Allahabad High Court
National Insurance Company L.T.D. ... vs Dipanjali Singh D/O Late Pramod Kumar ... on 19 February, 2020
Author: Jaspreet Singh
Bench: Jaspreet Singh
HIGH COURT OF JUDICATURE AT ALLAHABAD, LUCKNOW BENCH
Case :- FIRST APPEAL FROM ORDER No. - 725 of 2011
Appellant :- National Insurance Company L.T.D. Thro. Divisional Manager
Respondent :- Dipanjali Singh D/O Late Pramod Kumar Singh
Counsel for Appellant :- Waquar Hashim,Sandeep Kumar Agrawal
Counsel for Respondent :- Dev Kumar Tripathi,Rehan Mubassir
ALONG WITH
Case :- FIRST APPEAL FROM ORDER No. - 726 of 2011
Appellant :- National Insurance Company L.T.D. Thro. Divisional Manager
Respondent :- Dipanjali Singh D/O Late Pramod Kumar Singh
Counsel for Appellant :- Waquar Hashim,Sandeep Kumar Agrawal
Counsel for Respondent :- Dev Kumar Tripathi,Rehan Mubassir
ALONGWITH
Case :- FIRST APPEAL FROM ORDER No. - 724 of 2011
Appellant :- National Insurance Company L.T.D. Thro. Divisional Manager
Respondent :- Dipanjali Singh D/O Late Pramod Kumar Singh
Counsel for Appellant :- Waquar Hashim,Sandeep Kumar Agrawal
Counsel for Respondent :- Dev Kumar Tripathi,Rehan Mubassir
ALONGWITH
Case :- FIRST APPEAL FROM ORDER No. - 727 of 2011
Appellant :- National Insurance Company L.T.D. Thro. Divisional Manager
Respondent :- Anjali Singh D/O Arvind Kumar Singh
Counsel for Appellant :- Waquar Hashim
Counsel for Respondent :- Poonam Singh,Santosh Singh
ALONGWITH
Case :- FIRST APPEAL FROM ORDER No. - 728 of 2011
Appellant :- National Insurance Company L.T.D. Thro. Divisional Manager
Respondent :- Anjali Singh D/O Arvind Kumar Singh
Counsel for Appellant :- Waquar Hashim
Counsel for Respondent :- Poonam Singh,Santosh Singh
*****
Hon'ble Jaspreet Singh,J.
Heard Shri Waquar Hashim, learned counsel for the appellant Insurance Company in all the five connected appeals and Shri Dev Kumar Tripathi learned counsel appearing for the claimants-respondents No.1 and 2 in FAFO Nos.724, 725, 726 of 2011. None has appeared on behalf of the claimants-respondents in FAFO Nos.727 and 728 of 2011.
Since, in one accident, five persons lost their lives, it is in respect of their death that five separate claim petitions came to be filed, which have been allowed by the Tribunal and the Insurance Company being aggrieved against the said awards have preferred these five appeals. Since, common questions of law and facts are involved, hence, the Court has connected all these five appeals and the same have been heard together and are being disposed of by this common judgment.
In order to appreciate the controversy involved in the above appeals, certain brief facts are being noticed hereinafter.
On 14.04.2005, Shri Pramod Kumar Singh was driving his Santro Car bearing UP-32-BJ-1917 wherein his wife Smt. Sita Singh, his 16 years old son Debashish were travelling along with one Shri Arvind Kumar Singh and his wife Swastika Singh. As the aforesaid car reached near Ahuja Petrol Station in Police Station Baksi-Ka-Talab, a truck bearing No.HR-12-GA-0432, which was coming from the opposite direction and was being driven rashly and negligently, hit the car, as a result all the five persons sitting in the car sustained grievous injuries and consequently expired.
Shri Pramod Kumar Singh was survived by his two daughters namely Dipanjali Singh and Shipra Singh, who filed three claim petitions for the death of their father, mother and younger brother respectively whereas the legal heirs of Arvind Kumar Singh namely Anjali Singh and Anjul Kumar Singh filed two claim petitions for the death of their father Arvind Kumar Singh and mother Swastika Singh. All the claim petitions were decided by the MACT/ADJ, Court No.10, Lucknow by means of separate awards dated 26.04.2011 wherein compensation was granted in all the five claim petitions. The Insurance Company being aggrieved against the aforesaid award passed in respective five claim petitions have preferred the instant appeals.
