T.H. Mohammed vs United India Insurance Co. Ltd. on 26 September, 1996

Karnataka High Court
T.H. Mohammed vs United India Insurance Co. Ltd. on 26 September, 1996
Equivalent citations: II (1998) ACC 269, 1998 ACJ 463, 1997 (2) KarLJ 153
Author: M Saldanha
Bench: M Saldanha


M.F. Saldanha, J.

1. This civil revision petition is dealt with by me in two separate compartments. The first aspect of it relates to non-payment of compensation amount by the insurance company. Admittedly, the Motor Accidents Claims Tribunal passed an order dated 22.9.1986 awarding compensation as also interest at the rate of 6 per cent per annum simple interest. The order specified that in the event of the respondent insurance company not depositing the amount awarded within six months, that it would then carry interest at the rate of 12 per cent per annum from the date of the petition till the payment was made. In other words, there was a clear mandate in the decree, that if there was any default in the payment of the awarded amount beyond six months, that the computation of interest would be at the rate of 12 per cent per annum. The admitted position is that the amount was not deposited within six months. The payment was in fact made only on 22.7.1989 and insurance company deposited a sum of Rs. 19,578/- and the interest had been calculated at the rate of 6 per cent per annum. The delay or the time-lag was approximately 272 years after the passing of the decree and under the terms of the decree, the claimant was right when he applied to the lower court for execution whereby he claimed that the difference of interest which comes to Rs. 7,856.85 ought to have been awarded to him. When the execution proceedings were taken out, the insurance company resisted the balance payment claimed from it on the ground that judgment in the case of Oriental Insurance Co. Ltd. v. Anantha-ram Ramachandra Kalluray 1988 ACJ 367 (Karnataka), had laid down that the provision for payment of enhanced interest in the event of default with retrospective effect was in the nature of a penalty and that the Tribunal had no power to do this. It is this particular contention which has been upheld and the execution application has been dismissed. The present civil revision petition is directed against that order.

2. The submission canvassed by the petitioner proceeds on a clear-cut point of law. lie contends that the lower court was in error in having sought to question the validity or the correctness of the original decree and that the lower court had no jurisdiction to do so. The learned advocate submits that the executing court is an implementing authority and that it has only to enforce the decree that has earlier been passed and that it is not open to the executing court to go behind the decree or to question any aspect of its validity. Learned advocate has drawn my attention to a decision of the Supreme Court in the case of V. Ramaswami Aiyengar v. T.N.V. Kailasa Thevar AIR 1951 SC 189, wherein the Supreme Court has unequivocally held that the executing court has no power to go behind a decree or for that matter to re-examine its validity. This is the well-settled position in law that has been consistently followed both by the Supreme Court and by the High Courts in a stream of decisions thereafter. I need only to refer to the recent decisions of the Supreme Court in relation to benefits admissible to claimants under Section 23(1)(a) of the Land Acquisition Act. In those cases, it was the contention of the State that the additional benefits were either not available or that the computations were incorrect and that therefore, the executing court should not give effect to the earlier decrees or awards. The Supreme Court has unequivocally clarified the position that if there is any error or defect, factual or legal, in the original order, that it is for the party against whom the order has been made to take the matter in revision or in appeal and get that infirmity rectified. If this is not done, then the original order becomes final and once the rule of finality applies, it is not open to the party at the stage of execution to get over that legal position and seek to reopen the controversy. This is the settled position in law and to my mind, for very good reason, because experience has shown that even at the stage of execution, all sorts of contentions are raised before the executing court and an attempt is made to virtually recommence or re-argue the proceeding or to ask the executing court to modify the decree or to water it down or for that matter, to substitute it with a new one. This last aspect of the matter is precisely what the Apex Court observed while deciding the case referred to by me earlier. In so far as it was pointed out that the effect of asking the executing court to reconsider any aspect of the matter, would in terms mean that the executing court is required to substitute a new decree either wholly or partially in place of the earlier one, there is a total legal bar to anything of this sort being permitted and therefore, the executing court is required to implement the decree without questioning it. To this extent therefore, petitioner’s learned advocate is fully justified in pointing out that the trial court ought to have straightaway executed the decree in question. The order passed is erroneous to that extent and will have to be set aside.

