M.B.Koyakutty vs Oriental Insurance Company Ltd
2022 Latest Caselaw 4 Ker

               IN THE HIGH COURT OF KERALA AT ERNAKULAM

                                PRESENT

           THE HONOURABLE THE CHIEF JUSTICE MR.S.MANIKUMAR

                                    &

                THE HONOURABLE MR. JUSTICE SHAJI P.CHALY

         MONDAY, THE 3RD DAY OF JANUARY 2022 / 13TH POUSHA, 1943

                           WA NO. 1283 OF 2021

  JUDGMENT DATED 26.04.2021 IN WP(C) 9912/2015 OF HIGH COURT OF KERALA

APPELLANT/PETITIONER:

            M.B.KOYAKUTTY
            AGED 58 YEARS, S/O. BEERAN,
            PROPRIETOR,
            M.K. OIL INDUSTRIES,
            CHUNANGAMVELY,
            ERUMATHALA P.O., ALUVA THALUK, ERNAKLULAM- 683 105.
            BY ADVS.
            V.N.SANKARJEE
            V.N.MADHUSUDANAN
            R.UDAYA JYOTHI
            M.M.VINOD
            M.SUSEELA


RESPONDENTS/RESPONDENTS:

     1      ORIENTAL INSURANCE COMPANY LTD
            DIVISIONAL OFFICE NO. V, DOOR NO.6/990-B, SHAN COMPLEX, IST
            FLOOR, BAZAR ROAD, MATTANCHERY,
            COCHIN - 682 002, REPRESENTED BY ITS DIVISIONAL MANAGER.
     2      THE CHIEF REGIONAL MANAGER
            ORIENTAL INSURANCE COMPANY LIMITED, GRIEVANCE CELL,
            REGIONAL OFFICE, METRO PALACE, OPP. NORTH RAILWAY STATION,
            ERNAKULAM - 682 018. ERNAKULAM DISTRICT.
     3      THE INSURANCE OMBUDSMAN
            KOCHI,
            OFFICE OF THE INSURANCE OMBUDSMAN, 2ND FLOOR, PULINAT
            BUILDING, OPP. COCHIN SHIPPYARD, M.G. ROAD, ERNAKULAM, KOCHI
            - 682 015. ERNAKULAM DISTRICT.



            R1 & R2 BY SMT. K.S. SANTHI, STANDING COUNSEL



      THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 03.01.2022, THE

     COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
 W.A.No. 1283/2021                       :2:




                                                                           "C.R"
                     Dated this the 3rd day of January, 2022

                                  JUDGMENT

S. MANIKUMAR, CJ.

Being aggrieved by the judgment dated 26.04.2021 in W.P.(C) No.

9912 of 2015 declining to grant interest for the alleged delay for the

refund of an undeclared amount of Rs.50,170/- liable to be refunded to the

appellant for the year 2004-2005 on the expiry of the policy, instant writ

appeal is filed.

2. Writ petitioner, a Marine Insurance policy holder, has made a

Complaint No.10/KCH/Gi/11-005-159/2006-07 before the Insurance

Ombudsman, Kochi. The averments made in the complaint, as summarised

in Ext. P8 award, are reproduced hereunder:

"2. The main allegations in the complaint reads as below:

For the last several years, on behalf of his proprietorship concern, the complainant had taken the Marine Insurance Policy from the insurer a sum of Rs.50170/- was paid in excess of the premium amounts. The complainant had on various occasions contacted the insurer to make refund of the same, it was in no use, hence the complaint.

3. On registration of the complaint notices under relevant forms were issued to either side for appearance of parties and for their pleadings. In response to the said notice the complainant had filed P-II form on 13.10.2006 reiterating the allegations in the original complaint, whereas the respondent had filed a self- contained note on 26,10.2006 reputing the claim on the following contentions:

In furtherance to the request for refund of undeclared balance from the complainant, the insurer had from their records found that there was an undeclared balance of Rs.23,70,000/- under policy No.128/2004, whereas there was over declaration to the tune of Rs.18,88,000/- under Pol.No.129/2004 pertaining to M/s. Mezhukkattil Mills, a sister concern of the complainant. On expiry of the policies an amount of Rs.9471/- was due for the complainant's concern and recovery of Rs.7544/- was to be effected from M/s. Mezhukkattil Mills. Instead of the complainant, the cheque for refund was wrongly drawn in favour of M/s. Mezhukkattil Mills vide letter dated 30 th March, 2006. The complainant's request for refund on policies for the year 2001 was received only in 2005; the amount was not paid as the Company had no provision for refund on policies which had expired long back."

