Partly allowed

National Insurance Company Limited v. Noushad

Kerala HC1 Oct 2020MACA/506/2013

Case brief

AI extract

What is this about?

The Kerala High Court allowed an appeal filed by an Insurance Company against a Motor Accident Claims Tribunal award. The court held that there is no legal provision to award enhanced penal interest at 12% per annum upon default in payment within 60 days, striking down that portion of the award while upholding the principal compensation and simple interest.

What did the court decide?

The award directing payment of 12% penal interest if not paid within 60 days is set aside. The appellant must deposit the compensation with simple interest at 7.5% per annum.

National Insurance Company Limited Vs Noushad — Motor Accident Claims | Kerala HC (2020)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT

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THE HONOURABLE MR.JUSTICE C.S.DIAS

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THURSDAY, THE 01ST DAY OF OCTOBER 2020 / 9TH ASWINA, 1942

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MACA.No.506 OF 2013

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AGAINST THE AWARD IN OPMV 38/2004 OF MOTOR ACCIDENT CLAIMS TRIBUNAL ,ATTINGAL

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APPELLANT:

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NATIONAL INSURANCE COMPANY LIMITED

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THIRUVANANTHAPURAM NOW REPRESENTED BY ITS MANAGER, KOCHI REGIONAL OFFICE, OMANA BUILDING, M.G ROAD, KOCHI 35

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BY ADVS. SRI.MATHEWS JACOB (SR.) SRI.P.JACOB MATHEW

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RESPONDENTS:

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1 NOUSHAD

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FOUSIYA MANZIAL, KUNNUMUKAL, VELLUMANNADI P.O, VENJARAMOODU, THIRUVANANTHAPURAM DISTRICT 695503

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2 RUKKIYA BEEVI

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W/O NOUSHAD, FOUSIYA MANZIL, KUNNUMUKAL, VELLUMANNADI P.O, VENJARAMOODU, THIRUVANANTHAPURAM DISTRICT 695503

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3 AJUMAL MINOR S/O NOUSHAD, REPRESENTED BY HIS MOTHER RUKKIYA BEEVI, FOUSIYA MANZIL, KUNNUMUKAL, VELLUMANNADI P.O, VENJARAMOODU, THIRUVANANTHAPURAM DISTRICT 685503

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R1 BY ADV. SRI.THOMAS ABRAHAM R1-2 BY ADV. SMT.MERCIAMMA MATHEW

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THIS MOTOR ACCIDENT CLAIMS APPEAL HAVING BEEN FINALLY HEARD ON 25-09-2020, THE COURT ON 01-10-2020 DELIVERED THE FOLLOWING:

MACA.No.506 OF 2013

JUDGMENT

Dated this the 1st day of October 2020

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The appellant is the 3^rd respondent-Insurance Company in OP(MV).No.38/2004 on the file of the Motor Accident Claims Tribunal, Attingal. The petitioners in the above claim petition are the respondents in the appeal. As the appellant admitted the insurance policy, the owner and driver of the offending vehicle have not been impleaded as the respondents in the appeal. The parties are, for the sake of convenience, referred to as per their litigate status in the claim petition.

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The claim petition was filed under Section 166 of the Motor Vehicles Act, 1988, claiming compensation on account of the death of the son of the petitioners 1 and 2 and the brother of the 3^rd petitioner.

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The case of the petitioners was that on 6.10.2003, while the petitioners and their son Anas

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were travelling in an autorickshaw bearing registration No.KL 01/U 5980 on the KadakkavoorVarkala Public Road, when the vehicle reached Ayanthi Puthiya Palam, the bus driven by the 2^nd respondent, in a rash and negligent manner, hit the autorickshaw. The deceased succumbed to the fatal injuries on the spot. In the said circumstances, the petitioners filed the claim petition, seeking compensation of Rs.6,66,500/-, which was limited to Rs.6,00,000/-.

