The appeal and the cross-objection both arise out of the award dated 24.5.84 made by the Motor Accident Claims Tribunal, Cachar. The appellant is the Assam State Transport Corporation (hereinafter referred to as ‘the Corporation’) and the cross-objectors are the claimants.
2. An accident took place on 30.4.81 in which a bus belonging to the Corporation was involved. The bus of the Corporation hit a truck belonging to claimants which was coming from the opposite direction, as a result of which the truck was damaged and the driver of the truck also sustained minor injuries. A claim was made for compensation claiming a sum of Rs. 26,469.00. The amount claimed comprised of a sum of Rs. 23,819/- on account of expenditure incurred on repair of the truck, Rs. 2,000/- on account of loss of income from the truck, Rs. 400/- being driver's pay for the said period, Rs. 200/- for cost of treatment of claimant No. 2, and Rs. 50/- on account of loss of work of claimant No. 2.
3. The claim was contested by the Corporation. The learned Tribunal held that there was contributory negligence on the part of drivers of both the vehicles, and accordingly, decided to apportion the compensation awarded between the Corporation and the claimants in the ratio of 2:1. So far as the amount of claim is concerned, except the claim on account of loss of income for Rs. 2,000/- the Tribunal held the claim as proved. Accordingly, compensation of Rs. 17,646/- was awarded. Interest at the rate of 6% per annum was ordered from the date of the award in the event of failure of the Corporation to deposit the awarded amount within four months from the date of the award.
4. Aggrieved by the award, the present appeal has been filed by the Corporation. The award has been challenged on two grounds. Firstly, that Tribunal having arrived at a finding of contributory negligence ought not to have awarded any compensation to the claimants. Secondly, that the award of compensation was not based on any legal evidence. The claimants have filed cross objection on the ground that the finding regarding the contributory negligence was perverse, the same being contrary to the evidence on record. The case of the cross-objector is that the full amount of compensation claimed, along with the interest from the date of making the claim should have been awarded.
5. I have heard Mr. P.C Deka, learned counsel for the appellant and Mr. S.K Senapati, learned counsel for the respondents-cross-objectors. I have carefully gone through the evidence on record. It appears that the vehicle was examined by the Motor Vehicles Inspector. The accident case was investigated by the police who found the driver of the bus of the Corporation responsible for the accident and submitted a charge-sheet against him. No case was taken up against the driver of the truck. On consideration of the evidence on record and the facts and circumstances of the case, I find no justification for arriving at a finding of contributory negligeace on the part of the driver of the vehicle of the claimant. In that view of the matter, the finding regarding contributory negligence cannot be sustained. The question of apportionment of the claim between the Corporation and the claimants, therefore, does not arise.
6. Turning to the question of compensation, I find that the claim under different heads had been proved by the claimants to the satisfaction of the learned Tribunal. There is material on record to justify the finding of the learned Tribunal in regard to the quantum of damages. The total claim was Rs. 26,469/- out of which a sum of Rs. 2,000/- related to the loss of income from the truck which was not allowable. The balance amount of Rs. 24,469/- comprised of a sum of Rs. 23,818/- on account of repairs of the vehicle which was fully proved by the claimants before the learned Tribunal. The balance claim for Rs. 650/- was also accepted by the Tribunal. I do not find any justification to interfere with the same. Accordingly, I hold that the claimants are entitled to the compensation amounting to Rs. 24,469/-. The award is modified accordingly.
7. In regard to interest, it appears that the learned Tribunal did not even consider the question of awarding interest from the date of making the claim till the date of payment. It simply awarded interest at the rate of 6% from the date of the award — that too in the event the awarded amount is not paid within four months.
8. The learned counsel for the cross-objectors submitted that the claimants were entitled to interest from the date of filing of the claim till the date of payment. He referred to a number of decisions of the Supreme Court as well as of this Court where interest had been awarded from the date of filing of the claim till the date of payment, in most of the cases at the rate of 12% per annum. I have considered the submission. The power to award interest is vested in the Tribunal under Section 110-CC of the Motor Vehicles Act, 1939 which reads:
“110-CC. Award of interest where any claim is allowed.— Where any Court or Claims Tribunal allows a claim for compensation made under this Act, such Court or Tribunal may 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 it may specify in this behalf.”
