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2008 DIGILAW 780 (ORI)

NEW INDIA ASSURANCE COMPANYLTD. v. KUNI MOHANTY

2008-08-29

N.PRUSTY

body2008
JUDGMENT : N. Prusty, J. - The Petitioner/New India Assurance Company Ltd., which was Respondent No. 2 in MAC Case No. 781 of 1998 (221/99) in the file of the Learned District Judge-cum- First Motor Accident Claims Tribunal, Berhampur, has filed this Writ Petition challenging Order Dated 21.05.2003 (Annexure1) whereby the Petitioner was directed to pay the contractual rate of interest at the rate of 12% per annum to the claimants/Opposite Party Nos. 1 to 6, since the awarded amount of Rs. 1, 95,000/- was not paid to the claimants within a period of two months from the date of the award in terms of the award/order passed by the Tribunal on the basis of a compromise made between the claimants/Opposite Party Nos. 1 to 6 and the Petitioner/Insurance Company in the Lok Adalat, with a prayer to quash Annexure-1. 2. The brief facts of the case are that the claimants/Opposite Party Nos. 1 to 6 had filed MAC Case No. 781 of 1998 in the Court of the Learned District Judge-cum- First Motor Accidents Claims Tribunal, Berhampur-Ganjam, claiming compensation of Rs. 5,00,000/- since the husband of claimant/Opposite Party No. 1 and father of claimant/Opposite Party Nos. 2 to 6, namely, Raju Mohanty, succumbed to the injuries sustained in a motor vehicle accident caused in a public road on 03.09.1998 at about 8 P.M. due to rash and negligent driving of the driver of the truck bearing Registration No. ORE 2205. 3. Respondent No. 1 in MAC Case No. 781 of 1998, who is the owner of the vehicle and presently Opposite Party No. 7 in this Writ Petition, filed his written statement contending therein that since the driver of the vehicle was having a valid driving license and also the vehicle has been validly insured with the present Petitioner-Insurance Company having insurance policy No. 3155050315646, the insurance company is liable to pay the compensation. 4. The present Petitioner, who was Respondent No. 2 in M.A.C. No. 781 of 1998, had also filed its written statement denying all the allegations made in the claim application. 5. The matter was taken up for compromise in the (pre) Lok Adalat on 04.09.1999 on consent of the claimants as well as the Respondent No. 2/Petitioner-Insurance Company. On 11.09.1999 the Claimant/Opposite Party Nos. 1 to 6 had filed an application to reduce the claim amount from Rs. 5,00,000/- to Rs. 2,00,000/-. 5. The matter was taken up for compromise in the (pre) Lok Adalat on 04.09.1999 on consent of the claimants as well as the Respondent No. 2/Petitioner-Insurance Company. On 11.09.1999 the Claimant/Opposite Party Nos. 1 to 6 had filed an application to reduce the claim amount from Rs. 5,00,000/- to Rs. 2,00,000/-. On that date, i.e. 11.09.1998 the claimants and the Insurance Company filed the petition for compromise in the State Level Lok Adalat held at Berhampur, with regard to settlement of claim between them for a sum of Rs. 1, 95,000/ - as compensation payable by the Insurance Company within two months from the date of passing of the award subject to fulfillment of certain conditions as mentioned in the said petition for compromise, failing which interest will run at the rate of 12% per annum from the date of the application till payment. Learned Tribunal finally passed the order/award on 25.03.2000, on being satisfied that the terms of compromise have been complied by the respective parties as well as on the basis of a petition filed by both the parties to pass the award in terms of the compromise arrived at between them in the State Level Lok Adalat. Before passing such award the Tribunal was also satisfied that the compromise had been made voluntarily without coercion, fraud and undue influence and since the terms of compromise were admitted by the claimants and the advocate for the Insurance Company after the compromise petition was read over and explained to them. The Respondent No. 2/Insurance Company was accordingly directed to pay a sum of Rs. 1,95,000/- to the claimants/Opposite Party Nos. 1 to 6 within two months, failing which it shall be liable to pay interest thereon at the rate of 12% per annum from the date of application i.e. 16.09.1998 till realization as per terms of such compromise. Instead of complying the above Order Dated 25.03.2000, much after the stipulated time period of two months was over, the Petitioner-Insurance Company filed an application before the Learned Tribunal on 12.06.2000 for setting aside the Order Dated 25.03.2000 and for disposal of the case after trial. Vide order-dated 17.08.2000, Learned Tribunal recalled Order Dated 25.03.2000 and fixed the case for hearing to 08.12.2000. Vide order-dated 17.08.2000, Learned Tribunal recalled Order Dated 25.03.2000 and fixed the case for hearing to 08.12.2000. Again the claimants filed an application before the Tribunal on 04.09.2000 to recall the Order Dated 17.08.2000 alleging therein that since the condition stipulated in the compromise petition had been complied by the respective parties, the earlier order/award dated 25.03.2000 was finally passed on the basis of such compromise made in Lok Adalat, that order can not be recalled and as such the order dated 17.08.2000 is not correct. The said application of the claimants was rejected vide Order Dated 12.12.2000. 