3. Earlier, the Insurance Ombudsman directed refund of Rs.9,471/-

only. Being aggrieved by the said award dated 28.11.2006, appellant has

filed W.P.(C) No.20193 of 2007. Before the writ court, the appellant/writ

petitioner has contended that a sum of Rs.50,170/- was liable to be

refunded.

4. After hearing the learned counsel for the parties, a learned single

Judge, vide judgment dated 3rd October, 2013 in W.P.(C) No. 20193 of

2007, set aside the order and remitted the matter back to the Insurance

Ombudsman, for fresh reconsideration of the issue. Operative portion of

the said judgment reads thus:

"10. As the impugned order is passed on such a premise, this Court is of the definite view that the order calls for an interference. Accordingly, the writ petition is allowed. The

impugned order is set aside and the matter is remitted back to the Insurance Ombudsman for fresh consideration of the issue. Both the parties shall be at liberty to adduce further evidence in the matter. After re-considering the entire evidence, the Insurance Ombudsman shall pass appropriate orders, in accordance with law, at the earliest."

5. After reconsideration of the matter, the Insurance Ombudsman

passed Ext. P10 award dated 09.01.2015 holding that the first respondent

Insurance Company is liable to pay Rs.50,170/- towards premium refund

as claimed by the appellant. However, the Ombudsman declined to grant

interest.

6. Being aggrieved by the denial of interest, appellant has filed W.P.

(C) No. 9912 of 2015 for the following relief:

"Issue a writ of certiorari or any other appropriate writ or order quashing Ext. P10 to the extend of not granting proper relief to the petitioner and direct respondent No.1 to pay the sum of Rs.50,170/- with 12% interest from the date of claim i.e., 22.07.2005 and grant adequate amount as compensation for illegal withholding and cost and expenses incurred for litigation."

7. Adverting to the rival submissions, writ court declined to grant

interest on the ground inter alia that even in Ext. P5 claim made by the

appellant/writ petitioner before the Ombudsman, writ petitioner has not

sought for any interest. Writ court further observed that even in W.P.(C)

No. 20193 of 2007, no claim for interest is made. Observing that either in

the pleadings before the authorities or before this Court, at the initial

stage, no claim for interest was made and that the claim was made only

after the remittance of the matter by this Court, in W.P.(C) No. 20193 of

2007, writ court has declined to grant interest.

8. Being aggrieved by the denial of interest, instant appeal is filed.

9. Learned counsel for the appellant contended that the finding

rendered by the learned single Judge in the impugned judgment is

contrary to the decision of this Court in Nandini Jayaram v. Insurance

Ombudsman, Kochi and others [2016 (2) KHC 293]. Reliance is also

made on the decision in Thazhathe Purayil Sarabi and Ors. v. Union

of India (UOI) and Ors. [(2009) 7 SCC 372].

10. Learned counsel for the appellant further contended that it is a

radical principle of law that since the interest being a statutory right, a

person charged with principal sum can maintain the claim for interest,

while recovering the principal amount, even though he had not made any

express request for interest. He also submitted that the said principle is

stated in the decision rendered by the Hon'ble Supreme Court, and

therefore, the impugned judgment is contrary to the said precedence

governing the field.

11. Even though Smt. K.S. Santhi, learned Standing Counsel for

respondent Nos. 1 and 2, made submissions, to sustain the impugned

judgment and contended that appellant was also responsible for the delay

in approaching the Ombudsman and in the year 2007, there is no provision

for payment of interest, and therefore, there is no error in the impugned

judgment, we are not inclined to accept the said contention for the reason

that indisputably, refund of the undeclared amount is for the year 2004-

2005 and that the same can be claimed only after the expiry of the policy.

