Supreme Court Affirms 9% Interest On Compensation Awarded By MACT; Says Delay To Be Compensated At Least Minimally by Award Of Interest

The Supreme Court observed that due to the repudiation of or refusal to consider the claim that the claimants are driven to the Tribunal. If they are paid in time, it could be utilized by the claimants and on failure, thus it is to be compensated at least minimally by award of interest.

The Oriental Insurance company filed a SLP against the order of compensation awarded by the Tribunal and confirmed by the High Court.

The Bench of Justice Sudhanshu Dhulia and Justice K. Vinod Chandran observed, “In fact, it is due to the repudiation of or refusal to consider the claim that the claimants are driven to the Tribunal. When the matter is pending before the Tribunal or in appeal before the higher forums, the claimants are deprived of the compensation for future prospects. If they are paid in time, it could be utilized by the claimants and on failure, the loss of dependency would force the claimants to source their livelihood from elsewhere…If the amounts were disbursed to the claimants on a rough calculation, on intimation of the accident to the Insurance Company, subject to the award of the Tribunal, necessarily there would not have been any interest liability atleast to the extent of the disbursement made. Hence, we reject the contention and direct that the entire award amounts would be paid with interest at the rate of 9% from the date of filing of the claim till the date of disbursement.”

Case Brief

The Petitioner is an insurance company, while the Respondents are the wife and children of the deceased, who died in a motor vehicle accident. The Motor Vehicle Accident Tribunal awarded total compensation of Rs.79,04,540/- considering the income of the deceased and l adopted a multiplier of 13 and reduced 1/3rd of the income for personal expenses.

Later, the High Court also confirmed and decided that total compensation would be Rs.76,63,508/-,

The insurance company, however, contended regarding the higher interest rate of 9% and also agitated the illegality in awarding interest for future prospects, which in any event is an amount received in advance, normally inuring to the benefit of the claimants only in future.

Court’s Analysis

The Court opined that there is nothing to indicate that it was only by reason of the claimants’ absence that the consideration was delayed.

“Laws delays cannot, without proper substantiation, be cast upon the shoulders of one or other party to the lis. We hence do not find any reason to find the delay to be the sole responsibility of the claimants and in that circumstance necessarily interest must run from the date of filing of the claim petition, to the date of payment; for which precedents are legion, and we need not refer to them”, the Court remarked.

Further, the Court observed that considering the over-all circumstances, especially the long delay caused, the 9% interest rate granted by the Tribunal is perfectly in order, especially noticing the accident having occurred in the year 1995.

The Court said, “We cannot but observe that there was nothing stopping the Insurance Company from settling the claim on a computation, on receipt of intimation of the accident, especially since the determination of compensation for loss of dependency, on death being occasioned in a motor vehicle accident, can be determined as evident from the judicial precedents; at least provisionally.”

Accordingly, the Petition was rejected.

Cause Title: The Oriental Insurance Co. Ltd. V. Niru@ Niharika & Ors. (Neutral Citation: 2025 INSC 822)

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