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                   IN THE SUPREME COURT OF INDIA

                    CIVIL APPELLATE JURISDICTION

                    CIVIL APPEAL NO.              OF 2008                 (Arising out of S.L.P.(Civil) No. 12917 of 2007)

Dharampal & Ors.                                   .... Appellants

                                    versus

U.P. State Road Transport Corpn.                   .... Respondent

                                JUDGMENT

Dr. Mukundakam Sharma, J.

1.           Leave granted.

2.           The present appeal revolves around a very short issue, namely, the

quantum of interest to be awarded on the compensation awarded to the legal

representatives of the deceased who died in an accident. Before we deal with

the issue that arises for our consideration, we will deal with the factual matrix

out of which the aforesaid issue arises.

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3.          Deceased, Pradeep Kumar was driving a motorcycle along with his

wife, two minor daughters and a minor son.         When they reached village

Dadiaki on the Muzaffarnagar - Roorkee Road, Bus No. UP15L 7640,

allegedly driving at a very high speed, rashly and negligently, hit the

motorcycle. All the five persons traveling on the motorcycle died on the spot

due to the aforesaid accident. The driver of the bus fled away from the place of

occurrence immediately after the accident, leaving behind the bus. The age of

the deceased Pradeep Kumar was 28 years and as per appellants he was earning

an amount of Rs.4,200/- per month. The appellants filed a petition No.202 of

2004 before the Motor Accident Claim Tribunal, Udham Singh Nagar,

Rudrapur. Several witnesses were examined. On perusal of the evidence on

record the Tribunal passed a judgment and awarded             Rs.3,50,100/- as

compensation to the appellants along with interest @ 6% per annum from the

date of application till the date of payment. The Tribunal upon consideration

of the evidence held that the deceased was earning Rs.2,400/- per month and

not Rs.4,200/- as claimed. Being aggrieved by the aforesaid award of the

Motor Accident Claim Tribunal the appellants preferred an appeal being

Appeal No.102 of 2007 in the High Court of Uttrakhand at Nainital contending

inter alia that it was clearly proved that the deceased was doing a work of

mason and was earning Rs.4,200/- and the Tribunal erred in determining the

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income of the deceased on the presumption that the job of the mason is not

available everyday. Challenge was made in the said appeal also in respect of

the interest awarded contending inter alia that the rate of interest was on the

lower side and the Tribunal should have awarded higher rate of interest.

4.          The respondent - UP State Road Transport Corporation also filed

an appeal which was registered as Appeal No.386 of 2005. Both the aforesaid

appeals were taken up for consideration together as the issues that arose for

consideration were similar. The Division Bench of the Uttarakhand High Court

considered the evidence on record and dismissed the appeal filed by the

respondent - UP State Road Transport Corporation whereas the appeal filed by

the appellants was allowed to the extent that the appellants were held to be

entitled to get a sum of Rs.3,70,000/- instead Rs.3,51,100/- as awarded by the

Tribunal for the death of Pradeep Kumar. So far as the rate of interest is

concerned, the High Court also maintained the interest at 6 % p.a. which was

awarded by the Tribunal holding that the said rate of interest does not require

any interference. The High Court directed the State Road Transport

Corporation to deposit the enhanced amount of compensation within two

months with interest, with the Tribunal.

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5.          The appeal is now filed by the appellants in this Court in respect

of the quantum of compensation awarded as also in respect of the rate of

interest which was awarded by the Tribunal as also by the High Court.

6.          Learned counsel appearing for the appellants, at the time of

arguments fairly stated before us that he would advance his arguments only in

respect of the interest and would not like to press for the enhancement of

quantum of compensation in terms of the prayers made in the memorandum of

appeal.

7.          Accordingly, we heard the learned counsel for the appellants only

in respect of the issue of enhancement of rate of interest awarded by the

Tribunal and also by the High Court, which is awarded and maintained as 6%

per annum. Counsel for the appellants submitted before us that there are ample

number of cases decided by this Court for such claim of enhancement of rate of

interest and in some cases the rate of interest has been consistently awarded by

this Court at 9% per annum considering the claim of this nature. The counsel

for the respondent - UP State Road Transport Corporation pointed out that this

is not a case for enhancement so far as the rate of interest is concerned,

inasmuch as the prevailing rate of interest on bank deposit was only 6.5%.

8.          As per section 171 of the Motor Vehicle Act, 1988 (hereinafter

referred as ’Act’) where the claim for compensation made under the act is

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allowed by the Claims Tribunal, the tribunal may direct that in addition to the

amount of compensation simple interest shall also be paid at such rate from

such date not earlier than the date of making claim.