6. Challenging the above-said Order Dated 17.08.2000 whereby the earlier order/award dated 25.03.2000 was recalled as well as Order Dated 12.12.2000 whereby the petition filed by the claimants was rejected by the Tribunal, the claimants approached this Court in O.J.C. No. 1748 of 2001 with a prayer to direct the Petitioner/Insurance Company to pay the entire awarded amount with interests to the claimants and for quashing the Order Dated 17.08.2000 passed by the Tribunal in M.A.C. Case No. 781 of 1998. The said Writ Petition (O.J.C. 1748 of 2001) was disposed of by this Court vide Order Dated 21.01.2003. Relying on a decision of the Supreme Court in the case of New India Assurance Co., Shimla Vs. Kamla and Others etc. etc. the Order Dated 17.08.2000 and 12.12.2000 passed by the Tribunal were set aside. In the said order, the Insurance Company, who was Opposite Party No. 2, was directed to deposit the amount as awarded by Order Dated 25.03.2000 before the Tribunal by 03.03.2003, with liberty to move the Tribunal for realization of the amount from the owner of the offending vehicle, if there was any breach of policy conditions on account of the vehicle being driven without valid driving licence and that the Insurance Company will appear before the Tribunal on 03.03.2003. 7. The Insurance Company deposited only the compensation amount of Rs. 1,95,000/- as per the terms of the settlement made in the Lok Adalat as well as the award passed on the basis of such settlement, but did not comply the other part of the order 1 award dated 25.03.2000 so far as it relates to it's liability for payment of interest, since the compensation amount was not paid within stipulated period of two months from the date of the order. Since part of the order/award relating to payment of interest.was not complied, the claimants filed an application before the Tribunal on 10.03.2003 for a direction to the Insurance Company/Respondent No. 2, to deposit the interest on the principal compensation amount of Rs. 1,95,000 ' 12% per annum from 16.09.1998 till the date of payment. Even though Learned Counsel for the Insurance Company urged that Legal Services Authority have reduced the interest to 9 % per annum from 2001, for which it should not be saddled with 12 % rate of interest, the said application was disposed of by the Tribunal vide Order Dated 21.05.2003 with a direction to the Insurance Company to pay interest ' 12% per annum as per the terms of contract/compromise, for its default to pay the awarded amount within the stipulated time. Hence, this Writ Petition. 8. In this Writ Petition, the main ground of the challenge to the impugned Order Dated 21.05.2003 is that since in the earlier Writ Petition (OJC No. 1748 of 2001) there was a direction to the insurance Company to pay the amount as awarded by 03.03.2003 and the said direction of this Court having been complied by the Insurance Company by depositing only the compensation amount of Rs. 1,95,000/-, the direction of the Tribunal to pay interest, which is on the basis of the default clause, is not sustainable and as such Order Dated 21.05.2003 is liable to be set aside. 9. Heard Mr. Rao, Learned Counsel for the Petitioner and Miss. Deepali Mohapatra, Learned Counsel for the claimants/Opposite Party Nos. 1 to 6. As it appears from record the Opposite Party No. 7 has not appeared in this case since the Writ Petition has been dismissed against Opposite Party No. 7/ owner of the vehicle, vide Order Dated 14.11.2007. 10. Mr. Rao, Learned Counsel for the Petitioner submits that the Order Dated 25.03.2000, which was passed by the Learned Tribunal as per the terms of the compromise made in the State Level Lok Adalat, directing the Insurance Company to pay a sum of Rs. 10. Mr. Rao, Learned Counsel for the Petitioner submits that the Order Dated 25.03.2000, which was passed by the Learned Tribunal as per the terms of the compromise made in the State Level Lok Adalat, directing the Insurance Company to pay a sum of Rs. 1,95,000/- to the claimants/Petitioners -within a period of two months, failing which, it shall be liable to pay interest ' 12 % per annum from the date of application, i.e. 16.09.1998 till realization, got itself automatically merged in the Order Dated 21.01.2003 passed by this Court in OJC No. 1748 of 2001, since as per the direction in the said order, the amount as awarded by Order Dated 25.03.2000 was directed to be deposited within 03.03.2003. As such the time stipulated on 25.03.2000 was extended till 03.03.2003 and in that view of the matter, the direction for payment of interest in the event of default to make payment within two months from the date of the application, is not sustainable. Learned Counsel also submits that since in the meantime, the Legal Services Authorities have reduced the interest to 9% per annum from 2001, directing the Insurance Company to pay interest ' 12% per annum is bad. 11. For better appreciation of the case, the operative portion of the Order Dated 21.01.2003 of this Court in O.J.C. No. 1748 of 