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Neither party adduced any oral evidence. The petitioners produced and marked Exts.A1 to A5 in evidence.

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After considering the pleadings and materials on record, the Tribunal by the impugned award allowed the claim petition, in part, by

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MACA.No.506 OF 2013

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directing the 3^rd respondent- Insurance Company to pay an amount of Rs.2,70,000/- as compensation to the petitioners 1 and 2 with interest at the rate of 7.5% per annum from the date of petition till the date of expiry of 60 days from the date of award and, thereafter, if the amount was not paid, the 3^rd respondent shall pay interest at an enhanced rate of 12% p.a.

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Aggrieved by the quantum of

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compensation awarded by the Tribunal, this appeal is filed.

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Heard the learned counsel appearing for

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the appellant and the learned counsel appearing for the respondents/petitioners.

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When the appeal was taken up for hearing, the learned counsel appearing for the appellant submitted that he was confining his arguments to the penal interest that was awarded

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by the Tribunal at the rate of 12% p.a, if the award amount was not paid within a period of 60 days from the date of award.

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The learned counsel for the respondents contended that going by the law laid down by this court in National Insurance Company Ltd. and others V. K.K. Assainar and others [2019 KHC 685] , the respondents were entitled to compensation as laid down by this court in paragraphs 12 to 14 of the said judgment.

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Section 171 of the Motor Vehicles

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Act, 1988, reads as follows:

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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.

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11. In Dharampal and others vs. U.P State Road Transport Corporation [(2008) 12 SCC

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MACA.No.506 OF 2013 6

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208] the Honourable Supreme Court, while interpreting Section 171 of the Act held that award of interest would depend upon the bank rate prevailing at the relevant time.

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Similarly, a Division Bench of this Court in National Insurance Co. Ltd vs. M.K. Moidu and others [2011 (4) KHC 756] has held that there is no scope for retrospective enhancement of interest in case of default in payment of compensation.

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Sec.169 of the Act, confers the Tribunal with all the powers of a civil court. Likewise, Rule 395 of the Kerala Motor Vehicles Rules, 1989, enables the application of the provisions of the Code of Civil Procedure, in certain cases. Therefore, the broader principles of the Code of Civil Procedure have been made applicable to proceedings before the Tribunal.

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Sec.34 of the Code of Civil Procedure contemplates that in a commercial transaction, the

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interest shall not exceed the contractual rate of interest at which money is lent or advanced by National Banks in relation to commercial transactions.

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In view of the above statutory provision and the law laid down in Dharmapal and M.K. Moidu (supra), I am of the considered opinion that the direction of the Tribunal that the appellant/3rd respondent has to pay interest at the rate of 12% per annum, if the compensation is not paid within a period of sixty days from the date of award, is unconscionable and unsustainable in law. There is no enabling provision in the Motor Vehicles Act, 1988 and the Rules framed thereunder or under the Code of Civil Procedure which enables the Tribunal to order payment of penal interest @ 12% per annum, if the compensation is not paid within sixty days. It is for the respondents/petitioners in the claim petition to

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execute the award and realise the compensation, if the same is not paid within the stipulated time period. Moreover, it is seen that this Court had admitted the appeal, as early as on 26.8.2014, and directed the appellant to deposit 50% of the compensation amount before the Tribunal within a period of one month.

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In the result the appeal is allowed in part, by setting aside that portion of the award directing the appellant to pay enhanced interest at the rate of 12% per annum, if the award amount is not paid within sixty days from the date of award. The appellant shall deposit the compensation amount awarded by the Tribunal, if not already deposited, along with the interest at the rate of 7.5% per annum from the date of petition till the date of deposit along with proportionate costs within a period of sixty days from today. On making such deposit, the entire amount that is lying in deposit

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before the Tribunal and deposited pursuant to this judgment shall be released to the

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respondents/petitioners in accordance with law.

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Sd/-

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C.S.DIAS

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