9.           In National Insurance Co. Ltd. vs. Keshav Bahadur reported in

(2004) 2 SCC 370 this court has held that the provisions require payment of

interest in addition to compensation already determined. Even though the

expression "may" is used, a duty is laid on the Tribunal to consider the

question of interest separately with due regard to the facts and circumstances of

the case. It was clearly held in the said decision that the provision of payment

of interest is discretionary and is not and cannot be bound by rules.

10.          Interest is compensation for forbearance or detention of money,

which ought to have been paid to the claimant. No rate of interest is fixed

under section 171 of the Act and the duty has been bestowed upon the court to

determine such rate of interest. In order to determine such rate we may refer to

the observations made by this court over the years. In the year 2001 in the case

of Kaushnuma Begaum (Smt.) and others vs. New India Assurance Co.

Ltd. & others reported in (2001) 2 SCC 9 on the question of rate of interest to

be awarded it was held that earlier, 12% was found to be the reasonable rate of

simple interest but with a change in economy and the policy of Reserve Bank

of India the interest rate has been lowered and the nationalized banks are now

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granting interest @ 9% on fixed deposits for one year. Accordingly,

interest @ 9% was awarded in the said case. We may at this stage also refer to

the following observations of their Lordships in the aforesaid decision which

are relevant to the present case:

     "24. Now, we have to fix up the rate of interest. Section 171 of the       MV Act empowers the Tribunal to direct that ‘in addition to the       amount of compensation simple interest shall also be paid at such       rate and from such date not earlier than the date of making the       claim as may be specified in this behalf’. Earlier, 12% was found       to be the reasonable rate of simple interest. With a change in       economy and the policy of Reserve Bank of India the interest rate       has been lowered. The nationalized banks are now granting       interest at the rate of 9% on fixed deposits for one year. We,       therefore, direct that the compensation amount fixed hereinbefore       shall bear interest at the rate of 9% per annum from the date of the       claim made by the appellants........"

11.          In the year 2002, in United India Insurance Co. Ltd. and others

vs. Patricia Jean Mahajan and others reported in (2002) 6 SCC 281 this

Court held that the interest is payable on the equitable grounds to the aggrieved

person who is deprived of using the money which is due and payable to him.

Following the observations made in the case of Kaushnuma Begaum (supra)

interest @ 9 % was awarded in this case also. It was held as follows :-

     "In our view the reason indicated in the case of Kaushnuma       Begum (supra) is a valid reason and it may be noticed that the rate       of interest is already on the decline. We therefore, reduce the rate       of interest to 9% in place of 12% as awarded by the High Court."

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12.          In the year 2003 in the case of Abati Bezbaruah v. Dy. Director

General, Geological Survey of India and Another reported in (2003) 3 SCC

148 it was held that the question as to what should be the rate of interest, in the

opinion of this court, would depend upon the facts and circumstances of each

case. Award of interest would normally depend upon the bank rate prevailing at

the relevant time. After referring to the aforementioned decisions interest @

9% was awarded in the said case.

13.          However, in the year 2005 in Tamil Nadu State Transport

Corpn. Ltd. vs. S. Rajapriya reported in (2005) 6 SCC 236 this Court again

taking note of the then prevailing rate of interest on bank deposits directed for

lowering the rate of interest fixed by the Tribunal at 9% per annum and altered

the same to 7.5% per annum.

14.          In the backdrop of the aforesaid legal position, we may now

examine the facts of the present case. The accident in the present case had

taken place on 1.9.2004 and the Tribunal had passed the award on 18.5.2005.

Rate at which the interest is to be awarded would normally depend upon the

bank rate prevailing at the relevant time. Since in the case of State of Tamil

Nadu State Transport Corpn. Ltd. (supra) decided in the month of April,

2005, the prevailing rate of interest on bank deposits was found and held to be

7.5% per annum, we consider it appropriate to award the same rate of interest,

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as the same was the prevailing rate of interest on the date of the passing of the

award i.e. 18.05.2005 in the present case. Consequently, we hold that the

appellants would be entitled to be paid interest at the rate of 7.5% from the date

of application till the date of payment.

15.          In terms of the above directions and observations the appeal stands

disposed of directing the payment of interest at the aforesaid rate. So far as the

issue with regard to enhancement of compensation is concerned, the same was

not pressed before us and consequently the prayer for enhancement of quantum

of compensation as raised in the memorandum of appeal stands dismissed.

However, in the circumstances of the case there will be no order as to costs.

                                            .................................J                                              (S.B. Sinha)

                                            .................................J.                                              (Dr. Mukundakam Sharma) New Delhi, May 12, 2008