3. The civil revision petition accordingly succeeds. The respondent insurance company is directed to deposit the amount in question with the lower court within an outer limit of four weeks from today. The lower court shall forthwith pay over the amount to the petitioner. If the respondent insurance company commits any further default in depositing the amount in question within the prescribed period of time, the interest at the rate of 18 per cent per annum shall be payable by the insurance company for the entire period starting from four weeks from today up to the date of deposit. In order to obviate any difficulty arising, the petitioner’s learned advocate shall communicate through the post to the insurance company the date within which the deposit in question is required to be made.

4. As regards the second aspect of the matter, on the basis of which it is unnecessary to hold up the relief that the petitioner is entitled to, the petitioner’s learned advocate points out to me that the Division Bench decision in Kalluray’s case 1988 ACJ 367 (Karnataka), does require reconsideration. His submission is that the decision in question could provide a fetter to the claimants getting enhanced interest in cases where the insurance company defaults, which in his submission is very much in the interest of justice. The learned advocate submits that there is no reason why the nationalised insurance companies should not abide by the court decisions. If they are aggrieved by the decision, it is open to them to move the appeal court and to challenge the decision, in which case, under the law, they will be made to deposit the whole or part of the award amount. He submits that in those of the cases where appeals are not filed, that the order is required to be implemented immediately and he points out that in all these accident cases, there is a very long time-lag between the date when the incident takes place and the conclusion of the proceedings, invariably several years. The learned advocate is absolutely right when he points out to me that if, after this long waiting period claimant is further required to indefinitely wait until the insurance company has the good sense to pay up the amount or until, as has happened in the present case, the poor claimant is required to take out the execution proceedings, that it could be extremely harsh to hold that the claimant should not get any benefit. On the other hand, it is his submission that the insurance company should not be permitted to take advantage of such a situation.

5. One needs to view the position in law from a clear perspective and more importantly, from the aspect of doing complete justice to the parties. If the insurance companies are permitted to indefinitely delay the implementation of the court order, not only would this be harsh and unjust to the poor claimants, but on the other hand it would be conferring virtually unjust enrichment on the insurance companies and permitting them to take advantage of their own wrong. This is something which is an anathema and which the law just does not permit. It is also within the power of a court to ensure, while passing an order that given reasonable time, the order will be given effect to and to prescribe in that order a disincentive as far as delaying of the implementation of the order is concerned. This to my mind, is not a penalty, but on the other hand, it is viewed very correctly, to be construed as an additional benefit to the claimant who has been deprived of the compensation amount for that additional period of time. It is really in the nature of compensatory costs and is therefore, not to be viewed under the head of a penalty. One needs to also take note of the fact that the power vested in the Tribunal to award interest is a power that is required to be judiciously exercised and it is within the discretion of the Tribunal therefore, to fix the rate of interest. In those of the cases where the Tribunal desires to eliminate the need for the applicant to have to come back to the court and complain about a default and where the order is not complied with during the period prescribed and where it becomes necessary for the applicant to go without the compensation and to institute further proceedings, the least that the court can do is to make provision for some additional financial benefits to offset all these further unnecessary proceedings. Nothing could be fairer and more in consonance with the interest of justice than a conditional order which any court is entitled to pass, prescribing that in the event of the decree not being implemented, that the rate of interest would stand revived. There are situations in which a court may disqualify a party from claiming or receiving interest for a variety of reasons or defaults and similarly, it is within the discretion of a court to award interest at a higher rate in given situations. It is only if that power has been arbitrarily or wrongly exercised, that the question of a prohibition will come in. It is in this background, that I am of the considered view that the Division Bench decision in Kalluray’s case 1988 ACJ 367 (Karnataka), requires reconsideration. That is required to be done from the point of view of ensuring that claimants in such cases are not disqualified from receiving higher interest and in order that the law on the point may be settled.

6. In the aforesaid circumstances, since the decision in question is a Division Bench decision of this Court, the Registrar shall place these proceedings along with a copy of this order before the Hon’ble Chief Justice so that the matter as regards the clarification of the law on the point may be referred to a Full Bench of this Court for a fuller and proper decision.

7. With these directions, the civil revision petition to stand disposed of. No order as to costs.

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