Jharkhand HC Reduces Interest Rate, Compensation By MACT To Family Of Deceased 50-Year-Old, Cites Excessive Award Under Conventional Head
The Jharkhand High Court has slashed the interest rate on compensation awarded to the family of a 50-year-old barber who was struck by a mini-bus, ruling that the 12% annual interest granted by the Motor Accident Claims Tribunal (MACT), Dumka, was excessive.
Justice Subhash Chand, presiding over the case, reduced the interest rate to 7.5%, stating, “The impugned Award passed by the learned Tribunal is modified to the extent that the total amount of compensation which would be payable to the claimants would be ₹8,17,600/- and 7.5% interest would be payable thereon from the date of filing the claim petition i.e., 30th March, 2012 till the date of actual payment.”
Additionally, Justice Chand struck down the 18% penal interest imposed by the MACT, while emphasizing, “So far as the penal interest of 18% is concerned, the same also needs interference, reason being that if the said amount of Award along with interest is not paid by the Insurance Company within 45 days from the date of passing Award, for the same, execution proceeding may be initiated by the claimants under Section 174 of the Motor Vehicles Act. Therefore, the penal interest of 18% per annum is hereby struck off from the impugned Award.”
Justice Chand made these observations while adjudicating a Miscellaneous Appeal filed by Oriental Insurance Company Limited. The appeal challenged the award of ₹9,99,000, granted by the Motor Accident Claims Tribunal (MACT), Dumka, in a Motor Accident Claim Case.
The case arose from a fatal accident in January, 2012, in which Narayan Thakur, a 50-year-old barber, was struck by a rashly driven mini-bus while walking on the Ramgarh-Godda road. Thakur succumbed to his injuries on the spot. His legal heirs—widow, son, and two daughters—filed a claim under Section 166 of the Motor Vehicles Act for compensation.
The Tribunal awarded the amount of Rs. 9,99,000/- along with simple interest thereon @ 12% per annum from the date of filing the claim petition till the date of payment and realization of the said compensation amount. The said amount was directed to be paid within 45 days, in failure the Insurance Company was directed to pay the penal interest @ 18% per annum to the claimant up to the date of actual payment. The insurance company, dissatisfied with the award, particularly the interest rates and amounts under conventional heads, appealed before the High Court.
The court revisited the tribunal's decision, particularly its reliance on the Supreme Court's judgment in Vimal Kanwar and Ors. vs. Kishore Dan and Ors. reported in 2013 (3) JCR (SC) (197). The Court held, “the learned Tribunal has awarded the amount under the conventional head to the claimants relying upon the judgment ... the same should not have been relied upon by the learned Tribunal because the Hon'ble Apex Court has awarded the said amount under the conventional head by exercising the power under Article 142 of the Constitution of India.”
Instead, the High Court recalculated the compensation based on the principles laid out in National Insurance Company Ltd. vs. Pranay Sethi and Ors. (2017) 16 SCC 680. The court observed, “The modified amount of compensation is computed as under ... Total amount of compensation will be Rs. 8,17,600.”
The recalculated amount included future prospects, adjusting the annual income with a 10% increase in light of the deceased's self-employed status and age group.
The interest rates were also revised. Referring to the Supreme Court's ruling in National Insurance Company Ltd. vs. Mannat Johal and Ors., 2019 (2) TAC 705 (SC), the High Court noted, “The Tribunal had awarded interest at the rate of 12% p.a. but the same had been too high, a rate in comparison to what is ordinarily envisaged in these matters.”
Accordingly, the High Court allowed the appeal, reducing the compensation to ₹8,17,600 with 7.5% interest from the date of filing the claim until payment. The insurance company was directed to deposit the modified amount within 45 days, failing which execution proceedings could be initiated by the claimants.
Additionally, the penal interest of 18% was struck down. The court observed: “If the said amount of Award along with interest is not paid by the Insurance Company within 45 days from the date of passing Award, for the same, execution proceeding may be initiated by the claimants under Section 174 of the Motor Vehicles Act.”
Case Title: The Oriental Insurance Company Limited vs Most. Dulari Devi and Ors
LL Citation: 2024 LiveLaw (Jha) 193