Admittedly, it is the case of the appellant that he is entitled to refund the

amount lying with the Insurer and thus, Ext. P1 letter dated 22.07.2005

was sent to the Insurance Company for refund.

12. Material on record discloses that refund was denied on the

ground that the undeclared amount was issued in favour of M/s.

Mezhukattil Mills, who is a sister concern.

13. When the matter was remitted back, the Insurance Ombudsman,

after going through the evidence and materials on record, by Ext. P10

award dated 09.01.2015, found that the company is liable to pay a sum of

Rs. 50,170/- towards premium refund and thus, directed the company to

do so, within the time frame. Claim has been made 22.07.2005 for refund.

The abovesaid amount has been retained by the first respondent

Insurance company.

14. In Nandini Jayarajan (cited supra), a learned single Judge of

this Court held as under:

"9. In view of the rival submissions, the question that arises for consideration in this writ petition is, whether the petitioner, who has been granted an award by the Ombudsman, in exercise of the power under R.12 of the Redressal of Public Grievances Rules, 1998, is entitled to get interest for the award.

10. Going by the R.12 of the Redressal of Public Grievance Rules, 1998, it is seen that as rightly submitted by the learned Standing Counsel for the Insurance Company, there is no provision for granting interest, when passing an award. But, going by the sequences of events from 30/12/2005, the date of death of the petitioner's husband, it could be seen that the petitioner was fighting for getting the compensation before this Court and the Insurance Ombudsman and such a circumstance was caused by the unilateral repudiation of claim by the respondent. It is also pertinent to note that such repudiation was made on 09/04/2007 and the petitioner was constrained to seek indulgence of this Court to get the grievance redressed. After the remand order passed by this Court, final award was passed on 14/10/2011 only.

11. It is true that there is no provision for granting interest under the said Rules. But, under the similar situations, where no provision was provided to award interest, under the Railway Claims Tribunal Act, 1987 the Apex Court in 2009 (4) KLT 370 (SC) (Thazhathe Purayil Sarabi v. Union of India) held that even in the absence of a specific provision for granting interest in the concerned Statute, the power to grant interest is a matter left with discretion of the authority or the Tribunal, as the case may be under the provisions of S.3 of the Interest Act and S.34 of the Code of

Civil Procedure. In the above decision, the Apex Court further held that in the cases where a Statute does not provide any provisions for payment of interest on any awarded sum, the power of the Court to grant interest can also be inferred to from the above provisions of the Interest Act, 1978 and the Code of Civil Procedure. A Similar view was taken by this Court in MFA No. 16 of 2008 also. In this decision, this Court relied on 2008 ACJ 783 [Union of India v. Oinam Keirungba Meetal]. There, the Court held that payment of interest may be considered to be a part of compensation itself and even if there is no provision to pay interest, interest is payable to the claimant, at the discretion of the Court. In view of the proposition laid down by the Apex Court the principle that can be relied on is that, even in the absence of specific provision for granting interest, it is a matter left with the discretion of the Courts or Tribunals, as the case may be."

15. In Thazhathe Purayil Sarabi (cited supra), the Hon'ble Apex

Court held as under:

"20. Admittedly, neither the Railway Claims Tribunal Act, 1987 nor the Railways Act, 1989 make provision for payment of interest on any awarded amount. While Section 16 of the 1987 Act prescribes the procedure for making an application to the Claims Tribunal, the right to receive compensation is contained in Sections 124 and 124-A comprising Chapter XIII of the 1989 Act dealing with the liability of the Railway Administration for death and injury to passengers due to accidents.

21. Even though there is no provision in either of the Acts for payment of interest on the awarded sum, there is no

denying the fact that the right to claim compensation accrued on the date of the incident, although compensation has been held in Rathi Menon case [(2001) 3 SCC 714] is to be computed from the date of the award of the Claims Tribunal. In cases where the statute does not make any specific provision for payment of interest on any awarded sum, the power of the courts to grant interest can also be referred to from the provisions of the Interest Act, 1978 and the Code of Civil Procedure.

