Bengaluru: An interest rate of 9% is more appropriate in cases involving death and serious injury, especially where there is a long delay in the claimant’s receiving the compensation, the high court ruled.Justice Tara Vitasta Ganju, upholding the decision of the Motor Accident Claims Tribunal, Bengaluru, in a 10-year-old accident case, noted in her recent order that there cannot be any ‘straitjacket formula’ in determining the rate of interest and that the same must depend on the facts and circumstances of each case. The guiding principle remains that the rate must neither be punitive nor non-existent but must strike a balance between fairness to the claimant and reasonableness to the insurer, the judge added.In Nov 2016, one Ravanamma, on a bicycle, was hit by a speeding van when was crossing the Outer Ring Road at Kasturinagar, east Bengaluru. An injured Ravanamma was taken to KR Pura Govt Hospital, wherein the doctors declared her ‘brought dead’. Her husband and two children moved the tribunal seeking compensation, claiming that the deceased was working as a mason and supporting the family with monthly earnings of Rs 9,000.In Feb 2018, the tribunal awarded Rs 16.5 lakh compensation along with 9% interest. United India Insurance Company, the insurer of the van, challenged the same. It argued that the interest rate was high and it should be reduced to 8%. The insurer claimed that there was no delay from its side.Justice Ganju noted that interest is the compensation for the money being held back from the family of a deceased or the injured person. The courts have, from time to time, held that the interest is awarded not because of any contractual obligation but because of the delay in claimants receiving compensation after the occurrence of the accident.The Supreme Court has consistently held that the award of interest is intended to recompense the claimant for being deprived of the use of money, which ought to have been paid at the time of the occurrence of the accident. The rate of interest, therefore, must be just, fair and reasonable, having regard to the prevailing economic conditions and bank rates. In the present case, the accident occurred in 2016 and the award was passed in 2018. The tribunal deemed it appropriate to award interest on the compensation at the rate of 9% per annum. The award of interest is not punitive and is fair considering the prevailing economic conditions and bank rates. In addition, it is now 10 years since the date of the accident, the judge observed while directing the insurer to pay an additional Rs 1.9 lakh compensation along with 9% interest.
