Holding

Interest on compensation under Section 110‑CC may be awarded only from the date the claim is made, not from an earlier date.

Summary

The claimant, a young student, suffered multiple severe injuries in a road accident caused by the negligent driving of a bus insured by United India Insurance. He filed a compensation claim under the Motor Vehicles Act, 1939, which the Motor Accident Claims Tribunal awarded Rs.1,50,000, later enhanced by the Bombay High Court to Rs.2,70,000 with 12% interest from the date of the accident. The insurer appealed, contending that Section 110‑CC of the Act permits interest to accrue only from the date the claim is made, not from an earlier date. The Supreme Court examined the language of Section 110‑CC and held that interest cannot be awarded from a date earlier than the claim filing date. Despite this, the Court chose not to disturb the High Court's order directing interest, noting the claimant's extensive injuries and the adequacy of the compensation. The appeal was dismissed, and the insurer was ordered to pay costs.

Issues considered

Whether interest on compensation awarded under Section 110‑CC of the Motor Vehicles Act can be directed to accrue from a date earlier than the date on which the claim was made
Whether the High Court's order directing interest from the date of the accident complies with Section 110‑CC

Legislation cited

Motor Vehicles Act, 1939s. 110-CC

Subjects

Motor Vehicles ActSection 110-CCcompensation claiminterest on compensationroad accidentinsurance liabilityappellate jurisdiction

Judgment

UNITED INDIA INSURANCE CO. LTD. A
v.
NARENDRA PANDURANG KADAM AND ORS.

DECEMBER 16,1994

[B.P. JEEVAN REDDY AND SUHAS C. SEN, JJ.] B

Motor Vehicles Act, 1939: Section I JO-CC.

Accident-Compensation claim-Interest on-Held interest cannot be
awarded from a date earlier than the date of claim-Held on facts
interference with order ofinterest not calledfor. C

In a road accident the respondent, a young man of good health, a
sportsman and a bright student, sustained fracture of the bone in the
left leg resulting in permanent shortening of the leg, disability of the
right index finger, fracture of ribs, loss of vision of both eyes with D
100% disability. Besides one of his kidneys had also to be removed. The
Motor Accident Claims Tribunal, held that claimant had proved that
the accident was due to the rash and negligent driving on the part of
the driver of the bus which was insured with the appellant-Insurance
Company. Having regard to injuries suffered by the claimant, the
Tribunal awarded a compensation of Rs. 1,50,000. On appeal the High E
Court enhanced the compensation to Rs. 2,50,000 with interest @ 12%
• per annum .from the date of accident till actual payment.

In appeal to this Court, preferred by the Insurance Company, it
was contended that a Court or Tribunal cannot allow interest from a
date earlier than the date of making the claim for compensation. F

Dismissing the appeal, this Court

HELD: 1. Ideally a claim should be settled as soon as it is made.
Because of the delay in settlement of the claim by legal process or
otherwise interest may be awarded but such interest cannot be from a G
date earlier than the date of the claim. The language of Section 110-CC
of the Motor Vehicles Act, 1939, is clear that the interest can be
awarded by the Court or Tribunal at such rate as it thinks fit but the
interest cannot be made payable from a date earlier than the date of
the claim. [690 D] H
687
688 SUPREME COURT REPORTS [1994] SUPP. 6 S.C.R

A 2. The accident caused by the rash and negligent driving of the bus
has ruined the life of the claimant. The amount of compensation given
by the High Court does not appear to be on the high side. Considering
the enormity of the suffering underwent by the claimant and also the
permanent injuries sustained by him as well as loss of future income
and enjoyment of life, this Court is disinclined to interfere with the
B order directing payment of interest, which will have the effect of
further reduction in the quantum of compensation awarded by the
High Court. [690 E, 691 D]

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 9465 of
1994.
c
From the Judgment and Order dated 17.2.86 of the Bombay High
..
Court in F.C.A.No. 41of1985.

S.C. Dhanda and Ms. Sushma Suri for the Appellant.

D The Judgment of the Court was delivered by

SEN, J. Leave granted.

This case has arisen out of an insurance claim made by Narendra
Pandurang Kadam. Narendra was a bright student studying Industrial
E Electronics. He stood first in his class and fourth in the college. He was
physically fit and a sportsman. On 18.5.1980, at about 6 A.M. Narendra
was travelling with one Sunil David on motorcycle bearing No.GDC-7526
•
along Afonso do Albuquerque Road, Panaji, Goa. When the motorcycle
carrying the claimant and his companion had reached a road crossing the
bus No. GDS-1574 driven by the Alisaheb Appasaheb Nadar, belonging to
F Ashok Vishwanath Naik came from the western section of Albuquerque
road, and collided with the motorcycle. As a result of which Narendre
sustained serious injuries.

Narendra's case is that the accident was due to rash and negligent
driving on the part of the driver of the bus. He was plying the bus at very
G high speed, and was unable to control the vehicle at the intersection. After
the accident the motor cycle was dragged to a considerable distance before
the bus could be stopped. As a result of the accident, Narendra sustained
fracture of the bone in the left leg resulting in permanent shortening of the
leg, disability of the right index finger, fracture of the 6th and 7th ribs, loss
of vision of both eyes with 100% disability and one of his kidneys had to be
H
UNITED INDIA INSURANCE CO. LTD. v. N. P. KADAM [SEN, J.] 689

removed. The bus was insured with United India Insurance Company Ltd., A
the appellant herein.