FAFO No.724 of 2011 arises out of the award dated 26.04.2011 passed in Claim Petition No.543/2005 wherein a sum of Rs.11,93,493/- has been awarded by the Tribunal on account of the death of Smt. Sita Singh wife of Shri Pramod Kumar Singh alongwith 6% interest per annum to be paid within a period of one month failing which the rate of interest would stand enhanced to 9% per annum.
FAFO No.725 of 2011 arises out of the award dated 26.04.2011 passed in Claim Petition No.544/2005 which related to the death Shri Pramod Kumar Singh wherein a sum of Rs.26,53,780/- along with 6% interest per annum has been awarded in favour of the respondents No.1 and 2 with a stipulation that in case if the aforesaid amount is not paid within a period of one month then the rate of interest would be 9% per annum.
FAFO No.726 of 2011 arises out of the award dated 26.04.2011 passed in Claim Petition No.542/2005 wherein a sum of Rs.3,65,000/- has been awarded by the Tribunal on account of the death of Dabashish alias Ashu (son of Shri Pramod Kumar Singh) with 6% interest per annum to be paid within a period of one month failing which the rate of interest would stand enhanced to 9% per annum.
FAFO No.727 of 2011 arises out of the award dated 26.04.2011 passed in Claim Petition No.156/2008 wherein a sum of Rs.23,50,380/- has been awarded by the Tribunal on account of the death of Shri Arvind Kumar Singh with 6% interest per annum to be paid within a period of one month failing which the rate of interest would stand enhanced to 9% per annum.
FAFO No.728 of 2011 arises out of the award dated 26.04.2011 passed in Claim Petition No.157/2008 wherein a sum of Rs.3,63,500/- has been awarded by the Tribunal on account of the death of Smt. Swastika Singh (wife of Shri Arvind Kumar Singh) alongwith 6% interest per annum to be paid within a period of one month failing which the rate of interest would stand enhanced to 9% per annum.
It is in the aforesaid backdrop, Shri Waquar Hashim, learned counsel for the appellant has raised the following submissions:-
(a) The accident which occurred on 14.04.2005 in the midst of the road while truck bearing No.HR-12-GA-0432 was coming from opposite direction hit the Santro Car bearing No.UP-32-BJ-1917 as indicated in the site plan would reveal that the same could not have transpired unless the driver of the car was also responsible for the said accident, hence, a case of contributory negligence but not considered by the Tribunal.
(b) The multiplier adopted by the Tribunal in mostly all the cases is on the higher side than as laid down by the Hon'ble Apex Court in the case of Sarla Verma (Smt.) and others vs. Delhi Transport Corporation and another, (2009) 6 SCC 121.
(c) Insofar as the FAFO Nos.724, 725 and 726 of 2011 are concerned, the Tribunal while awarding the compensation has not differentiated that the claimants were the two daughters of the deceased and while awarding the compensation, the Tribunal ought to have considered the dependency. The claimants being the daughters could have been dependent on the father, but in the same fashion they have been granted the compensation insofar as the mother as well as the minor brother are concerned. According to the learned for the counsel for the appellant, it is not appropriate, thus, the Tribunal has given a much larger amount as compensation especially when one of the daughter got married and she was no longer dependent on her parents or minor brother. Accordingly, the awards require to be scaled down.
(d) It has further been submitted that the Tribunal has erred in awarding penal interest to the respondents-claimants which is not in sound exercise of jurisdiction and consequently the same requires to be interfered with in the aforesaid appeals.
Learned counsel for the appellant in support of his contention has relied upon the decision of the Hon'ble Apex Court in the case of Bijoy Kumar Dugar vs. Bidya Dhar Dutta & Ors., (2006) 2 SCC (Cr.) 81; T.O. Anthony vs. Karvarnan & Ors., 2008 AICC 852; Manjuri Bera vs. Oriental Insurance Company Ltd., (2007) 2 TAC 431; U.P.S.R.T.C. vs. Trilok Chandra, 1996 AIR Online 1996 SC 324 and Sarla Verma (Smt.) and others vs. Delhi Transport Corporation and another, (supra).