7. An identical provision is contained in Section 171 of the Motor Vehicles Act, 1988 (Act 59 of 1988) which has since repealed the Motor Vehicles Act of 1939.
8. From a reading of Section 110-CC of the Act, it is clear that a discretion has been conferred on the Court or Tribunal to award interest in addition to the amount of compensation. Interest may be awarded from the date of making the claim. The rate of interest has been left at the discretion of the Court.
9. The question that arises for consideration is what is the nature of this power. True it is that the power to award interest is discretionary but it is well settled that the discretion vested in the Court or a Tribunal has to be exercised judiciously. It is a part of judicial function. The discretion in the matter of awarding interest does not mean that interest might be allowed or refused at the mere will or pleasure of the Court or the Tribunal. It is a legal discretion which has to be exercised reasonably-according to common sense and justice on consideration of the facts and circumstances of each case. In fact, from a reading of the Section in the light of the context, it is clear that ordinarily interest should be awarded at the prevailing rate or rates from the date of making the claim unless in view of the facts and circumstances of the case the Court or Tribunal is otherwise satisfied. In other words, the award of interest should be the rule-refusal an exception.
10. The nature and character of interest is also well settled by slow by a catena of decisions of the Supreme Court wherein it has been held that interest is compensatory and when awarded it partakes the character of additional compensation. (Mahalakshmi Sugar Mills v. CIT, (1980) 123 ITR 429 SC, Central Provinces Manganese Ore Co. Ltd. v. CIT, (1986) 160 ITR 961 SC). The quantum of this additional compensation is determined in the light of the time lag between the date of making the claim and the payment of the amount awarded and rate of interest prevailing during the relevant period. It is for this reason that the legislature did not specify the rate of interest but left to the discretion of the Court or Tribunal. It is common knowledge that rate of interest vary from time to time. What rate should be allowed in a particular case may have to be determined keeping in view the period to which the claim relates or during which the amount of compensation remained unpaid. Different rates of interest might have been prevailing during such period. The Court or Tribunal any award interest at a flat rate which may be determined keeping in view the varying rates that prevailed during such period or may allow interest at different rates for different periods. In India, the rates of interest have steadily gone up during the last three decades. To determine the rate of interest in a particular case, the Court may refer to bank rate, or the market rate of interest or the rate of interest offered by the Government on securities, bonds etc. or it may look at provisions of statutes where the Parliament has prescribed the rate of interest for the purpose of those statutes. The second course may be simpler and at so more authentic, is this connection, reference may be made to the rates of interest specified under the Income Tax Act, 1961. This Act provides for charging of interest from the taxpayers on delayed payment of tax and also for payment of interest by the Government to the tax payers on delayed refunds. The rate of interest originally was 4%, which was raised to 6 percent with effect from 1.4.65 to 3 percent with effect from 1.10.1967, to 12 percent with effect from 1.4.1972 and to 15 percent with effect from 1.10.1984 The changes in the rate of interest made by the Parliament in the Income Tax Act from time to time can be taken as index of the prevailing rates of interest during the relevant periods. It can, therefore, be held that between 1.4.1972 to 1.10.1984, the prevailing rate of interest was 12% and from 1.10.1984 onwards it is 15%. I hold accordingly.
11. In the instant case, the claim was filed on 2.11.1981 Section 110-CC permits the Tribunal to award interest from the date of application till the date of payment. The award was made on 24.5.84 The Tribunal did not allow any interest from the date of application. It allowed interest at the rate of 6 percent only from the date of award and that too if the awarded amount is not paid within four months from the date of the award. I am not satisfied with the decision of the learned Tribunal in this regard. In my opinion, in the absence; of valid reasons, the learned Tribunal should have exercised the discretion vested in it under Section 110-CC and awarded interest from the date of making the claim till the date of payment. I am also off the opinion that the rate of interest should be the prevailing rate of interest. Accordingly, I allow interest from the date of making the claim till the date of payment of the awarded amount at the rate off 12 percent from 2.11.81 to 30.9.84 and at the rate of 15 percent from 1.10.84 till the date of payment.
12. In result, the appeal is dismissed and the cross objection is allowed. The claimants shall be entitled to a sum of Rs. 24,469/- by way of compensation with interest thereon at the rate of 12 percent from 2.11.1981 to 30.9.1984 and 15 percent from 1.10.1984 till toes date of payment.