Motor accident compensation must bear uniform interest from claim filing until realization; split rates are impermissible.

The appellants, claimants in a motor accident claim arising from the death of Nileshbhai Mansukhbhai Taviyad, challenged only the manner in which interest was awarded by the Motor Accident Claims Tribunal, Dahod.

By judgment and award dated 10 March 2023 in MACP No. 400 of 2012, the Tribunal awarded compensation of ₹13,80,777, with interest at 9% per annum up to 31 March 2021 and 7% thereafter, while excluding the period from 7 October 2014 to 16 November 2022 from the interest calculation.

The High Court noted that the compensation amount, accident, and insurer’s liability were not disputed.

The Tribunal had also passed an order dated 7 October 2014 closing the claimants’ entitlement to interest from the date of filing of the claim petition.

The record showed that the insurer appeared only after issues were framed on 26 October 2021 and that the claimants had not caused delay in prosecuting the claim.

Section 171 of the Motor Vehicles Act, 1988 empowers the Tribunal to award interest on compensation from such date and at such rate as it may specify; the purpose of such interest is to compensate the claimant for being deprived of the compensation due from the date of the accident.

The Court relied on Abati Bezbaruah v. Dy. Director General, Geological Survey of India, (2003) 3 SCC 148, and held that the Tribunal must have a proper basis for determining the rate of interest.

It further applied the Division Bench decision in Oriental Insurance Co. Ltd. v. Aminaben Rahimbhai Kadiwala, 2003 ACJ 1096, which disapproved the splitting of interest rates without a legally justified basis.

The Court also relied on Vidhya Kakkar v. Delhi Transport Corporation, 1989 ACJ 1088, for the principle that interest should ordinarily be granted from the date of the claim application unless the claimant is responsible for delaying disposal of the proceedings.

Section 105 of the Code of Civil Procedure, 1908 was invoked to permit correction, in appeal, of an error or irregularity affecting the decision, even where an interlocutory order had not been separately challenged.

The High Court found no justification in the Tribunal’s award for applying 9% interest for the initial period and 7% thereafter.

Since the Tribunal had not referred to any evidence or identified any legal basis for varying the rate, the split-rate approach was inconsistent with the applicable principles governing interest awards.

The exclusion of interest from 7 October 2014 to 16 November 2022 was also held to be unsustainable.

The order dated 7 October 2014 had been passed without an application by the insurer, without any contention or issue concerning claimant-caused delay, and without circumstances showing that the claimants had obstructed the proceedings.

On the contrary, the record indicated that the insurer entered the proceedings only after issues were framed and subsequently sought procedural relief, whereas the claimants promptly produced documents and filed a pursis after only one adjournment.

Applying Section 171 of the Motor Vehicles Act and the cited authorities, the Court held that the claimants were entitled to interest from the date of filing of the claim petition.

The High Court quashed and set aside the Tribunal’s direction granting 7% interest from 1 April 2021 and excluding the period from 7 October 2014 to 16 November 2022.

It modified the award by directing payment of ₹13,80,777 with simple interest at 9% per annum from the date of filing of the claim petition until realization.

The remaining portion of the Tribunal’s judgment and award dated 10 March 2023 was maintained, and the record and proceedings were ordered to be returned forthwith.