22. Section 3 of the Interest Act, 1978, which confers power on the court to allow interest reads as follows:

"3. Power of court to allow interest.-- (1) In any proceedings for the recovery of any debt or damages or in any proceedings in which a claim for interest in respect of any debt or damages already paid is made, the court may, if it thinks fit, allow interest to the person entitled to the debt or damages or to the person making such claim, as the case may be, at a rate not exceeding the current rate of interest, for the whole or part of the following period, that is to say,-

(a) if the proceedings relate to a debt payable by virtue of a written instrument at a certain time, then, from the date when the debt is payable to the date of institution of the proceedings;

(b) if the proceedings do not relate to any such debt, then, from the date mentioned in this regard in a written notice given by the person entitled or the person making the claim to the person liable that interest will be claimed, to the date of institution of the proceedings:

Provided that where the amount of the debt or damages has been repaid before the institution of the proceedings, interest shall not be allowed under this section for the period after such repayment.

(2) Where, in any such proceedings as are mentioned in sub- section (1),-

(a) judgment, order or award is given for a sum which, apart from

interest on damages, exceeds four thousand rupees, and

(b) the sum represents or includes damages in respect of personal injuries to the plaintiff or any other person, or in respect of a person's death, then, the power conferred by that sub-section shall be exercised so as to include in that sum interest on those damages or on such part of them as the court considers appropriate for the whole or part of the period from the date mentioned in the notice to the date of institution of the proceedings, unless the court is satisfied that there are special reasons why no interest should be given in respect of those damages.

(3) Nothing in this section,--

(a) shall apply in relation to--

(i) any debt or damages upon which interest is payable as of right, by virtue of any agreement; or

(ii) any debt or damages upon which payment of interest is barred, by virtue of an express agreement;

(b) shall affect--

(i) the compensation recoverable for the dishonour of a bill of exchange, promissory note or cheque, as defined in the Negotiable Instruments Act, 1881 (26 of 1881); or

(ii) the provisions of Rule 2 of Order 2 of the First Schedule to the Code of Civil Procedure, 1908 (5 of 1908);

(c) shall empower the court to award interest upon interest."

23. As will be evident from the aforesaid provisions, the same, inter alia, provided that in any proceedings for the recovery of any debt or damages the court may, if it thinks fit, allow interest to the person entitled to the debt or damages at a rate not exceeding the current rate of interest for the whole or part of the period from the date when the debt is payable to the date of the incident of the proceedings, if such debt was payable by virtue of a written

instrument at a certain time or if the proceedings do not relate to any such debt, then, from the date mentioned in any written notice given by the person making a claim to the person liable that interest would be claimed from the date of institution of the proceedings.

24. As indicated hereinbefore, apart from the provisions of the Interest Act, Section 34 of the Civil Procedure Code also empowers the court to order interest on a decree for payment of money in the following manner:

"34. Interest.--(1) Where and insofar as a decree is for the payment of money, the court may, in the decree, order interest at such rate as the court deems reasonable to be paid on the principal sum adjudged, from the date of the suit to the date of the decree, in addition to any interest adjudged on such principal sum for any period prior to the institution of the suit, with further interest at such rate not exceeding six per cent per annum as the court deems reasonable on such principal sum, from the date of the decree to the date of payment, or to such earlier date as the court thinks fit:

Provided that where the liability in relation to the sum so adjudged had arisen out of a commercial transaction, the rate of such further interest may exceed six per cent per annum, but shall not exceed the contractual rate of interest or where there is no contractual rate, the rate at which moneys are lent or advanced by nationalised banks in relation to commercial transactions.

Explanation I.--In this sub-section, 'nationalised bank' means a corresponding new bank as defined in the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970).

Explanation II.--For the purposes of this section, a transaction is a commercial transaction, if it is connected with the industry, trade or business of the party incurring the liability.

(2) Where such a decree is silent with respect to the payment of further interest on such principal sum from the date of the decree to the date of payment or other earlier date, the court shall be deemed to have refused such interest, and a separate suit therefor

shall not lie."