Shri Dev Kumar Tripathi, learned counsel for the claimants-respondents in FAFO Nos.724, 725 and 726 of 2011 has submitted that there was no question regarding the accident being on account of contributory negligence. It has been submitted that neither there was any pleading nor any evidence was led on the aforesaid issue. The said contention has been raised by the learned counsel for the Insurance Company merely on the basis of site-plan which was prepared by the police authorities. However, the said site-plan was never proved like any other document nor any evidence was led to indicate that there was any contributory negligence on the part of the driver of car, thus, for the aforesaid reasons, it is submitted that the submissions of the learned counsel for the appellant does not hold water. It has further been submitted by the learned counsel for the respondents that the compensation to be granted by the Tribunal is on the premise that upon a death of a human being, there is no amount which can be awarded which may compensate the loss, however, an effort is made to ensure that as far as possible the heirs/legal representatives are awarded such sum which as far as possible may compensate them on account of the death of the aforesaid persons. It is in the aforesaid backdrop, it be noticed, that two young girl, that are the claimants, who lost their father, mother and young brother in a tragic accident in one stroke in itself is a thunderous event where grief knows no bounds. In the aforesaid circumstances, the Tribunal has rightly awarded the compensation and the same requires no interference from this Court.
In support of his contention, he has relied upon the decision of the Hon'ble Apex Court in the case of Ningamma and Another vs. United India Insurance Company Ltd., (2009) 13 SCC 710.
Shri Tripathi has fairly submitted that so far as the submission regarding penal interest is concerned, he does not wish to escalate the said issue and the same may be decided by the Court in light of the settled legal proposition.
The Court has heard learned counsel for the parties at length and also perused the record.
In light of the aforesaid submissions made by the learned counsel for the parties, the Court proposes to deal with the submissions raised by the learned counsel for the appellant in seretum.
The first issue (a) raised by the learned counsel for the appellant is in respect of the contributory negligence. It has been submitted that the manner in the the accident has occurred and also as evident from the record especially the site-plan, it is clear that the accident took place in the midst of the road and since both the vehicles were coming from the opposite direction, therefore, it cannot be the sole liability of the offending truck rather it was also the negligence of the Santro Car driver.
From the record it reveals that though the Insurance Company in its written statement bearing Paper No.A-9 (in Claim Petition No.544/2005 for reference) in Para-11 had raised a plea that the accident occurred on account of rash and negligent driving of the Santro Car and its driver. However, even though the issue was also framed, but no adequate evidence was led before the Tribunal by the Insurance Company rather for that matter the Insurance Company did not lead any evidence at all.
At this stage, learned counsel for the appellant has attempted to persuade this Court to take note of the site-plan and it has been urged that it indicates that it was a clear case of contributory negligence. The aforesaid submission does not find favour with this Court for the reason that the site-plan is like any other document which requires to be proved in accordance with law. The issue of contributory negligence was raised by the Insurance Company itself so it was incumbent on the Insurance Company to have led proper, cogent and admissible evidence. Once, they have failed to lead evidence at all, it is not open for them to raise this issue before the first appellate Court and that too on the basis of mere site-plan which has not been proved in accordance with law.
The decisions relied upon by the learned counsel for the appellant in the case of Bijoy Kumar Dugar (supra) and T.O. Anthony (supra) have been delivered on a different set of facts and circumstances. While the aforesaid issue has been considered by the Hon'ble Apex Court in the case of Jiju Kuruvila and others vs. Kunjujamma Mohan & Ors., (2013) 8 SCC 166, wherein it is held that the issue regarding the contributory negligence cannot be inferred merely on the position of vehicle as shown in the site-plan. In absence of any direct or corroborative evidence, no inference can be drawn of the contributory negligence on the part of the victim merely on the basis of such site-plan. The relevant portion of the aforesaid report of the Hon'ble Apex Court is reproduced hereinafter:-
"20.5. The mere position of the vehicles after accident, as shown in a scene mahazar, cannot give a substantial proof as to the rash and negligent driving on the part of one or the other. When two vehicles coming from opposite directions collide, the position of the vehicles and its direction, etc. depends on a number of factors like the speed of vehicles, intensity of collision, reason for collision, place at which one vehicle hit the other, etc. From the scene of the accident, one may suggest or presume the manner in which the accident was caused, but in the absence of any direct or corroborative evidence, no conclusion can be drawn as to whether there was negligence on the part of the driver. In absence of such direct or corroborative evidence, the Court cannot give any specific finding about negligence on the part of any individual."