2001 is quoted hereunder: In view of the aforesaid, the Orders Dated 17.08.2000 (Annexure 5) and dated 12.12.2000 (Annexure-7) passed by the Tribunal are set aside. The Opposite Party No. 2 is directed to deposit the amount as awarded by order-dated 25.03.2000 before the Tribunal by 3rd March, 2003. It is open to Opposite Party No. 2 to move the Tribunal for realising the amount from the owner of the offending vehicle, if there was any breach of policy conditions on account of the vehicle being driven without a valid driving licence. It is open to Opposite Party No. 2 to move the Tribunal for realising the amount from the owner of the offending vehicle, if there was any breach of policy conditions on account of the vehicle being driven without a valid driving licence. The Opposite Party No. 2 will appear before the Tribunal on 03.03.2003." As such Order Dated 21.01.2003 clearly indicates that this Court directed Opposite Party No. 2 therein/present Petitioner in this.Writ Petition, to deposit the amount as awarded by Order Dated 25.03.2000 before the Tribunal by 03.03.2003 and liberty was also given to Opposite Party No. 2/Insurance -Company to move the Tribunal for realizing the amount from the owner of the offending vehicle, if there was any breach of policy condition on account of the vehicle being driven without a valid driving licence. 12. Mr. Rao, Learned Counsel further submits that the Tribunal has not passed any award of interest vide Order Dated 25.03.2000 and it has only directed for payment of Rs. 1, 95,000/? towards compensation. Vide Order Dated 21.01.2003 of this Court in OJC No. 1748 of 2001, the Insurance Company was only directed to deposit the amount as awarded by Order Dated 25.03.2000. Since there was no order relating to payment of interest in the order of the Tribunal dated 25.03.2000 as well as order of this Court dated 21.01.2003, the Insurance Company is not liable to pay any interest. The 'award' means only the compensation amount and it does not cover the 'interest'. In default of payment, if any interest is imposed, it is a penal interest and no penal action can be taken without initiation of a fresh proceeding for the purpose. As such the direction of the Tribunal to pay penal interest for non-payment of the compensation amount within two months is without jurisdiction. In support of his contention, Mr. Rao, Learned Counsel relied upon and cited the decision in the case of Chandi Prasad and Others Vs. Jagdish Prasad and Others wherein it has been held by the Supreme Court that, when an Appellate Court passes a decree, the decree of the Trial Court merges with the decree of the Appellate Court, irrespective of the fact that the Appellate Court affirms, modifies or reverses the decree passed by the Trial Court and the decision of this Court in the case of Oriental Insurance Company Ltd. v. Harapriya Nayak and Ors. reported In 1994 (I) OLR 88 , wherein it has been held that grant of default interest is without jurisdiction. 13. Miss. Mohapatra, on the other hand, submits that award means an adjudication by the claims tribunal after hearing and considering the case on merit. Section 171 of the Motor Vehicles Act authorizes the Tribunal to award simple interest along with the compensation at such rate and from such date not earlier than the date of making the claim. In the instant case, on the basis of a compromise made in the Lok Adalat, the final order/award dated 25.03.2000 was passed by the Learned Tribunal to the following effect: That the Misc. Case be and the same is disposed of in terms of the compromise and the compromise petition do form part of the award. The Respondent Insurance Company is directed to pay Rs. 1,95,000/- (Rupees one lakh ninety five thousand) only to the Petitioners within a period of two months, failing which, it shall be liable to pay interest ' 12% per annum from the date of application, i.e. 16.09.1998 till realization. '' Keeping in view the above order, this Court while disposing of the earlier Writ Petition, i.e. OJC No. 1748 of 2001 had categorically directed the Insurance Company to deposit the amount as awarded by Order Dated 25.03.2000 before the Tribunal by 03.03.2003. Since the order/award dated 25.03.2000 is a composite order/award directing the Insurance Company to pay Rs. 1, 95,000/ -only to the Petitioner within a period of two months, failing which it shall be liable to pay interest at the rate of 12% per annum from the date of application i.e. 16.09.1998 till realization, the said composite award passed in terms of the compromise entered into between the parties cannot be altered and/or modified. As such there is no illegality or irregularity in the impugned Order Dated 21.05.2003 passed by the Learned Tribunal, which would call for any interference by this Court. As such there is no illegality or irregularity in the impugned Order Dated 21.05.2003 passed by the Learned Tribunal, which would call for any interference by this Court. Learned Counsel further submits that the ratio of the decisions relied upon and cited by Learned Counsel for the Petitioner cannot be made applicable to the instant case, since facts and circumstances of those cases are not same as that of the present case and the clause for payment of interest in the award was on the basis of a compromise petition duly signed and filed by the respective parties and as such none of the parties can be allowed to travel beyond the terms of such compromise. 