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Judgment
Rajiv Shakdher, J.—The Appellant has preferred the present Appeal u/s 173 of the Motor Vehicles Act, 1988 (hereinafter referred to as in short ''Act'') against the judgment of the Motor Vehicles Accident Claim Tribunal dated 1.12.1998 (hereinafter referred to as in short ''Tribunal'') in Claim Case No. 80/89. By virtue of the said judgment, the Appellant has been awarded Rs. 69,500/- with interest @ 12% p.a. The Tribunal has in awarding the compensation to the Appellant also returned a finding that the bus driver of the vehicle involved in the accident, as well as, the scooter driver were equally responsible. The Appellant being the wife of the scooter driver was thus awarded only 50% of the aforesaid quantified sum of Rs. 69,500/-. Resultantly, the Appellant has been awarded, by virtue of the judgment in Appeal, a sum of Rs. 37,500/- with interest @ 12% p.a from the date of filing of the petition till realisation.
Before I deal with the submissions of the learned Counsel for the Appellant, the following brief facts which are relevant for the disposal of the Appeal are set out herein below:
On 15.3.1988 at about 11.00 am the Appellant who was riding pillion on a scooter bearing registration No. DIK-6341 which was driven by her husband, were on their way to Azad Market from Lucknow Road. At the crossing of Lucknow Road and Mall Road a collision occurred between the said two-wheeler scooter and a DTC Bus bearing registration No. DHP-2099. The said bus is owned by Respondent No. 1 and the driver of the bus was Respondent No. 2.
As a result of the collision, the Appellant sustained injuries on both her legs. Though in comparison it seems more grievous injuries were sustained by her on her left leg. The result of the injury was that her left ankle has become deformed and stiff.
Aggrieved by the said injury, the Appellant instituted an action in the Motor Vehicles Claim Tribunal (hereinafter referred to in short as the ''Tribunal'') on 16.1.1989. The Tribunal registered the action as a suit bearing No. 80/89. The Tribunal in disposing of the action framed the following issues:
Whether Prem Lata received injuries in an accident with DTC Bus No. DHP-2099 driven by respondent no.1 in a rash and negligent manner? OPP
Whether the petitioner is entitled to receive compensation, if so, how much and from whom?
Relief.
The point to be noted is that the trial in the case commenced on 21.4.1991 and it finally concluded on 29.7.1997.
Upon conclusion of the trial, the judgment in the case was delivered by the Tribunal on 1.12.1998.
As regards Issue No. 1, the Tribunal after discussing the evidence on record came to the conclusion that both Respondent No. 2 i.e the bus driver, as well as, the scooter driver i.e the husband of the Appellant were equally responsible for the collision. The relevant observations in this regard are set out in Paragraph 9 of the judgment of the Tribunal. These are extracted herein below:
From the statement made by the petitioner and the respondent driver, the accident between the bus and scooter stands proved. Doctor stated that Smt.Prem Lata was examined by him and she has having deformity in the left leg, so, the injuries sustained by the petitioner stands proved to be due to accident with the bus. According to the petitioner, it was the bus driver which is negligent and responsible for the present accident but the bus driver stated that the scooter driver was at fault in the present accident because the scooter driver was driving at a fast speed and hit against the right side of rear wheel of bus. The scooter driver has not been examined by the petitioner. The bus driver has been challaned for rash and negligent driving in this case vide FIR No. 48/88. From the statement of the petitioner, the bus was coming behind the scooter and the bus had hit the scooter. The driver of the bus stated otherwise when he stated that he was driving the bus from I.P.Deport to Wazirpur and he was crossed the intersection and he was given signal to do so and the scooter driver had come from the wrong side and struck against the right rear wheel of the bus. From the perusal of site plan, it can be seen that the accident had taken place at point ''A'' meaning thereby that both the vehicles have colluded at this point. The bus driver has also crossed almost the entire intersection of the road when the scooter driver is alleged to have hit against the right rear wheel of the bus. Statement made by the petitioner that the scooter was hit from behind by the bus is falsified by the statement made by the bus driver and the site plan. The second witness of the occurrence who has been examined in this case are the petitioner Prem Lata and the driver of the bus. The scooter driver who happens to be the husband of the petitioner has not come in the witness box to explain his position in the present accident. From the site plan and statement of two witnesses, it can be seen that both the bus driver and scooter driver are responsible in the present case because the bus driver had already crossed the intersection when the scooter driver struck against the rear right wheel of the bus. I, Therefore, come to the conclusion that both the bus driver as well as the scooter driver are responsible in the present accident and their responsibility can be assessed at 50% each. The issue is decided accordingly.