This aspect of the matter has also been considered by a Division Bench of this Court in the case of Prabhandhak, U.P. Rajya Sadak Parivahan Nigam vs. Rabia Begum and others, reported in 2015 ACJ 1492. The relevant Para-28 of the aforesaid decision reads as under:-
"28. To sum up:-
1.Burden of proof with regard to contributory negligence shall be on the party who pleads for it. The contributory negligence should be proved like other issues. No inference may be drawn solely from Naksha Nazari or mere pleading on record."
Thus, once it is clear that the appellant Insurance Company did not lead any evidence to prove or establish the contributory negligence, hence, it cannot be permitted at this stage nor this Court is persuaded to draw an inference merely on the basis of the site-plan. In light of the decisions of the Hon'ble Apex Court in the case of Jiju Kuruvila and others vs. Kunjujamma Mohan & Ors., (supra) and the Division Bench of this Court in the case of Rabia Begum and others (supra), this Court declines to accept the first contention which is rejected.
The next contention (b) and (c) regarding the multiplier being on a higher side than as provided by the Hon'ble Apex Court in the case of Sarla Verma (Smt.) (supra) is concerned and that the amount awarded is not in consonance with the settled principles, as the claimants of the FAFO Nos.724, 725 and 726 of 2011 are the same and that they have been doubly benefited as they have been granted the compensation in respect of the father, mother and the minor brother though the two claimants can only be dependent on any one of them and in any case not on the minor brother also that one of the daughter also got married.
Learned counsel for the appellant in order to buttress his submission has relied upon the decision of the Hon'ble Apex Court in the case of Manjuri Bera and Trilok Chandra (supra).
So far as this aspect is concerned, this Court deems appropriate to quote certain passages from a recent decision of the Hon'ble Apex Court in the case of Kajal vs. Jagdish Chand, 2020 SCC Online SC 127 wherein the Hon'ble Apex Court has considered the earlier decisions of Manjuri Bera and Trilok Chandra (supra) and has mentioned the philosophy, purpose as well as the manner in which the compensation is to be ascertained has been discussed. The relevant portion thereof is quoted as under:-
"8. There are numerous cases where the principles for grant of compensation have been enunciated. It would be relevant to quote pertinent observations from a few.
9. In Phillips v. Western Railway Co., (1874) 4 QBD 406, Field, J., while emphasizing that damages must be full and adequate, held thus:
"You cannot put the plaintiff back again into his original position, but you must bring your reasonable common sense to bear, and you must always recollect that this is the only occasion on which compensation can be given. The plaintiff can never sue again for it. You have, therefore, now to give him compensation once and for all. He has done no wrong, he has suffered a wrong at the hands of the defendants and you must take care to give him full fair compensation for that which he has suffered." Besides, the Tribunals should always remember that the measures of damages in all these cases "should be such as to enable even a tortfeasor to say that he had amply atoned for his misadventure".
10. In the case of Mediana, [1900] AC 113, Lord Halsbury held:
"Of course the whole region of inquiry into damages is one of extreme difficulty. You very often cannot even lay down any principle upon which you can give damages; nevertheless, it is remitted to the jury, or those who stand in place of the jury, to consider what compensation in money shall be given for what is a wrongful act. Take the most familiar and ordinary case: how is anybody to measure pain and suffering in moneys counted? Nobody can suggest that you can by any arithmetical calculation establish what is the exact amount of money which would represent such a thing as the pain and suffering which a person has undergone by reason of an accident. In truth, I think it would be very arguable to say that a person would be entitled to no damages for such thing. What manly mind cares about pain and suffering that is past? But, nevertheless, the law recognizes that as a topic upon which damages may be given."