25. It is, therefore, clear that the court, while making a decree for payment of money is entitled to grant interest at the current rate of interest or contractual rate as it deems reasonable to be paid on the principal sum adjudged to be payable and/or awarded, from the date of claim or from the date of the order or decree for recovery of the outstanding dues. There is also hardly any room for doubt that interest may be claimed on any amount decreed or awarded for the period during which the money was due and yet remained unpaid to the claimants.

26. The courts are consistent in their view that normally when a money decree is passed, it is most essential that interest be granted for the period during which the money was due, but could not be utilised by the person in whose favour an order of recovery of money was passed.

27. As has been frequently explained by this Court and various High Courts, interest is essentially a compensation payable on account of denial of the right to utilise the money due, which has been, in fact, utilised by the person withholding the same. Accordingly, payment of interest follows as a matter of course when a money decree is passed.

28. The only question to be decided is since when is such interest payable on such a decree. Though, there are two

divergent views, one indicating that interest is payable from the date when claim for the principal sum is made, namely, the date of institution of the proceedings in the recovery of the amount, the other view is that such interest is payable only when a determination is made and order is passed for recovery of the dues. However, the more consistent view has been the former and in rare cases interest has been awarded for periods even prior to the institution of proceedings for recovery of the dues, where the same is provided for by the terms of the agreement entered into between the parties or where the same is permissible by statute.

29. Accordingly, we are unable to sustain the order of the Railway Claims Tribunal directing payment of interest on default of the payment of the principal sum within a period of 45 days.

30. As we have indicated hereinbefore, when there is no specific provision for grant of interest on any amount due, the court and even tribunals have been held to be entitled to award interest in their discretion, under the provisions of Section 3 of the Interest Act and Section 34 of the Civil Procedure Code.

31. In Jagdish Rai & Bros. v. Union of India [(1999) 3 SCC 257] this Court, while considering grant of interest in respect of an amount awarded in an arbitration proceeding under Section 9 of the Arbitration Act, 1940 read with

Section 34 of the Civil Procedure Code, observed that: (SCC p. 258, para 2) "2. There are four stages of grant of interest. Firstly, from the stage of accrual of cause of action till filing of the arbitration proceedings; secondly, during pendency of the proceedings before the arbitrator; thirdly, future interest arising between the date of the award and the date of the decree; and fourthly, interest arising from the date of the decree till realisation of the award."

32. This Court in Jagdish Rai case [(1999) 3 SCC 257] held that although the claim for interest had been made before the court in which proceedings for making the award the rule of the court were pending, the High Court ought to have further examined whether the appellant was entitled to any interest after the decree was made in terms of the award.

33. This Court in Jagdish Rai case [(1999) 3 SCC 257] went on to observe that the courts have taken a view that the award of interest under Section 34 of the Civil Procedure Code is a matter of procedure and ought to be granted in all cases where there is a decree for money unless there are strong reasons to decline the same. In the said case, this Court modified the decree of the Court of the Subordinate Judge by including a direction for payment of interest @ 12% per annum from the date when the award was made the decree of the Court of the Subordinate Judge, till realisation.

34. A similar view was expressed by a three-Judge Bench of this Court in Hindustan Construction Co. Ltd. v. State of

J&K [(1992) 4 SCC 217] .

35. Though, both the two aforesaid cases were in relation to awards having been made under the Arbitration Act, a principle has been enunciated that in cases where a money award is made, the principles of Section 34 of the Civil Procedure Code and Section 3 of the Interest Act could be invoked to award interest from the date of the award till the realisation thereof.

36. In the instant case, the claim for compensation accrued on 13-11-1998 when Kunhi Moosa, the husband of Appellant No.1, died on account of being thrown out of the moving train. The claim before the Railway Claims Tribunal, Ernakulam (OA No. 68/1999) was filed immediately thereafter in 1999. There was no delay on the part of the appellant claimants in making the claim, which was ultimately granted for the maximum amount of Rs. 4 lakhs on 26-3-2007.

