BRANCH MANAGER vs SMT. SHARDA

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CGHC010428412024 2026:CGHC:45871

NAFR
HIGH COURT OF CHHATTISGARH AT BILASPUR
MAC No. 2363 of 2024
1 - Branch Manager The Oriental Insurance Company Limited,
Branch Office-Jhamkot Para Mainroad Kondgaon, District
Kondagaon (C.G.)…… ( Insurer Of Bus No CG-07-E-8090)
... Appellant
versus
1 - Smt. Sharda W/o Late Tapsi Marai Aged About 47 Years R/o
Village Baniyagaon, Sargipara, P.S. And Tahsil Kondagaon,
District Kondagaon (C.G.)
2 - Ku. Chandrika D/o Late Tapsi Marai Aged About 47 Years R/o
Village Baniyagaon, Sargipara, P.S. And Tahsil Kondagaon ,
District Kondagaon (C.G.)
3 - Vikram S/o Late Tapsi Marai Aged About 23 Years R/o Village
Baniyagaon, Sargipara, P.S. And Tahsil Kondagaon , District
Kondagaon (C.G.)
4 - Vinay S/o Late Tapsi Marai Aged About 14 Years (Through
Natural Guardian Mother Smt. Sharda W/o Late Tapsi Marai) R/o
Village Bajniyagaon, Sargipara, P.S. And Tahsil Kondagaon ,
District Kondagaon (C.G.)
Digitally signed by
VIJAY BHARATRAO
PEKDE
Date: 2026.10.30
17:13:43 +0530

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5 - Ku. Poonam D/o Late Tapsi Marai, Aged About 12 Years
(Through Natural Guardian Mother Smt. Sharda W/o Late Tapsi
Marai) R/o Village Bajniyagaon, Sargipara, P.S. And Tahsil
Kondagaon , District Kondagaon (C.G.)
6 - Mahturam Poyam S/o Arjun Poyam Aged About 32 Years R/o
Vill. Bade Banjoda Pakhnapara, Post Dahikonga, P.S. And Tahsil
Kondagaon, District Kondagaon (C.G.)
... Respondents
For Appellant : Mr. Raj Awasthi, Advocate.
For Respondents : None
Hon'ble Shri Justice Sanjay Kumar Jaiswal
Order on Board
(29.10.2026)
1. This appeal under Section 173 of the Motor Vehicles Act,
1988 (for short the "Act of 1988") has been preferred by the
appellant/Insurance company challenging the impugned
award dated 10.10.2024 passed in Motor Accident Claims
Case No.140/2023, whereby the learned Claims Tribunal
has awarded a total sum of Rs.14,96,317/- along with
interest @ 6% per annum as compensation under Section
166 of the Act of 1988 to the claimants No. 1 to 5, who are
the wife and children of deceased Tapsi Marai, who died in a
road accident which took place on 24.05.2023, and directed
the appellant/Insurance company to first pay the award

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amount within 30 days and then to recover the same from
respondent No. 6, and in default @ 9% per annum from the
date of application till its realization.
2. Learned counsel for the appellant/Insurance Company
submits that the learned Tribunal, having recorded a
categorical finding that the driver of the offending motorcycle
was not holding a valid and effective driving license at the
time of accident and that there was a breach of the terms
and conditions of the insurance policy, erred in directing the
Appellant/Insurance Company to first satisfy the award and
thereafter recover the amount from the owner and driver. He
further submits that once the breach of the policy conditions
stood established, the Appellant was liable to be completely
exonerated from its liability to pay compensation, and the
entire liability ought to have been fastened upon the owner
and driver of the offending vehicle. Thus, the direction of
"pay and recover" in the facts of the present case is contrary
to law and, therefore, deserves to be set aside. Learned
counsel further submits that the Claims Tribunal has fallen in
error in awarding penal interest @ 9% per annum to
respondent Nos. 1 to 5/claimants, as there is no provision to
award penal interest in default of depositing of amount by

