Section 171 of MVA : Section 171: Award Of Interest Where Any Claim Is Allowed

Explanation using Example

Imagine a scenario where Mrs. Sharma files a compensation claim with the Motor Accident Claims Tribunal after her husband was involved in a road accident caused by a truck driver's negligence. The accident resulted in severe injuries to her husband, leading to significant medical expenses and loss of income. After examining the case, the Tribunal decides in favor of Mrs. Sharma and awards her a sum of money as compensation for the damages incurred.

Applying Section 171 of The Motor Vehicles Act, 1988, the Tribunal also includes in its order that the truck owner's insurance company must pay Mrs. Sharma simple interest on the compensation amount. The Tribunal sets the interest rate at 7% per annum, starting from the date she filed the claim, to the date the compensation is actually paid. This interest is meant to compensate for the time value of the money during the period Mrs. Sharma awaited the compensation.