Supreme Court Issues Directions To Ensure Direct Bank Transfer Of Compensation To Road Accident Victims & Workmen

The Supreme Court has passed a set of directions to ensure that the compensation paid to claimants under the Motor Vehicles Act, 1988 or the Workmen's Compensation Act, 1923 are directly credited to their bank accounts.

The Court passed these directions after noticing that huge amounts of compensation passed under these laws are lying unclaimed before Courts. Based on a letter received from BB Pathak, a retired District Judge from Gujarat, the Court had initiated a suo motu case last year title "In Re : Compensation Amounts Deposited With Motor Accident Claims Tribunals & Labour Courts."

The Court noted that a whopping sum of over Rs 282 crores was lying unclaimed in the MACTs and about Rs 6.61 crores in the Labour Courts in Gujarat. The figure was approximately Rs 239 crores in the MACTS and Rs 92 crores in the Labour Courts in Uttar Pradesh. Likewise, the amounts unclaimed in the MACTS in West Bengal were Rs 2.5 crores, Rs 4.59 crores in Maharashtra and Rs 3.61 Crores in Goa.

A bench comprising Justice Abhay S Oka and Justice Ujjal Bhuyan observed that the matter is of a "serious concern."

"The amounts represent the compensation granted to claimants in the claims filed under the 1988 and 1923 Acts. Though the claimants are held entitled to these amounts, they have not withdrawn the same. The fact that so many successful claimants have been deprived of compensation is very disturbing. It is necessary to find a solution," the Court observed.

Directions

The Court noted that the States have not framed rules under Section 176 of the MV Act regarding the filing of applications before the Tribunals. Till such rules are framed, the Court directed the High Courts to frame practice directions incorporating the following conditions : 

a) While filing claim petitions under the 1988 Act, following particulars shall be incorporated:

(i) Names and addresses (local and permanent) of the injured persons or the owners of the damaged property, as the case may be, their Aadhar and PAN details and email-id, if any; and

(ii) Names and addresses (local and permanent) of all the legal representatives of the deceased victim of the accident who are claiming compensation, their Aadhar and PAN details and email-id, if any;

(b) If the aforesaid details are not furnished, the registration of the application should not be refused on that ground, but MAC Tribunals at the time of issuing notice may direct the applicant(s) to furnish the information and make the issue of the notice subject to making compliance;

(c) While passing an interim or final order of grant of compensation, the MAC Tribunals shall call upon the person or persons held entitled to receive compensation, to produce their bank account details along with either a certificate of the banker giving all details of the bank account of the person or persons entitled to receive the compensation including IFS Code, or a copy of a cancelled cheque of the bank account. The Tribunal shall call upon the claimants to produce the documents within a specified reasonable time;

(d) A further direction shall be issued to the persons entitled to receive compensation to keep on updating information regarding the bank accounts, email id, in case there is any change;

(e) In the event a consent award or consent order is made, the MAC Tribunals may direct the deposit of the compensation amount ordered to be released to the claimants directly to the bank accounts of the persons held entitled to receive compensation. However, the consent terms must contain all relevant account details of the persons entitled to compensation in accordance with clause (c) above. The account details can also be incorporated in the order passed for the disbursement of the amount on the basis of a compromise between the parties. In case of compromise before the Lok Adalats, the MAC Tribunal, on the basis of the settlement, shall pass a consequential order in the above terms;

(f) It shall be the duty of the learned Judges presiding over the MAC Tribunal to verify from the certificate issued by the banker and ascertain whether the account is of the persons held entitled to receive compensation;

(g) The MAC Tribunals, while passing orders of withdrawal/disbursement, shall, in the ordinary course, pass an order of transfer of the requisite amounts directly to the bank account of the person/s entitled to receive compensation as per the account details furnished. If there is a long gap between the date of furnishing the account details and the date of filing application for withdrawal of the amount, the Tribunal will be well advised to get fresh account details of the claimants;

(h) Whenever the MAC Tribunal passes an order of deposit of compensation amount with the Tribunal, there shall be a direction issued to invest the amounts to be deposited in fixed deposit with any nationalised bank and the fixed deposit shall be with the standing instructions to the bank to renew the same after periodical intervals till further orders are passed by the Tribunal;

(i) Similarly, practice directions/rules be framed in respect of adjudication made under the 1923 Act. The above directions issued while passing awards in claims under the 1988 Act shall be applied in case of the claims for compensation under the 1923 Act;

(j) The Central Project Co-ordinator of e-court project or Registrar (Computer/IT) of the High Courts, as the case may be, with the help of the State Government, shall create a dashboard on which the information regarding the amounts lying deposited in connection with the compensation granted under 1988 or 1923 Acts shall be regularly uploaded with all details. It will help all concerned to implement the directions issued under this order;

(k) All the High Courts shall issue administrative directions to the MAC Tribunals and Commissioners under the 1923 Act to initiate a massive drive to ascertain the whereabouts of the persons who have been held to be entitled to receive compensation, but have not taken the same. This shall be done by taking the assistance of the District and Taluka Legal Services Authorities and para-legal volunteers;

(l) The State Governments shall provide assistance to the Legal Services Authorities of the local police officers/revenue officers of the district and taluka to trace the claimants who are held entitled to receive compensation;

(m) The State Legal Services Authorities shall monitor compliance with the directions issued in terms of clauses (k) and (l) above and report compliance within a period of four months from today.

The Court clarified that these directions will bind the MAC Tribunals and the Commissioners under the 1923 Act till rule-making power is properly exercised by the Government. If the Rules framed by the State Government or practice directions already issued are consistent with the above directions, the Rules or the practice directions, as the case may be, shall be followed notwithstanding this order.

Senior Advocate Meenakshi Arora assisted the Court as an amicus curiae in the matter. AOR Vishakha appeared for the High Court of Gujarat. The Court directed the Registrar Generals of the High Courts to file compliance reports by July 30, 2025. The Registry was directed to forward the sofy copies of reports to AOR Vishakha.

Recently, another bench of the Supreme Court had advised the MACTs to directly transfer the compensation amounts to the claimants' bank accounts.

Case : In Re Compensation Amounts Deposited with Motor Accident Claims Tribunals and Labour Courts

Citation : 2025 LiveLaw (SC) 455

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