Narendra lodged a claim for compensation before the Motor Accident
Claims Tribunal, Panaji, Goa. The claim was for Rs.6,25,000. The claim
was lodged after more than two years. A preliminary point of limitation was
raised by the bus driver, the owner of the vehicle and the insurance B

- company. The preliminary objection did not succeed. The Tribunal after a
review of the evidence produced before it held that the claimants had
proved that the accident was due to rash and negligent driving on the part of
the driver of the bus. The Tribunal found that the claimant had been
hospitalized at Goa Medical College for three months for treatment of C
injuries suffered by him. Having regard to the injuries suffered by the
claimant, the Tribpnal held he was entitled to a compensation of Rs.
1,50,000.

Aggrieved by the order of the Tribunal, Narendra preferred an appeal
to the Bombay High Court. A Division Bench of the Bombay High Court D
upheld the finding o9f the Tribunal that the accident was due to rash and
negligent driving by the bus driver. The cross objection filed by the In-
surance Company was dismissed. After taking into consideration the
prospect of the appellant in life and his potential earning capacity before the
• accident, it observed that the injuries sustained by the appellant, E
unfortunately, left him completely disabled and his life, hence forth, will be
miserable. Therefore, the pain and agony, Joss of amenities in life and
permanent disability, as well as the necessity to provide for future expenses
incidental to the injuries sustained, fully justify a higher compensation. The
compensation was enhanced from Rs. 1,50,000 to a total of Rs. 2,70,000
with interest at the rate of 12 per cent per annum from the date of the F
accident till actual payment. This compensation had to be paid jointly and
severally by the respondents. Costs were to be paid by the respondents.

The insurance company has now come up in appeal before this Court.
On 17th July, 1987 an order was passed condoning delay of 330 days in
preferring this appeal and also directing issue of notice to the respondents. G
The notice was confined to only one question i.e. whether the direction
issued by the High Court relating to the payment of interest was in
conformity with Section 110-CC of the Motor Vehicles Act. The appellant
was directing to pay Rs. 1,000 by way of cost to the respondent within two
weeks. H
690 SUPREME COURT REPORTS [1994] SUPP. 6 S.C.R

A The contention of the appellant is that a court or a tribunal cannot
allow interest from a date earlier than the date of making of the claim for 1
compensation. The contention of the appellant appears to be borne out by
the clear language of the statute section I I 0-CC provides : - >-:

"I I 0-CC. Award of interest where any claim is allowed-
B where any Court or Claims Tribunal allows a claim for
compensation made under this Act, such Court or Tribunal
~-
may direct that in addition to the amount of compensation I
simple interest shall also be paid at such rate and from such
date not earlier than the date of making of the claim as it may
.oj
specify in this behalf."
c
Ideally a claim should be settled as soon as it is made. Because of the
delay in settlement of the claim by legal process or otherwise interest may
be awarded but such interest cannot be from a date earlier than -the date of
the claim. The language of Section I I 0-CC is clear that the interest can be
D awarded by the Court or Tribunal at such rate as it thinks fit but the it_lterest
cannot be made payable from a date earlier than the date of the claim. The
contention of the appellant on this point appears to be prima facie correct.

This, however, is not the end of the problem in this case. The accident

E
caused by the rash and negligent driving of the bus No.GTS- 1574 has
ruined the life of the claimant. Considering that the claimant was a young
man of good health, a sportsman and a bright student, the amount of
•
compensation given by .the Bombay High Court does not appear to be on
the high side. The claim made was for a total sum of Rs. 6,25,000 made up
as under:- ~
J
F I. Pain and mental shock. Rs. 25,000

2. Fracture of left leg and shortening of leg,

skin grafting. Rs. 25,000

G 3. Rt. index finger operated. Rs. 5,000
r
4. Fracture of 6th and 7th ribs Rs. 5,000

5. Rt. kidney removed. Rs. I0,000

6. Loss of vision of both eyes Rs. 50,000
H
·----

}
UNITED INDIA INSURANCE CO. LTD. v. N. P. KADAM [SEN, J.] 691

7. Loss of future, income and enjoyment of life Rs. 4,50,000 A
(average pay Rs.1500 p.m. x 12 x 25 years) .
...
8. No chances of marriage. Rs. 25,000

9. Medical expenses and other expenses, extra food,
B
travelling rly. charges, medical bills, expenses etc. Rs. 25,000

10. One more operation on left leg. Rs. 5,000

Total : Rs. 6,25,000 C

The claimant was able to get a small amount of the claim. In fact, the
claim of Rs. 4,50,000 on account of loss of future income and enjoyment of
life was made on a very modest basis of Rs. 1,500 per month. Even that
was not allowed in full. The amount of compensation was brought down to
Rs. 2,70,000. Considering the enormity of the suffering underwent by the D
claimant and also the permanent injuries sustained by him as well as loss of
future income and enjoyment of life, we are disinclined to interfere with the
order directing payment of interest. This will have the effect of further
reduction in the quantum of compensation awarded by the High Court.

There was also enormous delay of 330 days for coming to this Court E
by the appellant. The claim was not settled promptly. On the contrary, the
case has been dragged on mercilessly. The appellant also did not pay
Narendra, the respondent No.I, Rs. 1000 as directed by this Court in time.
The respondent No.l will be entitled to retain the said sum of Rs. 1,000.
F
The appellant will pay the respondent No. I a further sum of Rs. 5,000
by way of costs.

The appeal is dismissed .

• T.N.A. Appeal dismissed. G