesaid accident. The driver of the bus fled away from the
place of occurrence immediately after the accident, leaving
behind the bus. The age of the deceased Pradeep Kumar was
28 years and as per appellants he was earning an amount of
E Rs.4,200/- per month. The appellants filed a petition No.202 of
2004 before the Motor Accident Claim Tribunal, Udham Singh
Nagar, Rudrapur. Several witnesses were examined. On pe-
....
'
rusal of the evidence on record the Tribunal passed a judgment
and awarded Rs.3,50, 100/- as compensation to the appellants
F along with interest @ 6% per annum from the date of applica-
tion till the date of payment. The Tribunal upon consideration of
the evidence held that the deceased was earning Rs.2,400/-
per month and not Rs.4,200/- as claimed. Being aggrieved by
the aforesaid award of the Motor Accident Claim Tribunal the
G appellants preferred an appeal being Appeal No.102 of 2007
in the High Court of Uttrakhand at Nainital contending inter alia
that it was clearly proved that the deceased was doing a work
of mason and was earning Rs.4,200/- and the Tribunal erred in
determining the income of the deceased on the presumption
H that the job of the mason is not available everyday. Challenge
DHARAMPAL & ORS. v. U.P. STATE ROAD 197
TRASNPORT CORPN. [DR. MUKUNDAKAM SHARMA, J]
was made in the said appeal also in respect of the interest A
awarded contending inter alia that the rate of interest was on
the lower side and the Tribunal should have awarded higher
rate of interest.
4. The respondent - UP State Road Transport Corpora-
tion also filed an appeal which was registered as Appeal No.386 B
'.; of 2005. Both the aforesaid appeals were taken up for consid-
eration together as the issues that arose for consideration were
similar. The Division Bench of the Uttarakhand High Court con-
sidered the evidence on record and dismissed the appeal filed
by the respondent - UP State Road Transport Corporation C
whereas the appeal filed by the appellants was allowed to the
extent that the appellants were held to be entitled to get a sum
of Rs.3,70,000/- instead Rs.3,51, 100/- as awarded by the Tri-
bunal for the death of Pradeep Kumar. So far as the rate of
interest is concerned, the High Court also maintained.the inter- D
est at 6 °1) p.a. which was awarded by the Tribunal holding that
the said rate of interest does not require any interference. The
High Court directed the State Road Transport Corporation to
deposit the enhanced amount of compensation within two
months with interest, with the Tribunal. E
5. The appeal is now filed by the appellants in this Court in
respect of the quantum of compensation awarded as also in
• respect of the rate of interest which was awarded by the Tribu-
" nal as also by the High Court.
F
6. Learned counsel appearing for the appellants, at the
time of arguments fairly stated before us that he would advance
his arguments only in respect of the interest and would noflike
to press for the enhancement of quantum of compensation in
terms of the prayers made in the memorandum of appeal.
G
,.. 7. Accordingly, we heard the learned counsel for the ap-
pellant3 only in respect of the issue of enhancement of rate of
interest awarded by the Tribunal and also by the High Court,
which is awarded and rri1intained as 6% per annum. Counsel
for the appellants submitted before us that there are ample num- H
198 SUPREME COURT REPORTS [2008] 8 S C.R
..
A ber of cases decided by this Court for such claim of enhance-
men\ of rate of interest and in some cases the rate of interest
has been consistently awarded by this Court at 9% per annum
considering the claim of this nature The counsel for the respon-
dent - UP State Road Transport Corporation pointed out that
B this is not a case for enhancement so far as the rate of interest
is concerned, inasmuch as the prevailing rate of interest on bank
deposit was only 6.5%. . '
8. As per section 171 of the Motor Vehicle Act, 1988 (here-
inafter referred as 'Act') where the claim for compensation made
c under the act is allowed by the Claims Tribunal, the tribunal may
direct that in additior to the amoJnt of compensation simple
interest shall also be paid at such rate from such date not ear-
lier than the date of making claim.
9. In National Insurance Co. Ltd. vs. Keshav Bahadur re-
D
ported in (2004) 2 sec 370 this court has held that the provi- .
sions require payment of interest in addition to compensatio1·,
already determined. Even though the expression "may" is used,
a duty is laid on the Tribunal to consider the question of interest
separately with due regard to the facts and circumstances of
Et the case. It was clearly held in the said decision that the provi-
sion of payment of interest is discretionary and is not and can-
not be bound by rules.
10. Interest is compensation for forbearance or detention <
F 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. In order to determine sJch rate we may refer to the
observations made by this court over the years. In the year 200·1
in the case of Kaushnuma Begaum (Smt.) and others vs. New
G
India Assurance Co. Ltd. & others reported in (2001) 2 SCC 9
on the question of rate of ir1terest to be awarded it was held that •
earlier, 12% was found to be the reasonable rate of simple in-
terest but with a change in economy and the policy of Reserve
Bank of India the interest rate has been lowered and the nation-
H
DHARAMPAL & ORS. v. U.P. STATE ROAD 199
.• TRASNPORT CORPN. [DR MUKUNDAKAM SHARMA, J]
a: zed banks are now granting interest@ 9°·~ on fixed deposits A
for one year. Accordingly, interest @ 9% was awarded in the
said case. We may at this stage also refer +o the following ob-
servations of their Lordships in the aforesaid decision which
are relevant to the present case:
"24. Now, we have to fix up the rate of interest. Section 8
'>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 C
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 D
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 E
(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. F
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 G
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 re-
ported in (2003) 3 SCC 148 it was held that the question as to H
200 SUPREME COURT REPORTS [2008] 8 S.C.R.
....
A 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 aforemen-
tioned decisions interest @ 9% was awarded in the said case.
B 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 inter-
est fixed by the Tribunal at 9% per annum and altered the same
c 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
D
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 appropri-
E ate 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.
F
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 enhance-
ment of compensation is concerned, the same was not pressed
G
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.
H
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