The Sikkim High Court has clarified that interest awarded under Section 171 of the Motor Vehicles Act, 1988, forms an integral part of just compensation and must be included in the final award even on appeal. This ruling corrects a clear error apparent on the face of the record, reinforcing the statutory mandate that claimants are entitled to interest from the date of filing until actual payment.
Background & Facts
The Dispute
The petitioner, Dhanesh Gupta alias Dhanesh Kumar Gupta, was involved in a motor vehicle accident on or about 06.03.2021. He filed a claim petition before the Motor Accident Claims Tribunal (MACT) seeking compensation for injuries sustained, including medical expenses, loss of earnings, future medical needs, pain and suffering, and loss of amenities.
Key Facts
- The accident occurred on or about 06.03.2021
- Claim petition was filed on 06.03.2021 before the MACT
- The Tribunal, by order dated 12.07.2023, awarded total compensation of Rs.71,20,670/-
- The Tribunal further granted interest @10% per annum on the entire amount from the date of filing of the claim petition (06.03.2021) until actual payment
- The respondents (National Insurance Company Limited and Branch Manager) filed an appeal before the High Court
- The High Court, by impugned judgment dated 16.09.2025 in MAC Appeal No. 03 of 2025, re-computed the compensation to Rs.27,83,390/-
- The High Court’s judgment did not mention or include the 10% interest granted by the Tribunal
- The petitioner filed a review petition under Order 47 Rule 1 read with Section 151 of the Code of Civil Procedure, 1908, on 01.02.2026
Procedural History
- 06.03.2021: Claim petition filed before Motor Accident Claims Tribunal
- 12.07.2023: MACT awarded compensation of Rs.71,20,670/- + 10% interest from 06.03.2021
- 16.09.2025: High Court allowed appeal and reduced compensation to Rs.27,83,390/- without addressing interest
- 01.02.2026: Review Petition No. 01 of 2026 filed before the High Court
- 15.04.2026: Hearing and judgment delivered on the same day
Relief Sought
The petitioner sought correction of the impugned judgment to include interest @10% per annum on the revised compensation amount of Rs.27,83,390/- from the date of filing of the claim petition (06.03.2021) until actual payment.
The Legal Issue
The central question was whether the High Court, while reducing the quantum of compensation on appeal, was obligated to retain the interest awarded by the Tribunal under Section 171 of the Motor Vehicles Act, 1988, and whether the omission to do so constituted an error apparent on the face of the record warranting review.
Arguments Presented
For the Petitioner
The petitioner’s counsel argued that Section 171 of the Motor Vehicles Act mandates the grant of interest at a rate not exceeding 10% per annum from the date of filing the claim petition until actual payment. The Tribunal had correctly applied this provision. The High Court’s failure to include this interest in its re-computed award of Rs.27,83,390/- was a clear oversight, as the interest was not a discretionary award but a statutory entitlement. The omission was an error apparent on the face of the record, justifying review under Order 47 Rule 1 CPC.
For the Respondent
The respondents contended that the High Court’s judgment was a re-assessment of quantum and that interest, being ancillary, was not part of the principal compensation. They argued that since the High Court had reduced the compensation amount, the interest should be recalculated or omitted. No specific statutory or precedential authority was cited to support this position.
The Court's Analysis
The Court examined the statutory framework under Section 171 of the Motor Vehicles Act, which provides that the Tribunal shall award interest at a rate not exceeding 10% per annum on the amount of compensation from the date of filing the claim petition until the date of actual payment. The Court noted that this interest is not a separate head of claim but an integral component of the just compensation mandated by law.
"The interest under Section 171 is not a discretionary benefit but a statutory right accruing automatically upon filing of the claim petition. It is part of the total compensation package and must be reflected in the final award, whether at the Tribunal or appellate stage."
The Court observed that the High Court, while re-computing the compensation to Rs.27,83,390/-, had entirely overlooked the interest component that had been granted by the Tribunal. The judgment did not address the interest at all, nor did it provide any reasoning for its exclusion. This omission was not a matter of differing opinion but a failure to consider a statutory obligation.
The Court held that such an error, which affects the legal entitlement of the claimant and is evident from the face of the record, falls squarely within the scope of review jurisdiction under Order 47 Rule 1 CPC. The Court emphasized that the purpose of Section 171 is to ensure that claimants are not deprived of the time value of money during prolonged litigation, and excluding interest defeats this legislative intent.
The Verdict
The review petition was allowed. The High Court set aside the portion of its judgment dated 16.09.2025 that omitted interest. The petitioner is entitled to interest @10% per annum on the amount of Rs.27,83,390/- from 06.03.2021 until actual payment. The order is deemed effective immediately, and compliance is to be completed within 6 weeks from the date of this judgment.
What This Means For Similar Cases
Interest Is Not Discretionary Under Section 171
- Practitioners must now argue that interest under Section 171 MV Act is mandatory and must be included in every award, whether at the Tribunal or appellate level
- Any judgment reducing compensation without addressing interest is vulnerable to review
- The burden shifts to the appellate court to expressly justify exclusion of interest, not its inclusion
Appellate Courts Cannot Erase Statutory Entitlements
- Reducing the principal compensation does not extinguish the statutory right to interest
- Interest must be calculated on the final compensation amount after appellate modification
- Failure to mention interest in the appellate judgment constitutes an error apparent on the face of the record
Review Jurisdiction Is Available for Statutory Omissions
- Review petitions under Order 47 Rule 1 CPC are maintainable where a statutory provision is overlooked
- This judgment expands the scope of review beyond clerical errors to include substantive statutory omissions
- Practitioners should consider review as a remedy when appellate judgments omit mandatory interest, costs, or statutory components
