Misc. Appeal No. 4085 Of 2009
5.1.2010
Shri Ashok Shrivastava, learned counsel for the
appellants.
Shri Rajneesh Gupta, learned counsel for the
respondent on advance notice.
With the consent of learned counsel for the parties
heard finally.
Question which crops up for consideration in the
present appeal under Section 23 of the Railway Claims
Tribunal Act, 1987 against an order dated 16.9.2009
passed by Railway Claims Tribunal, Bench at Bhopal in
O.A. No. IIu/24/08 as to whether the Tribunal is justified
in awarding interest @ 6 % on default within a period of 60
days/two months is no more res integra.
In Thazhathe Purayil Sarabi & ors v. Union of India
and another (AIR 2009 SC 3098), it is held by their
Lordships:
“16. It is, therefore, clear that the Court, while
making a decree for payment of money is entitled
to grant interest at the current rate of interest or
contractual rate as it deems reasonable to be paid
on the principal sum adjudged to be payable and/
or awarded, from the date of claim or from the
date of the order or decree for recovery of the
outstanding dues. There is also hardly any room
for doubt that interest may be claimed on any
amount decreed or awarded for the period during
which the money was due and yet remained
unpaid to the claimants.
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17-8. The Courts are consistent in their view that
normally when a money decree is passed, it is
most essential that interest be granted for the
period during which the money was due, but
could not be utilized by the person in whose
favour an order of recovery of money was passed.
As has been frequently explained by this Court
and various High Courts, interest is essentially a
compensation payable on account of denial of the
right to utilize the money due, which has been, in
fact, utilized by the person withholding the same.
Accordingly, payment of interest follows as a
matter of course when a money decree is passed.
The only question to be decided is since when is
such interest payable on such a decree. Though
there are two divergent views, one indicating that
interest is payable from the date when claim for
the principal sum is made, namely, the date of
institution of the proceedings in the recovery of
the amount, the other view is that such interest is
payable only when a determination is made and
order is passed for recovery of the dues. However,
the more consistent view has been the former and
in rare cases interest has been awarded for
periods even prior to the institution of proceedings
for recovery of the dues, where the same is
provided for by the terms of the agreement entered
into between the parties or where the same is
permissible by statute.
19. Accordingly, we are unable to sustain the
order of the Railway Claims Tribunal directing
payment of interest on default of the payment of
the principal sum within a period of 45 days. As
we have indicated hereinbefore, when there is no
specific provision for grant of interest on any
amount due, the Court and even Tribunals have
been held to be entitled to award interest in their
discretion, under the provisions of Section 3 of the
Interest Act and Section 34 of the Civil Procedure
Code.
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Division Bench of this Court in Siddha Muni Shukla
and others v. Union of India and another : M.A. No.
2868/2006 decided on 1.11.2006 has held:
“On the scrutiny of the award, it is clear as day that
the interest has been granted on a condition that if the
respondent would pay compensation within 60 days,
no interest would be leviable. It is trite law that this
would not amount to grant of interest. Mr. Dubey has
submitted that the interest may be granted from the
date of presentation of the application before the
tribunal i.e. from 16.9.2002 To buttress his aforesaid
submission, he has placed reliance on the decision
rendered in the case of Union of India Vs. Smt.
Lamipati and another AIR 1995 MP 90.
Recently, this Court in the case of Union of India Vs.
Rami Bai in M.A. No. 1220 of 2006 after referring to
various decisions rendered in the cases of Ambica
Quarry Works Vs. State of Gujrat AIR 1987 SC 1073,
Ramesh Chandra Daga Vs. Rameshwari Bai, (2005) 4
SCC 772, Zee Telefilms Ltd and another Vs. Union of
India and others (2005) 4 SCC 649, P.S. Sathappan
(dead) by Lrs. Vs. Andhra Bank Ltd. and others (2004)
11 SCC, and Executive Engineer Dhenkenal Minor
Irrigation Division Orissa Vs. N.C. Bhudarai (Dead) by
LRs. etc. AIR 2001 SC 626 has expressed the opinion
as under:-
“Only to show that in the absence of any
prohibition interest can be awarded as an
accessory or incidental to the sum awarded as
due and payable. On the scrutiny of the Act
and the Rules, it is clearly evincible that is no
prohibition. The Division Bench of this Court
in the case of Smt. Laxmipati (supra) has dealt
with the provisions of the Act. Rules and the
conception of grant of interest. The Division
Bench had addressed itself with regard to the
claims for unliquidated damages. The Division
Bench decision is a binding precedent on us
and we do not find any reason to differ with the
same. In fact, we respectfully concur with the
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said view. We may state here. Mr. Upadhyaya
laboured hard to persuade us that the law laid
down in the case of Laxmipati (supra) requires
reconsideration in view of the law laid down in
the case of Sanjay Sapatrao Gaikwad (supra)
and Rathi Memon (supra). We have already
dealt with the decision rendered in the case of
Rathi Menon (supra) and expressed the opinion
that the Apex Court has not laid down the law
that interest can only be granted from the date
of order passed by the Railway claims
Tribunal. As far as the law laid down in the
case of Sanjay Sampatrao Gaikwad (supra)
with due respect has not persuaded us to
express a different note than that has been
stated in the case of Laxmipati (supra).”
In view of above the order dated 16.9.2009 of the
Tribunal is modified to the extent that the appellant shall
be entitled for interest @ 6 % per annum from the date of
institution of proceedings before Railway Claims Tribunal.
The appeal is allowed to the extent above. However,
no costs.
(SANJAY YADAV)
JUDGE
VT/-