Insofar as Issue No. 2 on the aspect of the award of compensation to be paid to the Appellant is concerned, the Tribunal has discussed the same in Paragraph 10 of the judgment. The net result being that the Tribunal; upon perusal of the evidence and the submissions made before it came to the conclusion that the Appellant was entitled to the following sums:
Particulars Period of Amount Hospitalisation (Rs.) i) Hindu Rao Hospital 15.3.88 to 27.7.88 Nil ii) Hospitalisation in 28.7.88 to 19.8.88 Rs. 7290/- Tirth Ram Shah Hospital Rs. 5375/- iii) Medicines Rs. 5554.84/- iv) Conveyance Rs. 1220/- v) Permanent disability & pain and suffering Rs. 50,000/- Total Rs.69,439.84/- (Rounded Off to Rs. 69,500/-)
As regards the aforesaid sum of Rs. 69,500/- the Tribunal directed that the petitioner be paid only a sum of Rs. 34,950/- with interest @ 12% p.a from the date of filing of the petition on the ground that both the scooter driver and bus driver were equally responsible for the accident. This amount of Rs. 34,950/- was permitted to be paid @ 12% p.a from the date of filing of the petition till its realization.
Being aggrieved by the aforesaid judgment of the Tribunal, the Appellant herein preferred an Appeal u/s 173 of the Act. The said Appeal was filed on 3.3.99. The Appeal was listed before the Court on 5.3.99. By an order dated 7.10.99 the Appeal was admitted.
In the Appeal several grounds have been raised assailing the judgment of the Tribunal. Amongst others there is a specific ground i.e Ground No. (VI) wherein the Appellant has stated as follows:
VI. Because the Ld. Tribunal erred in holding that the husband of the appellant also contributed to the extent of 50% in causing the accident in question. It will not be out of place to mention here that the husband of the appellant has almost crossed the Mall road and Lucknow road inter-section, when his scooter was hit by the bus driven by respondent no.2 in a rash and negligent manner. The Site Plan of the accident prepared by the police during the course of investigation also corroborates this fact. Thus, the accident in question took place solely due to the negligence of respondent no.2.
However, at the time of hearing of the Appeal, the learned Counsel for the Appellant Mr.Sanjay Gupta has given up all other grounds in the appeal, in particular Ground No. VI; except that which pertains to denial of compensation on the ground of loss of income. The learned Counsel for the Appellant thus confined his submissions only to one aspect which is, the Appellant''s right to claim compensation towards ''loss of income''. It is the contention of the learned Counsel for the Appellant that in this case, even though the Appellant is a housewife, the Tribunal ought to have taken guidance of the second schedule to the Motor Vehicles Act, 1988 (hereinafter referred in short as the ''Act''). It is his contention that if resort had been taken to Paragraph 6 of the second schedule to the Act then the Tribunal could not have but come to the conclusion that the Appellant would be entitled to compensation for ''loss of income'' by taking her notional income as Rs. 15000 p.a. He further submits that if; to this notional income of the Appellant a multiplier of 17 is applied; given the age of deceased on the date of accident was 35 years and; the product so derived is discounted by the disability factor of 56%; the Appellant would be entitled to a total sum of Rs. 1,42,800/- (Rs.15000pa x 17 x 56%).
