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The Madhya Pradesh High Court has clarified that claimants receiving motor accident compensation are not required to open a bank account with Union Bank of India for disbursement of compensation and that the amount can be transferred to an account in any nationalised bank. [2026 LiveLaw (MP) 438]

The bench of Justice Vinay Saraf observed:

"it appears that there is no such direction that for disbursement of the awarded amount or creation of the Fixed Term Deposit, the account is required to be opened in Union Bank of India. The claimant may open the account in any branch of any Nationalized Bank and upon submission of the details by the claimant of his bank account maintained with the Nationalized Bank, the Tribunals are under obligation to transfer the amount directly to the account of the claimant".

A petition was filed challenging the order of July 31, 2026, whereby the Motor Accident Claims Tribunal recalled its earlier order to the extent that the amount required to be invested in FDR could be deposited only in a bank account maintained with Union Bank of India. 

The Tribunal subsequently passed another order on August 5, 20, explaining that the Supreme Court, in Suo Moto (WP 7/2024), had issued directions concerning the disbursement of compensation amounts. It also referred to directions issued by the Chief Justice of the MP High Court and communication from the Registry regarding the online dashboard for disbursement of compensation. 

On this basis, the Tribunal concluded that the compensation amount could be transferred only to a claimant's bank account maintained by Union Bank of India. 

Challenging this requirement, it was argued that neither the Supreme Court nor the Chief Justice of the MP High Court had issued any directions mandating claimants to open accounts exclusively with Union Bank, and that compensation could be transferred directly to claimants' accounts maintained with any branch of any nationalised bank. 

Acknowledging the issue, the bench directed the Principal Registrar to depute an officer or counsel from Registry to explain the procedure prescribed by the High Court. 

During the hearing, the Registrars appeared before the court and clarified that neither the Chief Justice nor the Registry had directed MACTs to insist upon claimants opening accounts with Union Bank. 

It was clarified that the directions issued in compliance with the Supreme Court's order were to transfer compensation amounts directly into bank accounts of claimants maintained with any nationalised bank. 

The court also considered the compliance report of October 27, 2026, which clarified that there are no administrative instructions mandating the creation of FDRs in any particular bank. The court also examined the Supreme Court directions in the Suo Motu Petition. 

The court noted that the Supreme Court had directed that, ordinarily, compensation amounts should be transferred directly to the bank accounts of persons entitled to receive them. It had further directed that whenever a MACT orders the deposit of compensation with the tribunal, the amount should be invested in a fixed deposit with any nationalised bank. 

Examining the subsequent practice procedure issued by the Registrar General of the High Court, the bench noted that the directions primarily concerned the integration of bank accounts of the Tribunal with the online dashboard and the secure processing of payment transactions. 

Thus, the directions did not require claimants to maintain their bank accounts exclusively with Union Bank. 

Thus, the bench disposed of the petition with the following directions 

(i) The compensation amount will be directly transferred to the bank account of the claimant maintained with any branch of any nationalised bank;

(ii) If the amount is not being disbursed through Dashboard, the FDRs can be created in any branch of any nationalised bank;

(iii) If the amount is being disbursed through Dashboard, the compensation amount can be transferred to bank account of claimant directly and the account of the claimant may be maintained with any branch of any nationalised bank;

(iv) In case of investing the compensation amount in FDRs through Dashboard, as on today only Union Bank of India is integrated and therefore the FDRs can be opened only in any branch of Union Bank of India, however, there will be no requirement of opening of any account in the Union Bank of India for the purpose of FDR by the claimant;

(v) High Court is in process of integrating some other nationalised banks also and after integration, the FDRs would be opened with those banks also.

Accordingly, the Court set aside the impugned orders of the MACT and directed the MACT to reconsider the applications in view of the above-mentioned directions. 

For Petitioners: Advocate Akhil Godha

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