11. The following observations of Lord Morris in his speech in H. West & Son Ltd.v. Shephard, 1963 2 WLR 1359, are very pertinent:
"Money may be awarded so that something tangible may be procured to replace something else of the like nature which has been destroyed or lost. But money cannot renew a physical frame that has been battered and shattered. All that Judges and courts can do is to award sums which must be regarded as giving reasonable compensation. In the process there must be the endeavour to secure some uniformity in the general method of approach. By common assent awards must be reasonable and must be assessed with moderation. Furthermore, it is eminently desirable that so far as possible comparable injuries should be compensated by comparable awards."
12. In the same case Lord Devlin observed that the proper approach to the problem was to adopt a test as to what contemporary society would deem to be a fair sum, such as would allow the wrongdoer to "hold up his head among his neighbours and say with their approval that he has done the fair thing", which should be kept in mind by the court in determining compensation in personal injury cases.
13. Lord Denning while speaking for the Court of Appeal in the case of Ward v.James, (1965) 1 All ER 563, laid down the following three basic principles to be followed in such like cases:
"Firstly, accessibility: In cases of grave injury, where the body is wrecked or brain destroyed, it is very difficult to assess a fair compensation in money, so difficult that the award must basically be a conventional figure, derived from experience or from awards in comparable cases. Secondly, uniformity: There should be some measure of uniformity in awards so that similar decisions may be given in similar cases; otherwise there will be great dissatisfaction in the community and much criticism of the administration of justice. Thirdly, predictability: Parties should be able to predict with some measure of accuracy the sum which is likely to be awarded in a particular case, for by this means cases can be settled peaceably and not brought to court, a thing very much to the public good."
19. In K. Suresh v. New India Assurance Company Ltd., (2012) 12 SCC 274, this Court held as follows:
"2...There cannot be actual compensation for anguish of the heart or for mental tribulations. The quintessentiality lies in the pragmatic computation of the loss sustained which has to be in the realm of realistic approximation. Therefore, Section 168 of the Motor Vehicles Act, 1988 (for brevity ''the Act') stipulates that there should be grant of "just compensation". Thus, it becomes a challenge for a court of law to determine "just compensation" which is neither a bonanza nor a windfall, and simultaneously, should not be a pittance.""
It is in the aforesaid backdrop, if the submission of the learned counsel for the appellant is tested it would be found that Shri Pramod Kumar Singh was employed as an Engineer in the Electric Department of Tehri Garhwal Hydro Corporation and was earning a salary of Rs.23,730/- per month. His wife namely Sita Singh was also a qualified and was also engaged in a work and vocation. In a family where both the parents are adequately qualified and their children are also taking education in good Institutions, in such a case, the standard of living of such children and the quality of life that they are used to indicates the circumstances and it cannot be said that the children can only be dependent on one of their parents. In the aforesaid case, it would reveal that both the parents were earning and thus, to provide, a safe and good future to all the three children, their income together was available to be enjoyed by the family as a whole which not only included for the present expenses and expenditure, but also for the future including higher education as well as marriage and other contingencies in life, etc. It is in this backdrop that this Court finds that the submission of the learned counsel for the appellant does not have any weight and the Tribunal has rightly considered the dependency in all the three cases i.e. in respect of the death of Pramod Kumar Singh, Smt. Sita Singh and Debashish. In this regard, at this stage, the Court gainfully refers to a recent decision of the Hon'ble Apex Court in the case of National Insurance Company Ltd. vs. Birendra & Ors., reported in 2020 SCC Online SC 28 and the relevant portion thereof reads as under:-
"12. We have heard Mr. Amit Kumar Singh, learned counsel for the insurance company (appellant) and Ms. Abha R. Sharma, learned counsel for the respondent Nos. 1 and 2. The principal issues which arise for our consideration are as follows:--
(i) Whether the major sons of the deceased who are married and gainfully employed or earning, can claim compensation under the Motor Vehicles Act, 1988 (for short, ''the Act')?
(ii) Whether such legal representatives are entitled only for compensation under the conventional heads?