As against this, the counsel for the Respondent; Mr.Abhinav Prakash, has contended that the Tribunal has given good reasons for the sums awarded to the Appellant. It is further contended by the learned Counsel for the Respondent that the claim for ''loss of income'' has neither been made before the Tribunal or even in the Appeal before this Court and hence, any claim for compensation on this ground ought not to be entertained.
Having heard the learned Counsel for the parties, I am of the view that the Tribunal ought to have granted compensation to the Appellant for ''loss of income''. The reasons for the same are as follows:
(1) Insofar as the first objection of the counsel for the Respondent is concerned, I find that broad averments have been made in the continuation sheet to the claim petition with respect to pecuniary and non-pecuniary damages. The relevant averments in this regard are contained in sub-paras 4 and 6 of paragraph 23 of the claim petition. The averments made reads as follows:
That the petitioner had spent considerable amount on special diet, conveyance, medicines, hospitalization and other miscellaneous items. The petitioner had to spend on these accounts in future also. The petitioner is entitled to compensation for suffering permanent disability, permanent limping, pain, mental torture and inconveniency suffered by the family of the petitioner in looking after the petitioner. The petitioner also claim compensation for the amount spent on special diet both present and future, medicines, treatment, loss of health, conveyance both present and future, loss of efficiencies, losses of enjoyment etc.
That during her normal life and petitioner who was healthy and energetic and active used to do all her household work herself but now she has to engage maid servant so she has to spent extra amount for the same. The petitioner is also forced to take high protein diet and for this she again has to spent more than Rs. 500/- per day, which is a burden on her. The husband of the petitioner who is doing the business of sale and purchase of sanitaryware could not attend to his business properly and due to this accident had suffered huge losses.
In the written statement there is no denial with respect to the averments made in sub-paras 4 and 6 of Paragraph 23 of the claim petition. This perhaps is so for the reason that it is really for the Appellant to place on record relevant documents to prove its case with respect to the various heads of claim.
In this regard the following extract from testimony of the Appellant (PW3) is relevant:
...I was removed to Hindu Rao Hospital by my husband. I was admitted in the Hospital and remained admitted till 28.7.88. Thereafter I remained admitted in Tirth Ram Shah Hospital where I was operated by Dr.Thakkar. I remained under the treatment of Dr.K.N.Jain. I remained there for about one month. Thereafter my treatment continues for about 2-3 months. Thereafter I took my treatment in AIIMS Hospital. I used to take the treatment there for about 6 months. I have become partial handicapped to the extent of 56%. I cannot sit and do household work. We had an employee for domestic work to which we used to pay Rs. 500/- per month for washing clothes and utensils. I had to take special diet from the date of accident till date of Rs. 25-30 daily. I had incurred Rs. 1 lac on my treatment. Some of the bills which I have kept are produced in the court. Bills are marked as Ex A-1 to ExA-73. I used to go to the Hospital by Taxi but later on I started going on three wheeler. I cannot travel in bus. My each visit to the Hospital cost Rs. 70 to 80. I must have visited the Hospital for 50 to 60 times. I am still under treatment as I am continuously having massage. I used to pay Rs. 500 per month for the same.
As a matter of fact in the cross-examination the Appellant has stated that she spent rupees ten to twelve thousand on taxi and three wheeler scooters and every trip in the taxi cost her about Rs. 150 to 200. The relevant portion of the cross-examination of the Appellant reads as under:
I have no other document to explain regarding the expenditure incurred by me except the one which I have filed on record. I have spent about Rs 10-12000 on my Taxi/TSR fares. I used to incur about Rs. 150-200 on Taxi fare in per visit. I used to go from Bhajanpura (my residence) to the Hospital. I have not obtained any report of Taxi fare. It is incorrect to suggest that I have filed false receipts/bills. It is also incorrect to suggest that I have also filed a false disability certificate of the doctor.
