BENGALURU: Interest rate of 9 per cent per annum is more appropriate in cases involving death and serious injury, especially when there is a long delay in the claimants receiving compensation, the Karnataka High Court said, adding it is fair considering the prevailing economic conditions and bank rates.
Justice Tara Vitasta Ganju passed the order while disposing of the miscellaneous first appeal filed by United India Insurance Co. Limited, challenging an award dated February 16, 2018, on the rate of interest passed by a motor vehicle accident tribunal in the city. It had awarded compensation of Rs 16.57lakh with interest at 9 per cent per annum as compensation to the claimants, the husband and children of deceased Revanamma, who was hit by a Tempo Traveller while crossing Outer Ring Road in Kasturinagar in 2016.
The High Court said the Supreme Court has consistently held that the award of interest is intended to compensate the claimant for being deprived of the use of money, which was to be paid at the time the accident occurred. The rate of interest must be just, fair and reasonable, having regard for the prevailing economic conditions and bank rates, court added.
The interest is usually determined at the prevailing bank interest rate on a case-to-case basis. The guiding principle remains that the rate must strike a balance between fairness to the claimant and reasonableness to the insurer.
The accident occurred in 2016, resulting in the death of the wife of Malyadri, a resident of Chinnappa Layout in the city. The award was passed in 2018. The tribunal deemed it apposite to award interest on compensation at 9 per cent per annum, which is not punitive, considering the prevailing economic conditions and bank rates. It is now 10 years since the accident.
However, the court said compensation is required to be calculated as set out in the order and a sum of Rs 18.52lakh is to be awarded to Malyadri and his two sons. Accordingly, the impugned order is modified to enhance compensation by Rs 1.95lakh along with interest at the rate of 9 per cent per annum from the date of petition till date of realisation, in addition to Rs 16.57lakh awarded by the tribunal, the court ordered.