14. Considering the submissions made by Learned Counsel for both the parties and keeping in view the contents of the Writ Petition as well as the impugned order passed by the Learned Tribunal, I am of the considered view that the Order Dated 25.03.2000 is a composite order/award for payment of the compensation amount of Rs. 1, 95,000/- by the Insurance Company within a period of two months, failing which it shall be liable to pay interest at the rate of 12% per annum from the date of application till realization. As such a bare perusal of the order clearly indicates that the Petitioner/Insurance Company shall have to pay the awarded amount within two months and if not paid, it shall have to pay interest' 12% per annum as directed in that order. Even though this Court by Order Dated 21.01.2003 directed "to deposit the amount as awarded by Order Dated 25.03.2000 before the Tribunal by 03.03.2003", has not waived the interest part of the award in that order. Rather the present Petitioner was categorically directed to deposit the amount as awarded by Order Dated 25.03.2000, before the Tribunal by 03.03.2003. "As awarded" means to pay both, i.e. the compensation amount as well as the interest, since Insurance Company violated the terms of compromise/award and defaulted in payment of compensation amount within the stipulated period of two months. Since the compensation amount was required to be deposited within the stipulated period and the same having not been complied, the Insurance Company cannot avoid its liability to pay interest for its default. As such, the contention of Mr. Since the compensation amount was required to be deposited within the stipulated period and the same having not been complied, the Insurance Company cannot avoid its liability to pay interest for its default. As such, the contention of Mr. Rao, Learned Counsel that the direction to the Insurance Company to pay interest as per default clause amounts to penal interest, cannot be accepted and accordingly, the claimant/Petitioners are entitled for the interest as per the terms of the compromise/award. 15. Furthermore, the award passed as per the terms of the compromise in the Lok Adalat clearly indicates that it is a composite order/award for compensation as well as interest as stated above, which was passed on the basis of an agreement, duly signed/executed by the Petitioner Insurance Company and the claimants/ Opposite Party Nos. 1 to 6. Once the Insurance Company agreed to certain terms and conditions and signed such agreement, it cannot wriggle out of the terms of such agreement after complying a part of the terms of that agreement and deny to comply the other part of the very same agreement on some plea or other. This Court also cannot go beyond the terms of the compromise as well as the award passed on the basis of such compromise made in the Lok Adalat, since it becomes obligatory on the part of all concerned parties to the compromise to honour the terms of such compromise. 16. The purpose of Lok Adalat is to settle the claim and the dispute between the parties amicably. Once a case is decided/settled amicably in Lok Adalat and an order/award is passed on the basis of the terms of compromise, the said order/award cannot be modified, revised or appealed against and it has to be deemed to be a decree of the Civil Court. As such, the Insurance Company, which was a party to the compromise, is bound by the terms of such compromise and shall have to honour the order/award passed on the basis of such compromise. 17. In the instant case, the award-dated 25.03.2000 was passed after both the claimants as well as the Insurance Company moved the Tribunal by way of filing a petition for making the compromise final. As such on the consent of both the parties the said award/ order was passed. The Insurance Company delayed the payment of compensation amount of Rs. 17. In the instant case, the award-dated 25.03.2000 was passed after both the claimants as well as the Insurance Company moved the Tribunal by way of filing a petition for making the compromise final. As such on the consent of both the parties the said award/ order was passed. The Insurance Company delayed the payment of compensation amount of Rs. 1,95,000/ - beyond two months, after the award was passed in terms of the compromise, by filing an application to recall Order Dated 25.03.2000 on the ground that the driver of the vehicle was not having a valid driving licence. Since vide Order Dated 25.03.2000, Learned Tribunal directed the Petitioner /Insurance Company to pay the compensation amount of Rs. 1, 95,000/- within two months failing which it shall be liable to pay interest at the rate of 12% per annum from the date of the application i.e. 16.09.1998 till realization, it cannot be exonerated nor can deny its liability to pay interest in terms of such compromise/ award. 