Karnataka High Court upholds 9 percent interest on delayed accident compensation
The Karnataka High Court has ruled that a nine percent interest rate is justified for delayed accident compensation, upholding a tribunal's decision in a case where a woman was killed on the Outer Ring Road in Kasturinagar, east Bengaluru.
Justice Tara Vitasta Ganju upheld the decision of the Motor Accident Claims Tribunal, Bengaluru, noting that there is no "straitjacket formula" for determining interest rates. The judge stated that the rate must depend on the facts and circumstances of each case, striking a balance between fairness to the claimant and reasonableness to the insurer.
The ruling came during an appeal involving a fatal road accident from November 2016. The victim, Ravanamma, was riding a bicycle when she was struck by a speeding van while crossing the Outer Ring Road at Kasturinagar. She was taken to the KR Pura Government Hospital, where doctors declared her dead.
Ravanamma's husband and two children approached the tribunal for compensation, stating that she supported the family by working as a mason with a monthly income of Rs 9,000. In February 2018, the tribunal awarded the family Rs 16.5 lakh with a nine percent annual interest rate.
United India Insurance Company, the insurer of the van, challenged the tribunal's decision. The insurance company argued that the interest rate was too high and should be reduced to eight percent, asserting that there was no delay on its part.
Rejecting the appeal, Justice Ganju noted that interest is intended to compensate the family of a deceased person for being deprived of the use of money that should have been paid at the time of the accident. The judge referenced Supreme Court rulings, noting that interest is awarded not due to contractual obligations but to recompense claimants for being deprived of money.
She observed that a decade had passed since the accident occurred, making the nine percent rate fair, reasonable, and non-punitive under the prevailing economic conditions and bank rates.
