2009 (5) TMI 966 - SC - Indian Laws

Non granting interest on the amount of the Award - from the date of the incident or from the date of filing of the claim petition till actual payment of the awarded sum - Held that - 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 utilized by the person in whose favour an order of recovery of money was passed. Accordingly, payment of interest follows as a matter of course when a money decree is passed. The only question to be decided is since when is such interest payable on such a decree. In the instant case, the claim for compensation accrued on 13th November, 1998, when Kunhi Moosa, the husband of the Appellant No.1, died on account of being thrown out of the moving train. The claim before the Railway Claims Tribunal, Ernakulam, (O.A.No.68/1999) was filed immediately thereafter in 1999. There was no delay on the part of the claimants/appellants in making the claim, which was ultimately granted for the maximum amount of ₹ 4 lakhs on 26th March, 2007. 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 8 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. As we have indicated earlier, payment of interest is basically compensation for being denied the use of the money during the period which the same could have been made available to the claimants. 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. 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.

Summary

Issues Involved:
1. Entitlement to compensation for the death of Kunhi Moosa.
2. Determination of the date from which compensation is payable.
3. Award of interest on the compensation amount.
4. Discretionary power of courts and tribunals to award interest.

Detailed Analysis:

Entitlement to Compensation:
On 13th November 1998, Kunhi Moosa, the husband of Appellant No.1, was robbed and thrown out of a train, resulting in his death. The appellants filed a claim for compensation amounting to Rs. 4 lakhs before the Railway Claims Tribunal, Ernakulam, in 1999. The Tribunal awarded the compensation on 26th March 2007, directing the Union of India to pay Rs. 4 lakhs, distributed among the appellants. This award was challenged in the Kerala High Court, which dismissed the appeal, leading to the present appeal before the Supreme Court.

Determination of the Date from Which Compensation is Payable:
The appellants argued that compensation should be payable from the date of the incident, relying on the Supreme Court's decision in Rathi Menon Vs. Union of India, which held that the right to claim compensation arises from the date of the incident. The High Court, however, upheld the Tribunal's decision to grant interest only in case of default in compliance with the order for deposit of the compensation amount.

Award of Interest on the Compensation Amount:
The primary question before the Supreme Court was whether the Tribunal and the High Court were justified in not granting interest on the awarded amount from the date of the incident or the date of filing the claim petition until the actual payment. The appellants cited several cases, including Tejinder Singh Gujral Vs. Inderjit Singh and Dr. K.R. Tandon Vs. Om Prakash, to argue that interest should be granted as compensation for the delay in payment.

Discretionary Power of Courts and Tribunals to Award Interest:
The Supreme Court noted that neither the Railway Claims Tribunal Act, 1987, nor the Railways Act, 1989, specifically provided for the payment of interest on awarded amounts. However, the Court emphasized that the power to award interest could be derived from the Interest Act, 1978, and Section 34 of the Civil Procedure Code. The Court highlighted that interest is a form of compensation for being denied the use of money due and should be granted from the date of the claim or the date of the order for recovery.

The Court observed that the Tribunal had delayed the award by approximately eight years, and the appellants should not be deprived of the beneficial interest of the awarded amount due to this delay. The Court concluded that both the Tribunal and the High Court erred in not granting interest from the date of the application until the date of the award and thereafter until the actual payment.

Conclusion:
The Supreme Court allowed the appeal, modifying the High Court's order. The Court directed that the awarded sum would carry interest at 6% per annum from the date of the application until the date of the award and thereafter at 9% per annum until the actual payment. The respondents were also directed to pay the costs of the proceedings, assessed at Rs. 25,000.