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Section 171: Award of interest where any claim is allowed

Motor Vehicles Act • Official Statutory Text & Practice Guide

Statutory Regulation
Legal Standard
Competent Court / Tribunal
Act 1988
Section 170 All 217 Sections of Motor Vehicles Act Section 172

Legal Commentary & Landmark Judgments: Section 171

Section 171 of the Motor Vehicles Act, 1988 authorizes the Claims Tribunal to award simple interest on the compensation amount from the date of the claim petition until realization.

  • Core Legal Standard: Section 171 confers judicial discretion upon the Claims Tribunal to grant compensatory interest on allowed awards.
  • Statutory Relief & Application: The section provides that where any Claims Tribunal allows a claim for compensation, it may direct that in addition to the principal compensation, simple interest shall be paid at such rate and from such date not earlier than the date of making the claim petition as it specifies.

The purpose of interest under Section 171 is not penal, but compensatory: it reimburses the claimant for the delay in receiving the compensation they were legally entitled to on the date of the accident. While the statutory provision does not fix a rigid percentage, judicial discretion is guided by prevailing bank lending and fixed deposit rates, typically ranging between 6% and 9% per annum.

Key Landmark Precedents:
  • Abati Bezbaruah v. Dy. Director General, Geological Survey of India (2003) 3 SCC 148: The Supreme Court held that the award of interest under Section 171 is discretionary and compensatory; the rate of interest must be determined having regard to the prevailing economic conditions and nationalized bank interest rates.
  • Dharampal v. U.P. State Road Transport Corp. (2008) 12 SCC 208: Held that interest must normally be awarded from the date of filing the claim petition until actual payment, ensuring that claimants are not disadvantaged by prolonged judicial delays.
Legal Commentary:

Interest awarded under Section 171 often constitutes a substantial proportion of the final disbursement in long-pending MACT cases. Tribunals cannot deny interest arbitrarily; if interest is withheld or reduced, reasons must be recorded in the award. However, interest is generally not awarded on amounts awarded under future prospects or anticipated future medical treatments that have not yet been incurred.

Section 170 All 217 Sections of Motor Vehicles Act Section 172