In the Appeal before this Court the following averments have been made in Grounds No. X and XIV. The same being relevant are extracted herein below:
X. Because the award of Rs. 50,000/- on account of permanent disability, pain and suffering is low, insufficient and erroneous.
XIV. Because the Ld. Tribunal have failed to appreciate that the appellant cannot sit or do the household work because of the injuries sustained by the appellant in the aforesaid accident and because of her inability to do household work, and sit, she had to employ a maid servant for doing the household work and the appellant is paying Rs. 500/- P.M to the said maid servant. The Ld.Tribunal erred in not awarding any amount in this regard.
Upon perusal of the pleadings on record and the testimony of the Appellant and the grounds taken in the Appeal, I am of the view that the Appellant has been able to establish that on account of the injury sustained by her, she has had to incur expenditure under various heads including in engaging help on account of ''loss of efficiency''. Keeping the aforesaid in mind and also the falling value of rupee and the inflation, which is nearly, 7.5 it would not be out of place to take the guidance of the second schedule, which was, introduced in the Act on 14.11.1994; in ascertaining what would be the notional income of the Appellant. As per Para 6 of the second schedule to the Act notional income for compensation to those who had no income prior to the accident has been taken as Rs. 15,000/- p.a. As per settled law the courts and Tribunal can look to the second schedule to the Act for guidance eventhough the case for the claim arose prior to the date of introduction of the Second Schedule in the Act. In this regard see observations of the Supreme Court in the case entitled Abati Bezbaruah Vs. Dy. Director General Geological Survey of India and Another, . The relevant portion read as under:
...11. It is now a well settled principle of law that the payment of compensation on the basis of structured formula as provided for under the Second Schedule should not ordinarily be deviated from. Section 168 of the Motor Vehicles Act lays down the guidelines for determination of the amount of compensation in terms of Section 166 thereof. Deviation of the structured formula, however, as has been held by this Court, may be resorted to in exceptional cases. Furthermore, the amount of compensation should be just and fair in the facts and circumstances of each case.
The observation of a Division Bench of this Court in the case entitled Rattan Lal Mehta Vs. Rajinder Kapoor, on this aspect are also relevant. These are as follows:
Question arises as to whether the multiplier in the Table appended by the Motor Vehicles (Amendment) Act 1994, which is prospective, can also be of relevance in respect of accidents which occurred before 14.11.1994, on which date the Table came into force. In our opinion, the statutory multiplier Table is clearly relevant for the following reasons.
That is why we are of the view that even in regard to cases of accidents prior to 14.11.1994, the date from which the Table in the Second Schedule brought in by the Amending Act, 1994, has come into force, it will be open to the Courts/Tribunals to take the multiplier as per the said statutory Table as relevant. (In fact, the objection or dispute must come from the tortfeasors or the insurance companies. Even if they do raise an objection, we may say from experience that the defendants need not be apprehensive of a higher award on the basis of the 1994 statutory Table, because difference in each multiplier over a period of 10 years will be higher only by small fractions ranging between 0.25 and 0.50 generally).
If the above procedure enunciated by us based on the statutory multiplier provided by Parliament is applied, we can steer clear of conflicts in the multipliers applied by the courts on the judicial side in several cases. This approach of ours will help in relationalising awards, remove ad hocism in selection of multipliers based on the individual preferences. A whole range of discrimination between case and case can easily be avoided. That is why we have taken pains to give reasons as to why the statutory multiplier Table provided for prospective use can also be used for accidents which occurred before 14.11.1994.
