The New India Assurance Company Limited v. Maisy Oommen and Others

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** **PRESENT:** **THE HONOURABLE MR.JUSTICE C.K.ABDUL REHIM & THE HONOURABLE MR. JUSTICE K.P.JYOTHINDRANATH** **MONDAY, THE 27TH DAY OF NOVEMBER 2017/6TH AGRAHAYANA, 1939** ## **M.A.C.A.No. 1009 of 2008 ( )** **--------------------------** **AGAINST THE AWARD DATED 03-11-2007 IN O.P (MV) 465/1988 of M.A.C.T., THALASSERY.** **APPELLANT(S)/2ND RESPONDENT:: ---------------------------------------------------** **THE NEW INDIA ASSURANCE COMPANY LIMITED, REPRESENTED BY ITS DY.MANAGER, REGIONAL OFFICE, M.G.ROAD, KOCHI-11.** **BY ADVS.SRI.MATHEWS JACOB (SR.) SRI.P.JACOB MATHEW** ## **RESPONDENT(S)/PETITIONERS 1 TO 3 RESPECTIVELY::** **-----------------------------------------------** **1. MAISY OOMMEN, AGED ABOUT 76 YEARS, RESIDING AT OPTICS, GENERAL'S ROAD, CONTONMENT, KANNUR.** **2. RAJ ISSAC OOMMEN, S/O.OOMMEN, AGED ABOUT 45 YEARS, -DO-.** **3. MOTI OOMMEN, S/O.OOMMEN, AGED ABOUT 45 YEARS, -DO-.** **R1,2,3 BY ADV. ADV. CELIN JOSEPH (B/O) (NO MEMO) R2 BY ADV. SRI.GRASHIOUS KURIAKOSE (SR.) R2 BY ADV. SRI.GEORGE MATHEWS** **THIS MOTOR ACCIDENT CLAIMS APPEAL HAVING BEEN FINALLY HEARD ON 27-11-2017, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **hmh** ## **C.K. ABDUL REHIM, J. & K.P. JYOTHINDRANATH, J.** ------------------------------------------------- M.A.C.A. NO. 1009/2008 ------------------------------------------------Dated this the 24[th] day of November, 2017 ## **JUDGMENT** ## C.K.ABDUL REHIM,J An order passed by the Motor Accident Claims Tribunal, Thalassery in IA No. 1103/2002 in OP(MV) No. 465/1988 is under challenge in this appeal filed at the instance of the insurance company, who was the 2[nd] respondent in the original claim petition before the Tribunal. 2. The claim petition was filed with respect of a motor vehicle accident which occurred on 18.03.1988, in which one Dr. C.E.Oommen scummed to the injuries sustained. The appellant herein was the insurer of the offending vehicle involved in the accident. The respondents herein are the legal heirs/dependants of the deceased, who were claimants in OP(MV) No. 465/1988. The Tribunal passed an award allowing compensation of Rs. 11,35,384/- along with 12% interest and cost to be paid by the appellant/insurance company. The award was on 16[th] November, 1990. The said award was challenged in appeal before this court at the instance of the appellant/insurance company, in MFA M.A.C.A. NO. 1009/2008 2 356/1991. The appeal was dismissed by this court on 12[th] January, 2000 on holding that the appellant insurance company was not entitled to challenge the quantum of compensation awarded. In the meanwhile, the claimants initiated steps for executing the award, by filing IA No.822/2000. The Tribunal had closed that application holding that the amount due was already deposited. The respondents/claimants thereupon filed a review petition before the Tribunal, as IA No. 1903/2000, seeking review of the order passed in IA No. 822/2000. The said review petition was dismissed by the Tribunal on 23.06.2000 by permitting the claimants to file fresh application under Section 174 of the M.V. Act. Accordingly the claimants filed IA No.1103/2002, which was allowed as per the order dated 06.11.2002, issuing revenue recovery certificate under Section 174 of the M.V. Act, for realisation of the balance amount due under the award. The insurance company challenged the said order in a writ petition filed before this court, O.P NO. 5641/2003. The said writ petition was disposed of through judgment dated 02.08.2007 (Annexure A3 herein). The order passed under Section 174 of the MV Act, dated 06.11.2002 was set aside on observing that the order impugned is highly cryptic. Contention raised by the insurance company was that, the stipulation imposed in the award to pay penal interest @ 15%, on failure to deposit the award M.A.C.A. NO. 1009/2008 3 amount within one month of the date of the award, cannot be sustained in view of the prolonged contest made against the award in different proceedings. The appellant had also contended that, immediately after dismissal of the first appeal, the entire amount due along with interest at the rate of 12% was deposited. It was also contented that, on account of the stay continued in the appeal, the escalation clause contained in the award, regarding the interest, was not operative during the time when the appeal was pending. But, while disposing the writ petition (OP 5641/2003) the learned Judge had not decided the said issue on merits. Instead, this court relegated the matter to be decided by the Tribunal, by direct to take into consideration of the stay granted from this court in the appeal. The order which is impugned in the present appeal was passed consequent to the judgment in O.P NO. 5641/2003. The Tribunal, after considering of the entire aspects, held that the claimants are entitled to get a balance amount of Rs. 12,42,143/- from the appellant/insurance company. The appellant/ insurance company was allowed to remit the said amount within a period of one month . On failure, it was ordered, to issue certificate of recovery. The said order is assailed in this appeal on various grounds. 