37. Even if the appellants may not be entitled to claim interest from the date of the accident, we are of the view that the claim to interest on the awarded sum has to be allowed from the date of the application till the date of recovery, since the appellant cannot be faulted for the delay of approximately eight years in the making of the award by the Railway Claims Tribunal. Had the Tribunal not delayed the matter for so long, the appellants would have been entitled

to the beneficial interest of the amount awarded from a much earlier date and we see no reason why they should be deprived of such benefit.

38. As we have indicated earlier, payment of interest is basically compensation for being denied the use of the money during the period in which the same could have been made available to the claimants. In our view, both the Tribunal, as also the High Court, were wrong in not granting any interest whatsoever to the appellants, except by way of a default clause, which is contrary to the established principles relating to payment of interest on money claims.

39. We, therefore, allow the appeal and modify the order of the High Court dated 24-5-2007 affirming the order of the trial court and direct that the awarded sum will carry interest @ 6% simple interest per annum from the date of the application till the date of the award and, thereafter, at the rate of 9% per annum till the date of actual payment of the same. The appeal is allowed to the aforesaid extent."

16. Principles of law laid down in the decisions, extracted above,

squarely apply to the facts on hand.

17. Even though learned Standing Counsel for the Insurance

company raised contentions sustaining the impugned judgment, it is trite

law that the remedy under Article 226 of the Constitution of India is based

on justice, equity, and good conscience. Let us consider as to when, the

abovesaid principle can be applied.

(i) In Rattan Lal v. Vardesh Chander and Ors. [(1976) 2 SCC 103], the Hon'ble Supreme Court held as under:

"20. Once we assume the inapplicability of the T.P Act to the lease in question - an assertion of the respondent which we do not feel compelled to consider in this appeal -we are confronted by the concept of justice, equity and good conscience which, admittedly comes into play in the absence of any specific legislative provision. In India and in other colonies during the Imperial era a tacit assumption had persuaded the courts to embrace English law (the civilizing mission of the masters) as justice, equity and good conscience. Throughout, the Empire, in Asia and Africa, there was an . inarticulate premise that English law was a blessing for the subject peoples. Robert M. Seldman writes about Sudan:

"The courts were simply directed to decide cases on the basis of 'justice, equity and good conscience' (Civil Justice Ordinance, 1929 Ch. 9 L S 13 (1955). However, the judges were all English law (sic): and with magnificent insularity it developed that 'justice, equity and good conscience' meant not merely English common law but English statutory law as well. The author has been told by an English barrister who tried a case in the Sudan some years age that he was amazed to discover that 'justice, equity and good conscience,' meant in his case the English Sale of Goods Act, 1862. (Law and Economic Development in Independent, English Speaking, Sub- Saharan Africa - Wisconsin Law Review Vol.

1966, Number 4, Fall)"

The Judicial Committee of the Privy Council struck a similar note in Maharaja of Jeypore v. Rukmani Pattamahdevi (AIR 1919 PC 1) where Lord Phillimore stated:

"They are directed by the several charters to proceed where the law is silent, in accordance with justice, equity and good conscience and the rules of English law as to forfeiture of tenancy may be held and have been held to be consonant with these principles and to be applicable to India."

21. Unfortunately, even after liberation, many former colonies, including India, did not shake off this neo- colonial jurisprudence [See Namdeo Lokman Lodhi vs. Narmadabai Keshoodeo and Ors. (AIR 1950 Bom

123)]. This is the genesis of the idea that Indian 'good conscience' is English Common Law during the reign of Empress Victoria. The imperatives of Independence and the jural postulates based on the new value system of a developing country must break off from the borrowed law of England received sweetly as 'justice, equity and good conscience'. We have to part company with the precedents of the British-Indian period tying our non- statutory area of law to vintage English law christening it 'justice, equity and good conscience'. After all, conscience is the finer texture of norms woven from the ethos and lifestyle of a community and since British and Indian ways of life vary so much that the validity of an

anglophilic bias in Bharat's justice, equity and good conscience is questionable today. The great values that bind law to life spell out the text of justice, equity ,and good conscience and Cardozo has crystallized the concept thus:

"Life casts the mould of conduct which will some day become fixed as law. Free India has to find its conscience in our rugged realities and no more in alien legal thought. In a larger sense, the insignia of creativity in law, as in life, is freedom from subtle alien bondage, not a silent spring nor hot-house flower."

