Reliance General Insurance Co. ... vs Smt. Shashi Gautam And 4 Others
2021 Latest Caselaw 1061 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD
 
 

?Court No. - 1
 

 
Case :- FIRST APPEAL FROM ORDER No. - 2650 of 2014
 

 
Appellant :- Reliance General Insurance Co. Ltd.
 
Respondent :- Smt. Shashi Gautam And 4 Others
 
Counsel for Appellant :- S.K. Mehrotra
 
Counsel for Respondent :- Ram Rasik Tiwari,Santosh Kumar Tiwari,V.K.Shukla
 

 
Hon'ble Vivek Agarwal,J.

1. Heard Sri S.K. Mehrotra, learned counsel for the appellant and Sri Santosh Kumar Tiwari, learned counsel for the respondents.

2. This appeal has been filed by the insurance company being aggrieved of award dated 31.05.2014 passed by learned Motor Accident Claims Tribunal/Additional District Judge, Court No. 5, Bareilly in Claim Case No. 999 of 2010, on a singular ground that learned claims tribunal has directed that compensation shall be payable within sixty days @ 7% interest and in case of default, insurance company shall be liable to pay penal interest @ 9%.

3. It is submitted that as per the direction of the Supreme Court direction for payment of penal interest is against the order of Supreme Court in National Insurance Co. Ltd. vs. Keshav Bahadur and Others, 2004 ACJ 648, wherein para 14, it has been held that retrospective enhancement of interest for default amounts, imposing of penalty, which is not statutorily envisaged and prescribed cannot be charged.

4. It is specifically mentioned that though Section 171 of the Motor Vehicles Act, 1988, confers a discretion on the tribunal to award interest, the same is meant to be exercised in cases where the claimants cannot claim the same as a matter of right. It has been held that 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 compensation together with interest payable thereon virtually amounts to the imposition of penalty, which is not statutorily envisaged and prescribed.

5. In view of such judgment of Supreme Court, direction of the tribunal that in case award is not satisfied within sixty days, then it shall carry interest @ 9% in place of 7% is set aside and this appeal is allowed in part.

Order Date :- 19.1.2021

Vikram/-A