I am, Therefore, of the view that in the instant case it would be in the fitness of things that the Appellant''s loss of income is determined by taking the notional income i.e Rs. 15000 p.a. This, however, leaves us with yet another issue, which is, as to what would be the most appropriate multiplier. Mr.Abhinav Prakash the learned Counsel for the Respondent has submitted that the most appropriate multiplier in the present case would be that, which is, relevant to the age of the Appellant on the date of determination of compensation which according to him would be the date of the judgment in Appeal by this Court. In support of this contention, Mr. Abhinav Prakash has relied upon the para 5 (a) & (b) of the Second Schedule of the Act; which reads as follows:
Disability in non-fatal accidents:
The following compensation shall be payable in case of disability to the victim arising out of non-fatal accidents:
Loss of Income, if any, for actual period of disablement not exceeding fifty two weeks. PLUS either of the following:
(a) In case of permanent total disablement the amount payable shall be arrived at by multiplying the annual loss of income by the Multiplier applicable to the age on the date of determining the compensation, or
(b) In case of permanent partial disablement such percentage of compensation which would have been payable in the case of permanent total disablement as specified under item (a) above.
Injuries deemed to result in Permanent Total Disablement / Permanent partial Disablement and percentage of loss of earning capacity shall be as per Schedule I under Workmen''s Compensation Act, 1923.
In my view, this submission of the learned Counsel for the Appellant is stated to be rejected. In cases of personal injury; while in determining an appropriate multiplier to be applied to the multiplicand, the relevant date would be the date of the conclusion of the trial. In this regard the following observations of the Justice M. Jagannadha Rao (as he then was) in the matter entitled Andhra Pradesh State Road Trans. Corporation Vs. G. Ramanaiah . The relevant portion read as under:
...30. Before leaving this part of the discussion, I have to emphasise a certain difference between claims by parents in cases of death of children and cases of claims by injured children. It will be noticed that in cases of death of children, because the parents are older and the dependency will not last till the total expected period of life of the child, the multiplier is to be selected on the basis of the age of the parents. But, in the case of injured children, the claim being not by the parents but by the child himself, there is no question of selecting the multiplier appropriate to the parents'' age. The multiplier appropriate to the age of the injured child at the date of trial will have to be selected.
Point No. 2
It is argued for the appellant that Multiplier Tables have to be prepared separately for fatal accident cases and separately for injury cases and that there cannot be a single Table for both fatal and non-fatal cases.
(I) Obviously, the doubt here is as to why, in cases of injuries, the multiplier suitable to the age of the injured person at the time of accident, is not selected. Now, in the case of a fatal accident, the uncertainties of the future are to be ''estimated'' with the aid of the mortality rates, right from the date of death. There is, in fact, no dispute on this score. However, in the case of an injured person, if the matter could, perhaps, be brought up before Tribunal on that very day of accident, the Tribunal could say, well, the future of the injured person from tomorrow is uncertain and, having regard to the general average mortality, take a multiplier suitable to the date of accident. Unfortunately, on account of the lengthy legal procedures involved in adjudication, there is considerable time-lag between the date of accident and the date of adjudication. In such cases, the future (which was uncertain on the date of accident) would have unfolded itself up to the date of evidence and if the injured person is still alive on the date of evidence, there is no need to go back to the mortality rate or chances of death of the injured person for the past period up to the date of evidence. The evidence of the injured person or someone on his behalf proves that he is very much alive on that date. Hence the mortality rates become relevant only for the period after the date of trial. Once the trial is over, the future of the injured person is the subject of uncertainty depending on the future mortality rates, such mortality rates being identifiable with reference to the age of the injured at the trial or rather soon after the trial. This is what is meant by saying that the future earnings in the case of dead person have to be ''estimated'', and they are ''estimated'' on the basis of a multiplier based on the age at the time of death in the accident. Likewise, the estimation in the case of an injured person starts only for the period after the trial. up to that date, the injured being alive no question of uncertainty of life or estimation arises. (The loss of salary or wages from date of accident to date of trial can be computed on an actual basis). If the period between date of accident and date of trial is (say) 2 years the actual loss in wages for 2 years can be worked out. But if at the date of trial, he is (say) 20 years, the future earnings (from date of trial) have to be computed with reference to mortality rates and converted to present value. This is to be done by applying a multiplier suitable to his age at the trial.
