Case Note & Summary
The appellant, the mother of the deceased, filed a claim before the Railway Claims Tribunal after her son died in a train accident on 28.12.2013. The Tribunal initially awarded compensation of Rs.4,00,000/-. Subsequently, the claimant filed a Review Application based on a Central Government Notification dated 22.12.2016 enhancing the compensation amount to Rs.8,00,000/-. The Review Application was allowed, and the claimant was granted Rs.8,00,000/- with interest at 6% per annum. The appellant challenged only the rate of interest, contending that it should be 12% per annum. The respondent argued that there is no specific provision in the Railways Act for a particular rate of interest. The High Court, considering Section 34 of the Code of Civil Procedure, 1908 and Section 3 of the Interest Act, 1978, and relying on the Supreme Court judgment in Tahazhathe Purayil Sarabi v. Union of India, held that interest is compensation for being denied the use of money. The Court modified the award, granting interest at 9% per annum from the date of the application till recovery, instead of 6% per annum. The appeal was partly allowed.
Headnote
A) Railway Law - Compensation - Interest Rate - Railways Act, 1989 - Section 124A - The appellant challenged the rate of interest awarded by the Railway Claims Tribunal on enhanced compensation. The Tribunal had granted interest at 6% per annum. The appellant sought 12% per annum. The High Court, relying on the Supreme Court decision in Tahazhathe Purayil Sarabi v. Union of India, held that interest is compensation for being denied the use of money and allowed interest at 9% per annum from the date of application till recovery. (Paras 5-11)
Issue of Consideration
Whether the Railway Claims Tribunal should have granted interest at 12% per annum instead of 6% per annum on the enhanced compensation amount.
Final Decision
The appeal is partly allowed. The impugned award is modified to the extent that the appellant is entitled to interest at the rate of 9% per annum from the date of application till recovery of the whole amount, instead of 6% per annum.
Law Points
- Interest rate
- Railway Claims Tribunal
- Section 34 CPC
- Section 3 Interest Act
- 1978
- Tahazhathe Purayil Sarabi v. Union of India
Case Details
2019 LawText (BOM) (06) 139
First Appeal No. 106 of 2019
Shri S. K. Sable for the appellant, Shri V. M. Gadkari for the respondent
Tahera Wd/o. Raheman Shaikh (Dead) and Numan Raheman Shaikh
Union of India, Through its General Manager, Central Railway, C.S.T. Mumbai
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Nature of Litigation
Appeal against the award of Railway Claims Tribunal regarding rate of interest on enhanced compensation.
Remedy Sought
Appellant sought enhancement of interest rate from 6% to 12% per annum on the compensation amount.
Filing Reason
The appellant was dissatisfied with the rate of interest (6% per annum) granted by the Railway Claims Tribunal on the enhanced compensation of Rs.8,00,000/-.
Previous Decisions
The Railway Claims Tribunal, Nagpur, by order dated 03.08.2017 in Review Application No. REV/NGP/2017/0010, allowed the review and granted compensation of Rs.8,00,000/- with interest at 6% per annum.
Issues
Whether the appellant is entitled to interest at 12% per annum instead of 6% per annum on the enhanced compensation amount.
Submissions/Arguments
Appellant argued that interest should be 12% per annum from the date of application till recovery.
Respondent argued that there is no specific provision in the Railways Act for a particular rate of interest.
Ratio Decidendi
Interest is compensation for being denied the use of money. The court has discretion under Section 34 CPC and Section 3 of the Interest Act, 1978 to grant interest at a reasonable rate. In the facts of the case, 9% per annum is appropriate.
Judgment Excerpts
The Hon'ble Apex Court has held that: 'the payment of interest is basically compensation for being denied the use of money, interest allowed at 6 per cent per annum from the date of application till date of'
Procedural History
The deceased died in a train accident on 28.12.2013. The claimant filed a claim application before the Railway Claims Tribunal, Nagpur, which was allowed and compensation of Rs.4,00,000/- was granted. The claimant filed a Review Application based on a Central Government Notification dated 22.12.2016 enhancing compensation to Rs.8,00,000/-. The Review Application was allowed on 03.08.2017, granting Rs.8,00,000/- with interest at 6% per annum. The appellant filed the present appeal challenging only the rate of interest.
Acts & Sections
- Code of Civil Procedure, 1908: Section 34
- Interest Act, 1978: Section 3
- Railways Act, 1989: Section 124A