(ii) In Annam and Others v. Mathu and Others [1961 KLJ 899], a Hon'ble Division Bench of this Court held as under:

"7. The phrase justice, equity and good conscience goes back in the legal history of India at least to Sir Elijah Impey and the Regulation of 1781. Section LX of the Regulation laid down that "in all cases, within the jurisdiction of the Mofussil Diwani Adalats, for which no specific directions are hereby given the respective judges thereof do act according to justice, equity and good conscience", and section XCIII provided "that in all cases, for which no specific directions are hereby given, the Judge of the Sadar Diwani Adalat do act according to justice, equity and good conscience.

8. This rule of decision in accordance with justice, equity and good conscience in the absence of specific directions meant" according to Mr. Setalvad in his Hamlyn Lectures, the Common Law in India, "in substance and in the circumstances the rules of English

law wherever applicable". He goes on to say:

"In the words of Sir Henry Maine, India was then 'regard being had to its moral and material needs, a country singularly empty of law.' The inevitable result was that the courts of justice had to legislate. The 'vast gaps and interspaces in the substantive law' were rilled by the principles of English common and statute law. The wide door of 'justice, equity and good conscience' made it easy for these principles to become, through (he decisions of the courts, the governing law of the country." (Page 23)

9. Interesting cases in the development of the doctrine are (1863) 9 MIA 303 and (1887) 14 Indian Appeals 89. In the former case the Privy Council said that although the English law was not obligatory upon the courts in the mofussil, they ought, in proceeding according to justice, equity and good conscience, to be governed by the principles of the English law, applicable to a similar state of circumstances, and in the latter that equity and good conscience had been generally interpreted to mean the rules of English law if found applicable to Indian society and circumstances. In (1868) 9 WR 230 Sir Barnes Peacock said:

"Now, having to administer equity, justice and good conscience, where are we to look for the principles which are to guide us? We must go to other countries where equity and justice are administered upon principles which have been the growth of ages, and see how the Courts act under similar circumstances; and, if we find that the rules which they have laid down are in accordance with the true principles of equity, we cannot do wrong in following them."

(iii) In Daduram and Ors. v. Bhuri Bai and Ors.[2019 (197) AIC

598], the Hon'ble High Court of Chhattisgarh held as under:

"18. Their Lordships of the Supreme Court have also in the matter of M.V. Elisabeth and others v. Harwan Investment and Trading Pvt. Ltd., Hanoekar House, Swatontapeth, Vasco-De-Gama, Goa [1993 Supp. (2) SCC 433] held that where statute is silent and judicial intervention is required, Courts strive to redress grievances according to what is perceived to be principles of justice, equity and good conscience. It was observed as under:

"86. The judicial power of this country, which is an aspect of national sovereignty, is vested in the people and is articulated in the provisions of the Constitution and the laws and is exercised by Courts empowered to exercise it. It is absurd to confine that power to the provisions of imperial statutes of a bygone age. Access to Court which is an important right vested in every citizen implies the existence of the power of the Court to render justice according to law. Where statute is silent and judicial intervention is required. Courts strive to redress grievances according to what is perceived to be principles of justice, equity and good conscience."