(II) In fact, it is logically and mathematically unthinkable (may, impossible) to have separate Multiplier Tables for fatal and non-fatal cases because for each age (at death or at trial in accident case) the basic material, namely, the mortality rates and the conversion rates will be the same. There is no change in basic data so far as the period from which the ''estimate'' for future is to be made. If still one wants separate Tables, they have to be only specified as follows:
(a) Fatal accident (b) Injury cases:
Age (at date of death/ Multiplier at date of trial) 15 20.16 20 19.14 25 17.95 30 16.51 35 14.81 40 12.79 45 10.45 50 07.68 55 04.27 59 00.97 Future estimate is Future estimate is From date of death. From date of trial only.
(III) Actuaries or mathematicians will be surprised if somebody seeks different Tables of Multipliers for fatal and non-fatal cases. In England also, Multiplier Tables have been prepared since 1967 and again now in 1984 by the British Government and there is always one Table-which is used in fatal cases and non-fatal cases as well. It is clear that the multiplier in cases of death is to be chosen, from the same Table, with reference to the age of the deceased at his death or with reference to the age of the injured at the trial, (the loss up to trial being computed on actual without the need to take future uncertainties into account because the injured is alive till the trial in flesh and blood and there is no uncertainty about it till the trial). If one looks into ''Kemp & Kemp on Damages (1967)'' at the Multiplier Tables (then prepared by Mr.Prevett), pages 40 to 51, it will be seen that the multipliers are given for ''age at trial'' for injured persons. So is the case of the Multiplier Tables prepared by the British Government in 1984 in its HMSO (See Munkman on Damages, 1985, pages 224 to 236) where the multipliers are for ''age at trial''. There is only one Table. One will not find any separate Tables for fatal cases. If one looks into these Tables in any standard textbook one will understand the basic fallacy in this argument. Likewise, in Pension Commutation Tables prepared by Government of India for commuting future pensions, the same Table given in the Central Civil Services (Pension) Rules, 1971 and 1981 has to be used for selecting the multiplier, be it for superannuation or for voluntary retirement. (They are prepared at real interest rate of 5/1/2 percent p.a.).
(IV) Such a question as the one raised here arose before the House of Lords also in Graham v. Dodds 1984 ACJ 181 and was cleared. Lord Bridge of Harwich extracted the dictum of Lord Fraser in Cookson v. Knowles 1979 ACJ 216, as follows:
In a personal injury case, if the injured person has survived until the date of trial, that is a known fact, and the multiplier appropriate to the length of his future working life has to be ascertained as at the date of trial. But in a fatal accident case, the multiplier must be selected once and for all as at the date of death, because everything that might have happened to the deceased after that date remains uncertain.)
There, there was fortunately no doubt that only one set of Multiplier Tables is available and the question was whether in the case of fatal accident, the age of the deceased at the time of his death was relevant or whether (as in an accident case) the age at the trial (if the deceased had lived) should be applied. It was clarified by Lord Fraser that in fatal cases, it was the multiplier suitable to the age of the deceased at the accident that was relevant and in accident cases, the age at the trial.
(V) In Munkman: Damages for Personal Injuries and Death, 1985.p. 139, it is observed:
At this point, there is a difference for the living plaintiff, whose expectation of life is calculated at the trial because he is still alive. Under a death claim, the expectation is fixed once for all at death.
(VI) In Jain S.Goldrein & Margaret R.de Haas: Personal Injury to Litigation (Practice & Procedure), 1985, p. 35, dealing with injury cases, it is stated:
The multiplier:
(1) The starting point: The starting point is the number of years it is anticipated that the plaintiff''s disability will last, assessed.... Close to the date of trial" and (at p.123), dealing with fatal cases, it is stated "what is the multiplier"
(1) From which date to assess: The relevant date for the assessment of the multiplier is that of death....