(iii) Whether the amount receivable by the legal representatives of the deceased under the 2006 Rules is required to be deducted as a whole or only portion thereof?
14. The legal representatives of the deceased could move application for compensation by virtue of clause (c) of Section 166(1). The major married son who is also earning and not fully dependant on the deceased, would be still covered by the expression "legal representative" of the deceased. This Court in Manjuri Bera(supra) had expounded that liability to pay compensation under the Act does not cease because of absence of dependency of the concerned legal representative. Notably, the expression "legal representative" has not been defined in the Act. InManjuri Bera (supra), the Court observed thus:--
"9.In terms of clause (c) of sub-section (1) of Section 166 of the Act in case of death, all or any of the legal representatives of the deceased become entitled to compensation and any such legal representative can file a claim petition. The proviso to said sub-section makes the position clear that where all the legal representatives had not joined, then application can be made on behalf of the legal representatives of the deceased by impleading those legal representatives as respondents. Therefore, the High Court was justified in its view that the appellant could maintain a claim petition in terms of Section 166 of the Act.
10. .....The Tribunal has a duty to make an award, determine the amount of compensation which is just and proper and specify the person or persons to whom such compensation would be paid. The latter part relates to the entitlement of compensation by a person who claims for the same.
11. According to Section 2(11) CPC, "legal representative" means a person who in law represents the estate of a deceased person, and includes any person who intermeddles with the estate of the deceased and where a party sues or is sued in a representative character the person on whom the estate devolves on the death of the party so suing or sued. Almost in similar terms is the definition of legal representative under the Arbitration and Conciliation Act, 1996 i.e. under Section 2(1)(g).
12. As observed by this Court in Custodian of Branches of BANCO National Ultramarino v. Nalini Bai Naique [1989 Supp (2) SCC 275 the definition contained in Section 2(11) CPC is inclusive in character and its scope is wide, it is not confined to legal heirs only. Instead it stipulates that a person who may or may not be legal heir competent to inherit the property of the deceased can represent the estate of the deceased person. It includes heirs as well as persons who represent the estate even without title either as executors or administrators in possession of the estate of the deceased. All such persons would be covered by the expression "legal representative". As observed in Gujarat SRTC v.Ramanbhai Prabhatbhai [(1987) 3 SCC 234 a legal representative is one who suffers on account of death of a person due to a motor vehicle accident and need not necessarily be a wife, husband, parent and child."
15. In paragraph 15 of the said decision, while adverting to the provisions of Section 140 of the Act, the Court observed that even if there is no loss of dependency, the claimant, if he was a legal representative, will be entitled to compensation. In the concurring judgment of Justice S.H. Kapadia, as His Lordship then was, it is observed that there is distinction between "right to apply for compensation" and "entitlement to compensation". The compensation constitutes part of the estate of the deceased. As a result, the legal representative of the deceased would inherit the estate. Indeed, in that case, the Court was dealing with the case of a married daughter of the deceased and the efficacy of Section 140 of the Act. Nevertheless, the principle underlying the exposition in this decision would clearly come to the aid of the respondent Nos. 1 and 2 (claimants) even though they are major sons of the deceased and also earning.
16. It is thus settled by now that the legal representatives of the deceased have a right to apply for compensation. Having said that, it must necessarily follow that even the major married and earning sons of the deceased being legal representatives have a right to apply for compensation and it would be the bounden duty of the Tribunal to consider the application irrespective of the fact whether the concerned legal representative was fully dependant on the deceased and not to limit the claim towards conventional heads only. The evidence on record in the present case would suggest that the claimants were working as agricultural labourers on contract basis and were earning meagre income between Rs. 1,00,000/- and Rs. 1,50,000/- per annum. In that sense, they were largely dependant on the earning of their mother and in fact, were staying with her, who met with an accident at the young age of 48 years."
Hence, the submissions of the learned counsel for the appellant fails.
Learned counsel for the appellant has also submitted that the multiplier adopted by the Tribunal is on the higher side.