18. Once interest is awarded on the amount of compensation it becomes an integral part of the award, even though it is on the basis of the default clause and as such the compensation amount and the interest awarded becomes inseparable. In this regard for better appreciation, Section 171 of the Motor Vehicles Act is quoted hereunder. Section -171. Award of interest where any claim is allowed: Where any Claims Tribunal allows a claim for compensation made under this Act such tribunal may direct that in addition to the amount of compensation simple interest shall also be paid at such rate and from such date not earlier than the date of making the claim as it may specify in this behalf. 19. Even though, this provision is relating to award of interest along with compensation amount and not relating to payment of interest on the basis of the default clause and in the instant case interest is to be paid in default, i.e. if the compensation amount is not paid within the time stipulated, the same being on the basis of the terms of compromise / an agreement, cannot be denied to the Petitioner, nor can be treated as penal interest, as submitted by Mr. Rao. 20. Rao. 20. As indicated above, this Court by Order Dated 21.01.2003, while disposing OJC No. 1748 of 2001, had directed the Petitioner/Insurance Company to deposit the amount as awarded by Order Dated 25.03.2000 before the Tribunal by 03.03.2003 and has not in any way modified or varied Order Dated 25.03.2000 by that order nor waived the interest specifically. Rather it issued a specific direction to comply the order passed by the Tribunal dated 25.03.2000. 21. In view of the above, the ratio of the decision relied upon and cited by Learned Counsel for the Petitioner cannot be made applicable to the instant case. Since the order/award dated 25 03.2000 is a composite award for payment of compensation amount of Rs. 1,95,000/- within two months and in default to pay the amount along with interest, the Petitioner-Insurance Company shall have to pay interest at the rate of 12% per annum from the date of application till realization, honouring the terms of the agreement/ compromise to which it was a party. As such, the Insurance Company cannot be exonerated from its liability to pay interest in terms of the order/award-dated 25.03.2000 passed by the Tribunal on the basis of such compromise made by it with the Opposite Party Nos. 1 to 6 in the Lok Adalat. Accordingly, as observed above, the Petitioner-Insurance Company shall have to deposit interest at the rate of 12% per annum on the compensation amount of Rs. 1,95,000 from the date of application, i.e. 16.09.1998 till realization, since it has already deposited the compensation amount only. 22. Since till date the Insurance Company has not paid the interest in terms of the Order Dated 25.03.2000, even though in the meantime more than 8 years have passed from the date of such order, the Insurance Company is directed to calculate the amount of interest payable to the claimants and deposit the same before the Tribunal within a period of three months from today without any further delay. Keeping in view the delay already caused in depositing the amount towards interest and the poor claimants have not received anything towards interest till date, it is made clear that in case of failure of the Petitioner to deposit the amount of accrued interest before the Tribunal as per the entitlement of the claimant? Opposite Party Nos. 1 to 6, within three months as directed above, the Opposite Party Nos. Opposite Party Nos. 1 to 6, within three months as directed above, the Opposite Party Nos. 1 to 6 shall be at liberty to move the Tribunal for payment of interest on such amount of interest payable, at the Bank's rate of interest on fixed deposit, at the present prevailing rate. 23.It need not be reiterated that after payment of entire dues, i.e. compensation amount as well as interest accrued thereon, the Petitioner-Insurance Company shall be at liberty to proceed against the owner of the vehicle for realization/recovery of the- entire amount paid by it, for violation of terms and conditions of the policy, if any, in accordance with law following the ratio of the decision in the case of New India Assurance Company Ltd. Simla v. Kamla and Section 149 (4) of the Motor Vehicle Act, as has been observed in Order Dated 21.01.2003 of this Court passed in O.J.C No. 1748 of 2001 as well as shall have liberty to attach the vehicle, if the owner /insured does not participate in the proceeding and comply with the order passed in the proceeding for recovery. 24. It is made clear that in case any proceeding for recovery of the amount deposited/paid by it, is initiated by the Insurance Company against the owner of the vehicle, the same shall be decided on its own merit in accordance with law, on the basis of the available materials on record/evidence adduced by the respective parties in that proceeding. 25. In view of the discussions made above, I do not find any illegality, irregularity or manifest error of law in the impugned order of the Learned Tribunal dated 21.05.2003, which would call for any interference by this Court. 26. In view of the above, I am not inclined to entertain this writ application and the same is accordingly dismissed. Final Result : Dismissed