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2000 DIGILAW 653 (MP)

Deobux Mandrup v. New India Insurance Company

2000-07-11

A.K.MISHRA, BHAWANI SINGH

body2000
JUDGMENT Bhawani Singh, C.J. 1. These two appeals (M. A. No. 134 of 1991 Deobux vs. The New India Insurance Company and M. A. No. 249 of 1991, The New India Insurance Company vs. Deobux),are. proposed to be decided by this common judgment since they are directed against the same judgment of Additional District Judge, Sehore (II) dated January 31, 1991. 2. Claimant Deobux initiated claim with respect to truck bearing No. M. P. B. 8165 insured with the New India Insurance Company for Rs. 2,90,000/-. On 14th December 1982, the truck met with an accident near Jamiaghat. It was loaded with luggage. In the accident, it was completely burnt. Claim submitted by the claimant was rejected by the Insurance Company which gave rise to the appointment of Arbitrators. 3. The claimant preferred claim for Rs. 3,30,000/-. It was supported by estimate and vouchers. It was purchased by taking loan from Central Bank of India which had filed suit for recovery of Rs. 3,62,235.78 p. against the claimant. Consequently, apart from the claim for damages, interest at the rate of 18% per annum was also made since the claimant was paying this rate of interest to the Central Bank of India against the loan amount. 4. The New India Insurance Company opposed the claim and denied the liability for payment of damages. Arbitrator Shri P.T. Hingorani awarded Rs. 85,000.00 while another Arbitrator Shri B.K. Upadhyay awarded Rs. 2,33,538.84. Hence, the third Arbitrator Shri P.M. Badnorkar was appointed and he gave award of Rs. 2,53,750.00 as an Umpire. 5. Additional District Judge, Sehore (II) heard the parties, perused their objections and awarded Rs. 2,33,538.00 with interest at the rate of 12.5% per annum from 19-3-1987 till payment. Both the parties are dissatisfied with the award and have filed separate appeals against it. 6. Smt. Sudha Pandit, Advocate appearing for claimant contends that interest should have been awarded from 14-12-1982, the day the truck met with accident at the rate of 18% per annum. Learned Counsel submits that the claimant has paid interest at the rate of 14.5% per annum with monthly rest and taking the rate of interest to 18% per annum to the Central Bank of India which filed recovery suit against the claimant for Rs. 3,62,235.78. Learned Counsel submits that the claimant has paid interest at the rate of 14.5% per annum with monthly rest and taking the rate of interest to 18% per annum to the Central Bank of India which filed recovery suit against the claimant for Rs. 3,62,235.78. In support reliance is placed on Division Bench judgment of this Court in the case of M.B. Gharpuray Engineers and Builders vs. State of Madhya Pradesh, 2000(2) MPLJ 210 in which it has been held that the rate of interest should be just and fair depending upon the circumstances of each case. Interest is paid to indemnify a person and it should normally be an equivalent or substitute of equal values taking into account the liability arising out of commercial transaction. Another decision cited by learned counsel is reported in AIR 1997 SC 925 , State of Orissa vs. B.N. Agarwalla which holds that the Arbitrator has jurisdiction to award pre-reference interest in cases which arose after the Interest Act, 1978. He has also jurisdiction to award interest for the period during which the arbitration proceedings were pending and also for post award period. 7. Shri Virendra Verma, learned counsel for the Insurance Company, brings to our notice decision of the Apex Court in the case of Executive Engineer, Dhankanai Minor Irrigation Division, Orissa vs, N.C. Budhiraj, AIR 2000 SC 221 and points out that question with respect to grant of interest for pre-reference period, prior to enforcement of the Interest Act, 1978 and awardability of interest in the absence of prohibition to claim or grant interest under arbitration agreement is under consideration by larger Bench of Apex Court and the same has not been decided. Apart from this decision, it is submitted that award of 12.5% interest per annum is on the higher side as the same deserves to be reduced. It is also submitted that the award is liable to be set aside because the Umpire filed award after expiry of the four month's period from the date of reference. 8. Having given our consideration to the submissions of the learned counsel for both sides, we find that the claimant has claimed 18% interest for loss of the truck right from the beginning. 8. Having given our consideration to the submissions of the learned counsel for both sides, we find that the claimant has claimed 18% interest for loss of the truck right from the beginning. However, we are not convinced with the submission that the rate of interest should be 18% per annum since the claimant was paying this rate of interest to the Central Bank of India from which loan was secured for the purchase of the truck. These are two separate transactions, therefore, no parity, as contended, can be drawn for enhancement of interest. The award of interest at the rate of 12.5% per annum is just and reasonable in the facts and circumstances of the case. The question is from which date it should be awarded? We are of the considered opinion that it should be awarded from 17-7- 1984, the date on which reference was made. 9. There is no substance in the last contention of the learned counsel for the Insurance Company that the award is not sustainable since it was filed after four months. First of all, this objection was not raised before the Additional District Judge (II), Sehore. Further examination of the record demonstrates that reference was made on 7-2-1990 to the Umpire who gave the award on 1-5-1990 to which objections were filed by the Insurance Company on 11-6-1990. Thus, there was no delay In filing the award. 10. Consequently, the M. A. No. 134 of 1991, Deobux vs. The New India Insurance Company is allowed to the extent that the claimant shall be entitled to interest at the rate of 12.5% per annum from 17-7-1984 till the date of payment. M. A. No. 249 of 1991, The New India Insurance Company vs. Deobux is dismissed. However, parties are left to bear their own cost.