(2) Why is that date chosen? The justification for such date is best explained by the following passage of Lord Fraser in Cookson v. Knowles 1979 ACJ 216 (already extracted above)
(3) Starting Point : When calculating a multiplier, the starting point is the number of years that the dependency may be expected to have lasted had the deceased continued to live, taking into account the particular age of the deceased.
(vii) In the Gujarat High Court, a Division Bench consisting of P D Desai, J. (as he than was) and M K Shah, J. in Bharat Premjibhai Vs. Municipal Corporation, Ahmedabad and Another, accepted that in injury cases, the loss up to date of trial (evidence) can be exactly computed on actual with the question of estimation arises only for the uncertainties after the date of trial and that for injury cases, the multiplier is to be selected on the basis of the age of the victim at the trial. Dealing with injury cases, P D Desai, J. (as he then was) observed (at p.272).
In the instant case the trial concluded on 29.7.1997. On the said date the age of the injured would be approximately 44 years. The relevant multiplier in that case would be 15.
In this case if the appropriate multiplier is taken to be 15 and the notional loss of income as Rs. 15,000/- pa which when discounted at 56% being the disability suffered by the Appellant, then the Appellant ought to have received an additional sum of Rs. 1,26,000/-.
Before I part with the Appeal, it is pointed out by the learned Counsel for the Appellant Mr.Sanjay Gupta that in the bills which have been proved before the Tribunal, there is an arithmetic error. The total amounts of the accepted bills being Ex Nos.A-1 to A-73 is Rs. 19,363.44/- as against this, the Tribunal has actually awarded Rs. 18,219.84/-. The learned Counsel for the Respondent Mr.Abhinav Prakash agrees that there is an error. Accordingly, an additional sum of Rs. 1143.60/- (rounded off to Rs. 1144/-) is also awarded to the Appellant.
In the circumstances, the Appeal is partly allowed. The Appellant is entitled to an additional sum of Rs. 63,000/- towards loss of income taking into account the attributability of the fault to the Respondent as set down by the Tribunal to the extent of 50%. In addition to this, a sum of Rs. 1144/- is also awarded to the Appellant which is on account of arithmetical error with regard to medical expenses incurred by the Appellant in respect to Ex A-1 to A-73. The Tribunal in the judgment in Appeal had awarded an interest of 12% p.a. I see no reason for altering the rate of interest. In this regard the observations of the Supreme Court in the case entitled Manalal Prabhudayal Vs. Oriental Insurance Co. Ltd., . The relevant portion read as under:
...12. Having considered the rival contentions of the parties, in our opinion, the appeal deserved to be allowed by granting relief to the appellant-firm. It is well settled that award of interest is in the discretion of Court. Normally, when interest is granted, Appellate, Revisional or Writ Court would not interfere with exercise of discretion unless the discretion has been exercised arbitrarily or capriciously. It is equally well settled that like grant of interest, rate of interest is also in the discretion of the Court and in the absence of any agreement between the parties, usually, the Court would not interfere with rate of interest unless it is convinced that the direction of the lower Court was ex facie bad in law.
As far as arbitration proceedings are concerned, it is well established that an Arbitrator, in absence of any prohibition of any arbitration agreement, has power to award interest. Though it is not a "Court" within the meaning of Section 34 of the Code of Civil Procedure, 1908, an Arbitrator has power to grant reasonable rate of interest at all the three stages; i.e. pre-reference period, pendent lite & post award period.
In Bhagawati Oxygen Ltd. Vs. Hindustan Copper Ltd., , one of us (C K Thakker, J.) after considering the relevant case law on the point, held:
Now Section 34 of the CPC has no application to arbitration proceedings since the Arbitrator cannot be said to be a "Court" within the meaning of the Code. But an Arbitrator has power and jurisdiction to grant interest for all the three stages provided the rate of interest is reasonable.
It is, thus, clear that Arbitrator has power to award interest at all the three stages, namely pre-reference period, pendent lite & post awad period provided there is no provision to the contrary in an arbitration agreement and the rate of interest is not unreasonable.