Upon perusal of the record as well as going through the decision of the Hon'ble Apex Court in the case of Sarla Verma (Smt.) (Supra), it would indicate that the multiplier adopted by the Tribunal is, one higher than it ought to be. This Court is not inclined to disturb the same for the reason that the Tribunal is required to hold an inquiry and adjudge the compensation which is just and fair.
Since, in all the aforesaid cases, the future prospect have not been appropriately considered coupled with the fact that the amount towards non-pecuniary benefits granted are extremely meager, hence, for the aforesaid reasons, the slight difference in the multiplier will not persuade this Court to disturb the award which otherwise is robust and sound. In light of the aforesaid, this Court does not find that the submissions of the learned counsel for the appellant has any weight and consequently, the same is rejected.
(c) Lastly, the issue raised by the learned counsel for the appellant in respect of grant of penal interest is concerned. At the very outset, the same has been settled by the Hon'ble Apex Court in the case of Vedanta Ltd. vs. Shenzen Shandong Nuclear Power Construction Co. Ltd., 2018 SCC Online SC 1922. The relevant portion thereof reads as under:-
"14. In the present case, the Arbitral Tribunal has adopted a dual rate of interest in the award. The award directs payment of interest @ 9% for 120 days post award; if the amount awarded is not paid within 120 days', the rate of interest is scaled up to 15% on the sum awarded.
15. The dual rate of interest awarded seems to be unjustified. The award of a much higher rate of interest after 120 days' is arbitrary, since the award-debtor is entitled to challenge the award within a maximum period of 120 days' as provided by Section 34(3) of the 1996 Act:-
["34.(3) An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the arbitral award or, if a request had been made under Section 33, from the date on which that request had been disposed of by the Arbitral Tribunal:Provided that if the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of three months it may entertain the application within a further period of thirty days, but not thereafter."].
If the award-debtor is made liable to pay a higher rate of interest after 120 days, it would foreclose or seriously affect his statutory right to challenge the award by filing objections under Section 34 of the said Act.
16. The imposition of a high rate of interest @ 15% post-120 days is exorbitant, from an economic standpoint, and has no co-relation with the prevailing contemporary international rates of interest. The award-debtor cannot be subjected to a penal rate of interest, either during the period when he is entitled to exercise the statutory right to challenge the award, before a court of law, or later. Furthermore, the Arbitral Tribunal has not given any reason for imposing a 15% rate of interest post 120-days."
This aspect of the matter has been considered by this Court in a case reported in Oriental Insurance Company Ltd.Vs. Mohd. Saleem and others [2014 (32) LCD 393] wherein it has been held that the tribunal while passing the award alongwith interest is not entitled to enhance the rate of interest in case if the award is not paid within the specified time.
"28. Before parting with the judgment, it is necessary to observe that under the statute there is no provision to fix penal interest and the direction of the tribunal in the judgment impugned that in case the appellants will not pay the awarded amount within time, then in that case the interest would be enhanced to 9% is not correct."
Therefore in view of the judgment of the Hon'ble Apex Court and this Court as mentioned above this Court is also of the opinion that the tribunal has erred in enhancing the rate of interest upon default in paying the amount within the time granted. Thus, it is held that the tribunal was not justified in granting penal rate of interest and to that extent the submission of the learned counsel for the appellant is upheld.
In light of the above, this submission of the learned counsel for the appellant regarding the rate of interest alone is accepted. The award passed by the Tribunal shall stands modified to the extent that the awarded sum in all the five claim petitions shall carry rate of interest @ 6% per annum from the date of application, till its actual payment.
In light of the aforesaid discussions, the award dated 26.04.2011 passed in all five claim petitions giving rise to the connected five appeals shall stands modified to the extent that the awarded sum shall carry interest @ 6% per annum from the date of claim petition, till the date of its payment. The quantum and rest portion of the awards are affirmed.
Any amount deposited before this Court by the appellant in all the aforesaid appeals shall be remitted to the Tribunal concerned to be released in favour of the respective claimants. The short-fall if any shall also be deposited by the Insurance Company within ten weeks from today.
Subject to the aforesaid, all the aforesaid appeals to the above extent are partly allowed. However, in the facts and circumstances, there shall be no order as to cost.
Order Date :- 19.02.2020 Rakesh/-