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the insurer or insured in pursuance of the award passed by
the Claims Tribunal within stipulated time. Hence, the same
is liable to be set aside. In support of his submission,
learned counsel placed reliance on the decision of Hon’ble
Supreme Court in the matter of National Insurance Co.
1
Ltd. Vs. Keshav Bahadur and Other .
3. None appeared for respondent Nos. 1 to 6.
4. I have heard learned counsel for the appellant, considered
his rival submissions made herein-above and went through
the records with utmost circumspection.
5. In the case at hand, it is true that the learned Claims
Tribunal recorded a finding regarding breach of the policy
conditions on the ground that at the time of the accident, the
driver, namely, Mehtu Ram Poyam, was not in possession of
a valid and effective driving license to drive the offending
vehicle. However, while considering the said breach, the
learned Tribunal has rightly found that the offending vehicle
was insured with the Appellant/Insurance Company and
directed the Insurance Company to satisfy the award
amount at the first instance with liberty to recover the same
from the owner and driver of the offending vehicle. In view of
1 2004 (2) SCC 370

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the settled legal position laid down by the Hon’ble Supreme
Court in the cases of Rama Bai Vs. Amit Minerals through
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Incharge Officer/Competent Officer and Another Sunita
3
and Ors. vs. United India Insurance Co. Ltd and Ors.
and Manuara Khatun and Others Vs. Rajesh Kumar
4
Singh and Others and Amrit Paul Singh & Anr. Vs. Tata
5
AIG General Insurance Company Limited & Ors. , the
direction of “pay and recover” issued by the learned Claims
Tribunal does not call for any interference. The Insurance
Company has failed to make out any ground warranting
interference with the impugned award with respect to ‘Pay
and Recover’.
6. Secondly, so far as argument of learned counsel for the
appellant/Insurance Company that there is no provision
under the Act of 1988 for awarding penal interest, the
Hon’ble Supreme Court in Keshav Bahadur (supra) held in
para 13 as under :-
“13. Though Section 110-CC of the Act
(corresponding to Section 171) of the New
Act) confers a discretion on the Tribunal to
award interest, the same is meant to be
2 (2025) SCC OnLine SC 2067
3 2025 SCC OnLine SC 1464
4 (2017) 4 SCC 796
5 (2018) 7 SCC 558

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exercised in cases where the claimant can
claim the same as a matter of right. IN the
above background, it is to be judged whether
a stipulation for higher rate of interest in case
of default can be imposed by the Tribunal.
Once the discretion has been exercised by the
Tribunal to award simple interest on the
amount of compensation to be awarded at a
particular rate and from a particular date, there
is no scope for retrospective enhancement for
default in payment of compensation. No
express or implied power in this regard can be
culled out from Section 110-CC of the Act or
Section 171 of the new Act. Such a direction
in the award for retrospective enhancement of
interest for default in payment of the
compensation together with interest payable
thereon virtually amounts to imposition of
penalty which is not statutorily envisaged and
prescribed. It is, therefore directed that the
rate of interest as awarded by the High Court
shall alone be applicable till payment, without
the stipulation for higher rate of interest being
enforced, in the manner directed by the
Tribunal.”
7. In view of above discussion and above referred judgment of
Hon’ble Supreme Court in Keshav Bahadur (supra), it is
apparent that since there is no specific provisions under the

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Act of 1988 for awarding penal interest, this Court finds that
Claims Tribunal has erred in awarding penal interest @ 9%
per annum on the amount of compensation awarded by the
Claims Tribunal, if the appellant/Insurance Company fails to
deposit the same within 30 days. Accordingly, the award of
penal interest @ 9% per annum on the amount of
compensation is unsustainable and, therefore, the same
deserves to be and is hereby set aside .
8. Thus, it is held that aforementioned amount of
compensation of Rs.14,96,317/- shall carry interest @ 6%
per annum from the date of filing of claim petition, till its
actual payment. Rest of the conditions mentioned in the
impugned award shall remain intact.
9. In the result, the appeal filed by the appellant/Insurance is
partly allowed .
10. Records of the Tribunal along with a copy of this judgment
be sent forthwith for compliance and necessary action, if
any. Sd/-
(Sanjay Kumar Jaiswal)
Judge
pekde