Karnataka High Court
Puttanna And Another vs Lakshmana And Others on 21 January, 2000
Equivalent citations: 2001ACJ113, AIR2000KANT187, ILR2000KAR1098, 2000(1)KARLJ603, AIR 2000 KARNATAKA 187, (2000) ILR (KANT) 1098, (2000) 1 KANT LJ 603, (2000) 2 TAC 78, (2001) 1 ACJ 113, (2000) 3 CIVLJ 379
Author: Mohamed Anwar
Bench: Mohamed Anwar
JUDGMENT G.C. Bharuka, J.
1. The parents of one P. Nagarajaiah, who had died in a motor accident involving a lorry bearing No. CTK 9534 and a bicycle on 26-4-1991 on account of rash and negligent driving by the driver of lorry, have approached this Court for enhancement of compensation which has been quantified by the Tribunal at Rs. 75,000/-.
2. The Tribunal has found that the deceased was a bachelor at the time of accident and his parents were aged about 50 and 45 years respectively. Since there was no conclusive proof about the income of the deceased and the family had 8 acres 35 guntas of agricultural land, his services in agricultural operations and income from milk vending was assessed at Rs. 900/- per month. After deducting 1/3 for personal expenses, Rs. 600/- was taken as contribution to the family. Keeping in view average age of the parents of the deceased and the law laid by the Supreme Court in the cases of General Manager, Kerala State Road Transport Corporation, Trivandrum v Mrs. Susamma Thomas and Others and Uttar Pradesh State Road Transport Corporation v Trilok Chandra, the Tribunal has adopted the multiplier of '10' for estimating the loss of dependency, which was accordingly assessed at Rs. 72,000/-(600 x 12 x 10). Apart from this, the Tribunal has also awarded a sum of Rs. 2,000/- towards funeral expenses and Rs. 1,000/- towards conveyance. Thus, in all, total compensation of Rs. 75,000/- was awarded with interest at the rate of 6% p.a. to be payable from the date of petition till realisation of the compensation awarded.
3. So far as quantification of compensation is concerned, learned Counsel appearing for the appellant could not make out any case for enhancement thereof. But his submission is that the rate of interest should have been 12% as against 6% awarded by the Tribunal. In support of his submission, he has relied on the judgment of the Supreme Court in the cases of Smt. Chameli Wati and Another v Delhi Municipal Corporation and Others , Jagbir Singh and Others v General Manager, Punjab Roadways and Others and Hardeo Kaur and Others v Rajasthan State Road Transport Corporation and Another.
4. In order to consider the substance of the submission made by the learned Counsel for the appellant pertaining to rate of interest, one is immediately required to refer to Section 171 of the Motor Vehicles Act, 1988, which corresponds to Section 110-CC of the Motor Vehicles Act, 1939. This section empowers the Claims Tribunal to award simple interest for a given period. It reads thus.--
"Section 171. Award of interest where any claim is allowed.--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".
5. The above statutory provision empowers the Claims Tribunal to award interest in addition to the amount of compensation with restrictions that (i) the interest can be only simple in nature, and (ii) it cannot be for a period earlier than the date of making the claim. Subject to the aforesaid restrictions, discretion has been vested with the Tribunal in relation to rate at which interest has to be paid and the period for which it has to be paid. The outer limit of which has to be necessarily the date of realisation of the amount. But it still needs to be examined as to whether the Tribunal can award interest and that too for a given period at its sweet will or irrationally exercising the statutory discretion vested in it. The binding judicial precedents and principles embodied in Article 14 of the Constitution of India emphatically command that the statutory or judicial discretion has to be necessarily exercised judicially and judiciously. For exercise of such a discretion in the said manner, there has to be some objective norms, measures or standards with reference to which the discretion of ascertaining rate of interest and the period for which it is to be granted can be worked out in a predictable manner. But, by and large, exercise of discretion and grant of interest must have relevance and nexus to the facts emerging from the records of the Tribunal. Our experience shows that the Accident Claims Tribunal constituted in this State are granting interest at rates varying between 6 to 12 per cent without assigning any reason whatsoever and seems to be guided more by their subjective approach. We strongly feel that it is high time that the objective tests and standards for grant of interest on compensation in accident claims cases as laid down by this Court and by the Apex Court be recapitulated towards rationalisation thereof.
6. In relation to rate at which the interest is to be granted in a matter of accident cases, the Division Bench of this Court, in the case of Managing Director, Karnataka Power Corporation Limited v Geetha, speaking through Venkatachalaiah, J. (as he then was) had held that.--
"It is erroneous to predicate that there is anything in the law or the binding precedents that wherever interest is awarded, its rate should not be less than 12%. Both the award and the rate of interest are in the discretion of the Tribunal to be exercised judicially and judiciously, not arbitrarily or capriciously; but in accordance with sound principles.
Generally speaking, a composite rate of 6% should be considered satisfactory without any specific itemisation because the component of compensation in the 'interest-pool' is comparatively smaller and the sizable component is the amount awarded for the loss of future dependency. We however, hasten to add that the Tribunals have an undoubted discretion to award higher rates of interest, if in their opinion, the circumstances of the particular case justify such higher- rates".
7. While enunciating the above principle, the Division Bench has noticed that the Supreme Court in several cases had granted interest at the rate of 12% p.a. But the Bench was of the view that those decisions were on the facts of the cases and those are not declaration of the law within the meaning of Article 141 of the Constitution.