Once it is conceded that an Arbitrator has power to grant interest and has also discretion in granting interest at particular rate provided it is reasonable, the award of the Arbitrator cannot be held to be bad in law or interfered with on the ground that he could not have granted interest or could not have awarded it at a particular rate unless the Court is convinced that the grant of interest was not at a ''reasonable rate''. From the record, it is clear that the arbitration proceedings started in 1995 and the award was passed in 1999. The Arbitrator had granted uniform interest @ 12% pa all throughout. The award was made Rule of the Court and the Court of Civil Judge, (Sr. Division), Bhubanesar did not find illegality therein. The High Court, in our opinion, Therefore, should not have interfered with the said order and reduced the rate of interest from the date of award till the date of realisation of the amount.
The High Court, no doubt, referred to M/s Channa Bros. In our opinion, however, the facts in that case were totally different. In that case, the Arbitrator passed an award in favor of both the parties and granted interest in favor of one party and refused to award interest to the other party. This Court in the light of facts before it, decided the matter. As we have already noted, this Court, in Bhagwati Oxygen Ltd has held that an Arbitrator has power to award interest at reasonable rate. In our considered opinion, the direction of the Arbitrator cannot be termed as arbitrary or unreasonable and when it was affirmed by the Trial Court, it ought not to have been interfered with by the High Court.
For the foregoing reasons, the appeals filed by the appellant-firm deserves to be allowed and accordingly allowed. The order passed by the High Court reducing the rate of interest from September 19, 1995 till the award and till the amount is paid / deposited in the Court from 12 % to 6% pa is set aside and the order passed by the Arbitrator in the award granting interest at the rate of 12 per cent per annum all throughout, that is, for pre-reference period, pendelite and post award period is upheld. In the facts and circumstances of the case, no costs.
Also the observation of the Mr. Justice A R Lakshmanan ( as he then was) in the case entitled Abati Bezbaruah Vs. Dy. Director General Geological Survey of India and Another, . The relevant portion read as under:
...18. Three decisions were cited before us by Mr A P Mohanty, Learned Counsel appearing on behalf of the appellant, in support of his contentions. No ratio has been laid down in any of the decisions in regard to the rate of interest and the rate of interest was awarded on the amount of compensation as a matter of judicial discretion. The rate of interest must be just and reasonable depending upon the facts and circumstances of each case and taking all relevant factors including inflation, change of economy, policy being adopted by the Reserve Bank of India from time to time, how long the case is pending, permanent injuries suffered by the victim, enormity of suffering, loss of future income, loss of enjoyment of life, etc, into consideration. No rate of interest is fixed u/s 171 of the Motor Vehicles Act, 1988. Varying rates of interest are being awarded by the Tribunals, High Courts and the Apex Court. Interest can be granted even if the claimant does not specifically plead for the same as it is consequential in the eyes of law. Interest is compensation for forbearance or detention of money and that interest being awarded to a party only for being kept out of money which ought to have been paid to him. No principle could be deduced nor any rate of interest can be fixed to have a general application in motor accident claim cases having regard to nature of provision u/s 171 giving discretion to the Tribunal in such matter. In other matters, awarding of interest depends upon the statutory provisions, mercantile saga and doctrine of equity. Neither Section 34 CPC nor Section 4A(3) of Workmen''s Compensation Act are applicable in the matter of fixing rate of interest in a claim under the Motor Vehicles Act. The courts have awarded interest at different rates depending upon the facts and circumstances of each case. Therefore, in my opinion, there cannot be any hard and fast rule in awarding interest and the award of interest is solely on the discretion of the Tribunal or the High Court as indicated above.
The Respondent shall pay a sum of Rs. 63000/- with interest @ 12% pa from 29.7.1997 till realisation after making due adjustments of amounts already paid to the Appellant. In addition a sum of Rs.1,144/- towards short payment of proved medical expenses shall also be paid by the Respondents. However, the same shall be paid without any interest. There shall be however no order as to costs.