3. Heard; Senior Counsel appearing for the appellant/insurance company as well as the Senior Counsel who M.A.C.A. NO. 1009/2008 4 entered appearance for the respondents. 4. The main controversy is with respect to the liability of the appellant for payment of the higher rate of interest ordered by the Tribunal. In the award, the Tribunal had directed the appellant/insurance company to make payment of the compensation to the tune of Rs. 11,35,384/- along with interest at the rate of 12% per annum due from the date of the claim petition (30.07.1988) and the cost, within one month from the date of the award . The Tribunal further directed, on failure of the company to pay it within the time stipulated, the amount awarded shall be paid with interest at 15% per annum from the date of the default. 5. One of the grounds raised in this appeal is that, the award of the Tribunal imposing penal interest is unsustainable. Learned Senior Counsel for the appellant contented that, the provisions of Section 110 CC of the old MV Act, which corresponds to Section 171 of MV Act, 1988 permits the Tribunal to award only simple interest and therefore the escalated and penal rate of interest ordered in the award is unsustainable. In this regard, learned Senior Counsel had placed reliance on a decision of the Hon'ble Supreme Court in **National Insurance Co.Ltd. v. Keshav Bahadur and others [(2004) 2 SCC 370].** But the dictum contained therein is that, ordering higher rate of interest on default M.A.C.A. NO. 1009/2008 5 of payment is a matter of discretion, which can be exercised by the Tribunal, but only on a prospective basis. There is no scope for retrospective effect for enhanced rate of interest. In this regard we take note of a decision rendered by a Division Bench of this court in **National Insurance Co. Ltd. v. M.K.Moidu [2011 (4) KHC 756 (DB)]** . After referring to **Keshava Bahadur's case** (supra) it is held that, higher rate of interest in case of default in depositing the compensation can be ordered if it is on a prospective basis, but not retrospectively. Therefore we are of the opinion that, challenge against the award to the extent it ordered escalated rate of interest on default in payment, cannot be challenged successfully. 6. Even otherwise, the appellant/insurance company is precluded from raising any challenge as mentioned above in view of the finality attained to the award, by virtue of dismissal of the appeal filed at their instance, MFA No. 356/1991. At this point of time it is not at all allowable to the appellant to challenge any of the findings contained in the award of the Tribunal, which was passed as early as in the year 1990 and which was confirmed by the appellate court in the year 2000. 7. The next question, which the parties are at controversy, is regarding correctness of the amounts already paid and regarding its proper credit against the liability arising out of the award. In the M.A.C.A. NO. 1009/2008 6 review petition filed before the Tribunal (R.P. No.1903/2000 in I.A. No.822/2000) the appellant herein had filed a calculation statement by computing the interest only @ 12% per annum with effect from the date of filing the claim petition. It is evident from the said statement that the appellant had made deposits of, Rs.25,000/- on 13.02.1991, Rs.75,000/- on 14.06.1991 and Rs.5,67,692/- on 16.08.1993. The balance amount calculated by adopting 12% interest, amounting to Rs.15,21,264/-, was deposited on 18.08.2000. As already found, this court cannot interfere with the findings of the Tribunal making the appellant/insurance company liable to pay 15% interest from the date of the default i.e., from the date of expiry of one month from the date of the award on 16.11.1990. Therefore, the contention of the appellant/insurance company that no more amount is due from the appellant to the claimants, cannot be accepted. 8. There exists a further dispute between the parties regarding the method of crediting various payments made on different dates. One of the grounds raised in this appeal is that, the Tribunal had erroneously credited the payments against the interest outstanding, instead of crediting the amount against the principal. It is also contended that the Tribunal, in arriving the figure contained in the impugned order, had calculated interest on interest M.A.C.A. NO. 1009/2008 7 and the amount ordered to be paid is not the correct amount which is actually due. Going by settled legal precedents interpreting provisions of Order XXI Rule 1 (2) of the Code of Civil Procedure, the correct method to be followed is to appropriate payments made by the judgment debtors, first towards the amounts outstanding towards the interest as on the date of such payment; and the balance if any can alone be adjusted against the principal amount. Considering the said principle, we are not inclined to accept contention of the appellant that there occurred any error in the calculations made by the Tribunal in the order impugned. 