8. The above judgment of the Division Bench was followed with approval by a subsequent Division Bench of this Court in the case of P. Ramadevi v C.B. Saikrishna and Others, by holding that.--
"The Motor Vehicles Act is a self-contained Act. The awarding of interest under the said Act depends upon not on compassion but on judicial discretion. It cannot also be a ground to compensation for the loss of erosion of the value of money due to inflation. The provisions of the interest Act providing of interest on compensation under the Land Acquisition Cases are not relevant. The compensation paid is on account of pecuniary loss or non-pecuniary loss. The interest is paid on such amount to compensate the person to whom the compensation is awarded for delayed payments. Compensation is an amount paid in advance for any loss of life or loss of dependency or loss of earnings. It is not a debt. Therefore, the interest to be awarded under Section 110-CC of the Motor Vehicles Act could only be at 6% per annum. Therefore, the interest awarded by the Claims Tribunal at 6% per annum is legal and proper".
9. Despite the above two Division Bench judgments of this Court, in the case of Karnataka State Road Transport Corporation v R. Sethuram and Another, the subsequent Division Bench felt that the rate of interest in motor accident cases should be paid at 12% p.a. and accordingly it was enhanced from 6%, as awarded by the Tribunal, to 12% p.a, Para 18 at p. 2268 of the judgment is material for the present purposes, which reads thus.--
"It was the further submission on behalf of the first respondent that the grant of interest at 6% is too low and needs to be enhanced suitably. Sri Narayana Rao on the other hand, relying on the decision of the Division Bench of this Court, contended that the award of damages does not amount to a debt and interest cannot be awarded at a rate higher than 6% p.a. In National Insurance Company Limited v Swaranlata Das , the Supreme Court held that award of interest is in the discretion of the Court. Various High Courts consistently granted interest at 12% p.a. vide Smt. Chameli Wati's case, supra, Managing Director, Karnataka Power Corporation Limited's case, supra, General Manager, Kerala State Road Transport Corporation's case, supra. We are therefore, with great respect, unable to agree with the decision in P. Ramadevi's case, supra, and we therefore hold that the grant of interest is in judicial discretion of the Courts, to be exercised in the facts and circumstances of each case and need not be restricted to 6% p.a.".
10. The K.S.R.T.C. went in appeal against the above judgment to the Supreme Court, wherein on the point of interest, the judgment of this Court was reversed. The case is reported in Karnataka State Road Transport Corporation v R. Sethuram and Another. In para 4 of the judgment it has been held that.--
"However, so far the enhancement of interest is concerned, we are of the opinion that as this accident took place in 1982 and an amount of Rs. 23,32,900 had been awarded by the Tribunal as compensation for the injuries sustained by the respondent, there was no justification on the part of the High Court to enhance the rate of interest from 6% to 12%. Accordingly, that part of the direction of the High Court is set aside. The respondent shall be entitled only to the interest at the rate of 6% over the amount awarded".
11. In the case of R.D. Hattangadi v Mis. Pest Control (India) Private Limited and Others, it has been held that.--
"So far the direction of the High Court regarding payment of interest at the rate of 6% over the total amount held to be payable to the appellant is concerned, it has to be modified. The High Court should have clarified that the interest shall not be payable over the amount directed to be paid to the appellant in respect of future expenditure under different heads. It need not be pointed out that interest is to be paid over the amount which has become payable on the date of award and not which is to be paid for expenditures to be incurred in future. As such we direct that appellant shall not be entitled to interest over such amount".
12. In another recent judgment of the Supreme Court going from the State of Karnataka, in the case of Tasnimtaj v Managing Director, K.S.R.T.C. and Another, it has been held that.--
"Learned Counsel for the appellant is right, when she contended that there was no reason for the High Court to abruptly reduce the interest from 9% to 6% only because the High Court was enhancing the compensation amount. However, in our view, once the interest of 6% is granted on the awarded amount, for the enhanced amount of Rs. 88,800/- pursuant to our order also there should be 6% interest from the date of the application till payment of additional amount of Rs. 88,800/- by the respondents. The appeal is partly allowed to that extent with the net result that the appellants will be entitled to claim total compensation of Rs. 3 lakhs in all with 6% interest from the date of the claim petition till payment. The award will stand modified accordingly".
13. It may be noticed here that no judgment of the Supreme Court declaring as of law within the meaning of Article 141 of the Constitution has been brought to our notice which has held that the Claims Tribunal should always award interest at the rate of 12% p.a. on the entire amount of compensation, which comprises of both pecuniary and non-pecuniary damages. On the other hand, the two Division Bench judgments of this Court in the cases of Geetha, supra and Ramadevi, supra, still hold good, according to which, awarding of composite rate of interest at the rate of 6% p.a. on the amount awarded should be found reasonable unless the special facts and circumstances of the case warrant granting of any other rate may be higher or lower. It has been held that any deviation for granting interest at the rate different than 6% p.a. should be supported by appropriate reasons to be spelled out by the Tribunal in its judgment.
14. It has further to be held that while determining the rate of interest and the period for which the same is sought to be granted, the Tribunal should give due consideration to the fact as to whether the claim proceedings have been sought to be lingered either by the claimant or the owner or his insurer, so that it may act as deterrent against the erring party and compensatory for the other.
15. For the aforesaid reasons, we find that on the facts and circumstances of the case the Tribunal has rightly awarded interest at simple rate of 6% p.a. from the date of petition till realisation on the awarded amount.
16. The appeal is accordingly dismissed but there will be no order as to costs.