19. Now, the question is what is meaning and significance of the expression "justice, equity and good conscience". The Formula "Justice, Equity and Good Conscience"--The origin of the formula lie in the Romeo canonical sources, way back in the 16 th Century. Late the formula was applied in Italy, Germany and France. It appealed the English legal system which modified and

incorporated it in their own system. The preamble to the Act of Succession enacted in 1536 used the expressions "Equity, reason and good conscience". The East India Company carried the principle to India. In 1688, the Judges appointed in Bombay under the Company's Law were "to behave themselves according to good conscience". The Royal Charters of 1683, 1687, 1726 and 1753 also used the expressions "Equity and Good Conscience" and "Justice and Right". The Regulation of 1781 enjoined that in all cases for which no directions were given the respective Judge "do act according to justice, equity and good conscience". The principles were to be applied where positive law or custom did not assist the Court to dispense judicial Justice. Indeed, the term "Justice" eludes a precise definition. It means the constant and perpetual disposition to render to every man his due. The Courts are to administer "commutative justice" and "distributive justice" as well. The expression "commutative justice" means that virtue whose object is to render to every one what belongs to him, as nearly as may be, or that which governs contracts. To render commutative justice, the judge must make an equality between the parties, so that no one may be gainer by another's loss. The expressions "distributive justice" means that virtue whose object is to distribute rewards and punishments to each one according to his merits, observing a just proportion by comparing one person or fact with another, so that neither equal persons have

unequal things nor unequal persons things equal. Equity is a system of law or rules more consonant than the ordinary law which opinions current for the time being as to a just regulation of the mutual rights and duties of men living in a civilized society, vide Halsbury's Laws of England, 3rd Edn., Vol. 14, p. 464. Equity according to Blackstone means "that portion of remedial justice which was formerly exclusively administered by a Court of Equity as contra-distinguished from that portion which was formerly exclusively administered by a Court of common law" - vide Blackstone's Commentaries, 429-

437. The meaning of the expressions "Justice, equity and good conscience" was summed up by Lord Hobhouse in Waghela Rajsanji v. Shekh Masludin [(1887) 13 Ind Appl. 89 at 96]. "Justice, equity and good conscience" could be interpreted to mean the rules of English Law and found applicable to Indian society and circumstances". [See U. Bransly Nongaiang v. U. Drolishon Sytemiong and others (1986) 2 Gauhati Law Reports 487)]."

18. Indisputably, the first respondent Insurance Company has

retained the amount. Applying the abovesaid principles of law, interest has

to be paid for the amount retained for the period from 22.07.2005 till the

date of payment.

19. During the course of hearing, Smt. Santhi, learned Standing

Counsel for the respondent Insurance Company, submitted that the sum of

Rs. 50,170/- directed to be refunded, has not been paid, for the reason

that the appellant/writ petitioner has not given a full and final settlement

letter. Since the writ petition/appeal is pending before this Court,

Company's expectation that the appellant/writ petitioner should give a

letter, as required by the Company, is not reasonable. No doubt, he could

have given a letter to receive the abovesaid amount under protest.

20. The issue now remains to be considered is, what should be the

rate of interest to be paid. Section 34 of the Civil Procedure Code, 1908

provides for payment of reasonable interest for the sum adjudged at the

rate of 6% per annum and for any period prior to the institution of the suit.

Simultaneously, Section 3 of the Interest Act, 1978 enables the court to

allow in any proceedings for the recovery of any debt or damages or in any

proceedings in which a claim for interest in respect of any debt or damages

already paid is made, the court may, if it thinks fit, allow interest to the

person entitled to the debt or damages or to the person making such

claim, as the case may be, at a rate not exceeding the current rate of

interest, for the whole or part of the period from which the amount has

fallen due.

21. Applying the abovesaid provisions and the doctrine of justice,

equity and good conscience, we deem it fit that 6% interest on the delayed

payment of Rs.50,170/- would be reasonable. Thus, while interfering with

the judgment dated 26.04.2021 in W.P.(C) No. 9912 of 2015 and setting

aside the same, we direct the Oriental Insurance Company Limited,

Divisional Office, Kochi, represented by its Divisional Manager, and the

Chief Regional Manager, Oriental Insurance Company Limited, Regional

Office, Ernakulam, respondents 1 and 2, to refund a sum of Rs.50,170/-

with 6% interest on the abovesaid sum for the period from 22.07.2005, till

the date of payment of the amount to the appellant, within two months

from the date of receipt of a copy of this judgment.

This appeal is allowed as above.

sd/-

S. MANIKUMAR, CHIEF JUSTICE

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SHAJI P. CHALY, JUDGE Rvx