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SC pitches for directly transferring compensation sum in claimants' bank accounts in MV Act cases [Read Judgment]

By Jhanak Sharma      21 March, 2025 05:41 PM      0 Comments
SC pitches for directly transferring compensation sum in claimants bank accounts in MV Act cases

NEW DELHI: The Supreme Court has directed for streamlining the process for payment of compensation in road accident by directly transferring the amount in the bank accounts of the claimants, to ensure that the insurance companies and the claimants are saved from hassles of the court processes.

Voicing concern over the mode of payment, a bench of Justices J K Maheshwari and Rajesh Bindal said the general practice followed by the insurance companies, where the compensation is not disputed, is to deposit the amount before the Motor Accident Claims Tribunal. Instead of following that process, a direction can always be issued to transfer the amount into the bank accounts of the claimants with intimation to the tribunal, it said.

The bench noted no uniform practice is followed regarding deposit of the amount before the tribunal, namely whether the amount will remain in government treasury or will be transferred in bank to be kept in interest bearing fixed deposit so that claimants do not suffer on account of interest for any delay in disbursement after deposit.  

"In case this process (transfer to bank accounts of claimants) is followed, the gap would be bridged. The real object of the beneficial legislation, namely to compensate for the loss of earning member of the family or for the injuries suffered by the claimants, will be achieved and compensation can be disbursed without any delay," the bench said.

The court here ordered for paying enhanced compensation of Rs 36.84 lakh to Parminder Singh, then 21-year-old youth who suffered 100 % disablity and quadriplegia, after the accident in 2014. The appellant was a state level Volleyball player and was pursuing studies to become a veterinary doctor.

With regard to the mode of payment in such cases, the bench said, this is an era of technology, where now artificial intelligence is taking over and the bank transactions can happen instantly with the help of technology.

"Our country has done wonders in digital payment transactions," the bench said, referring to the website of Ministry of Finance, Government of India, stating that the value of such transaction has grown from Rs 952 lakh crores to Rs 3,658 lakh crores.

It also noted the UPI transactions are likely to cross 20,000 crores in the financial year 2024-25.

"It is a matter of common knowledge that now under various schemes of the Government, funds are transferred to the beneficiaries directly in their bank accounts. As per the rough estimate, about 80% of the adult population in the country have bank accounts," the bench said.

The bench also pointed out a lot of matters come to the court in which the amount is required to be paid to the litigants and the normal practice used to be, and still prevalent is to deposit the amount in court and thereafter to be withdrawn by the litigant. Withdrawal of the amount deposited in the court by any litigant certainly needs time and also expenses.

In cases of compensation under the Motor Vehicle Act, the tribunals at the initial stage of pleadings or at the stage of leading evidence may require the claimants to furnish their bank account particulars, the court suggested.

The court pointed out it is also a fact that a substantial amount of compensation in motor accident cases remains deposited in the tribunal as the claimants may not have approached the tribunal for release for various reasons and such delay resulted in loss of interest to the claimants.

According to an RTI response from Insurance Regulatory Development Authority of India, towards the end of 2022- 23 there were 10,46,163 claim cases pending throughout the country before the Tribunals. The number of cases increased from 9,09,166 towards the end of 2019-20. Meaning thereby that there was an increase of 1,36,997 cases in a span of three years. This is besides the fact that large number of cases are regularly filed and decided, the court noted.  
 

 [Read Judgment]



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