9. It is worth mentioning that, during the pendency of this appeal since the year 2008 onwards, several attempts were made for arriving at an amicable settlement with respect to the quantum of amount payable. But those attempts were not seen succeeded, as revealed from the records. It is submitted by learned Senior Counsel appearing for the appellant that, in the course of time various suggestions were made by the appellant/insurance company, which were not acceptable to the respondents/claimants. Learned Senior Counsel appearing for the respondent, per contra, submitted that the appellant insurance company was not even amenable for making payment of the amount suggested by this court as a compromise. All such controversies are off the record and M.A.C.A. NO. 1009/2008 8 are not relevant at this point of time. 10. As things stands above, when the above appeal was taken up for final hearing, learned Senior Counsel appearing for the respondents/claimants made a fair offer that, the respondents are willing to forgive the penal interest ordered at 15%, provided the amount due is calculated and paid at the rate of 12% interest, from the date of filing of the claim petition, till the date of payment. Learned Senior Counsel for the respondents submitted that, the respondents/claimants were persuaded to agree for such a course, on the fervent hope that the appellant/ insurance company may not take up any further challenge in the matter to the Hon'ble Supreme Court; and that they will get the money within a short period. 11. Based on the concession made by learned Senior Counsel appearing for the respondents/ claimants as mentioned above, this court had directed the respondents to submit a calculation statement, showing the amount due as on the date of hearing of this appeal. Accordingly, a calculation statement was filed before this court, along with a memo dated 18.11.2017. The balance amount due as on 20.11.2017 is calculated as Rs.18,00,484/-. On a perusal of the calculation statement we notice that, all the payments made by the appellant/insurance company was given due credit on the respective dates of such payments, by crediting the amounts M.A.C.A. NO. 1009/2008 9 paid against the amount remaining due as on such dates, calculated along with interest @ 12%. The calculation statement submitted as above is extracted hereunder; ## **Calculation statement filed by Advocate George Mathews, counsel for the respondents.** 1. Amount awarded 1. Amount awarded : Rs.11,35,384.00 2. Add: Interest on Rs.11,35,384 @ 12% from 30.07.1988 to 13.2.1991 : Rs. 3,45,459.00 Rs.14,80,843.00 3. Less: deposit on 13.02.1991 Rs. 25,000.00 Rs.14,55,843.00 4. Add: interest on Rs.11,35,384 @ 12% from 14.2.1991 to 14.6.1991 : Rs. 45,412.00 Rs.15,01,255.00 5. Less: amount deposit on 14.6.1991 Rs. 75,000.00 Rs.14,26,255.00 6. Add: interest on Rs.11,35,384 @ 12% from 15.6.1991 to 16.8.1993 : Rs. 2,95,198.00 Rs.17,21,453.00 7. Less: amount deposited on 16.8.93 : Rs. 5,67,692.00 Rs.11,53,761.00 8. Add: Interest on Rs.11,35,384/- @ 12% from 17.8.1993 to 11.3.2000 (6 years, 6 months & 2 days) : Rs. 8,95,292.00 Rs.20,49,053.00 9. Add: Interest on Rs.11,35,384/- @ 12% from 12.3.2000 to 18.8.2000 (5 months & 7 days) : Rs. 58,604.00 Rs.21,07,657.00 10. Less: amount deposited on 18.8.00 : Rs.15,21,264.00 Balance Principal amount : Rs. 5,86,393.00 11. Add: Interest on balance principal amount of Rs.5,86,393.00 @ 12% from 19.8.2000 to 20.11.2017 (17 years & 3 months) : Rs.12,13,591.00 Rs.17,99,984.00 M.A.C.A. NO. 1009/2008 10 12. Add: Consolidated cost. : Rs. 500.00 Balance amount due as on 20.11.17 : Rs.18,00,484.00 ========== (Rupees Eighteen lakhs and four hundred and eighty four only) 12. We take note of the fact that the dispute in question had chequered history started since the date of award in the year 1990. The respondents/claimants are not paid with the full amount for which they are entitled, even after the lapse of 17 long years. Even the present appeal was kept pending before this court since the last 9 years. We do not find any merit in the contentions raised in the appeal. Since it remains conceded that the respondents/claimants are agreeable for settling the entire claim based on the above said calculation statement, we are inclined to dispose of the above appeal by directing the appellant/insurance company to make payment of the sum of Rs.18,00,484/- as contained in the above statement, within a period of six weeks from the date of receipt of a copy of this judgment, as full and final settlement of the entire amount due to the respondents/claimants. 13. We make it clear that, on default in payment of the amount as mentioned above, within the time stipulated herein above, the benefit conceded by the respondents/claimants will not be available to the appellant; and it will be left open to the M.A.C.A. NO. 1009/2008 11 respondents/claimants to seek recovery of the entire amounts due from the appellant in accordance with the terms of the award of the Tribunal by resorting to appropriate proceedings. ## **Sd/-** **C.K. ABDUL REHIM, JUDGE.** **Sd/K.P. JYOTHINDRANATH, JUDGE** // True copy // PA to Judge hmh/bpr