CLX-RAJ-HC-2026-006031
Oriental Insurance Company Ltd. - Appellant Versus Kamla Bai and Others (Smt.) - Respondents
Rajasthan High Court · Rajasthan
Partly AllowedCore ratio / Key holding
The retrospective enhancement of the rate of interest for default in payment of compensation under the Motor Vehicles Act, 1988, which effectively amounts to a penal interest, is not envisaged by the Act and is liable to be set aside.
Headnote
Motor Vehicles Act, 1988 - S.173 - Compensation - Interest - Penal Interest
Issues for determination
- Whether the Tribunal and Single Judge acted illegally in awarding penal interest at 15% per annum in default of payment of compensation under the Motor Vehicles Act, 1988?
Ratio decidendi
- The retrospective enhancement of the rate of interest for default in payment of compensation under the Motor Vehicles Act, 1988, which effectively amounts to a penal interest, is not envisaged by the Act and is liable to be set aside.
Important points
- Held, the Tribunal's award of 15% penal interest for default in payment of compensation under the Motor Vehicles Act, 1988, is set aside, affirming 12% interest.
Keywords
Motor Vehicles ActPenal InterestCompensationInsurance CompanyRate of Interest
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