Top court calls for direct transfer of aid to motor accident victims
The ruling, aimed at streamlining the disbursement process and reducing delays, was issued by a bench comprising justices JK Maheshwari and Rajesh Bindal on Tuesday.
The Supreme Court has directed that compensation awarded in motor accident claims should be directly transferred to the bank accounts of victims rather than being deposited with the Motor Accident Claims Tribunals first “so that insurance companies and the claimants are saved from hassles of the court processes”.
The ruling, aimed at streamlining the disbursement process and reducing delays, was issued by a bench comprising justices JK Maheshwari and Rajesh Bindal on Tuesday.
“Withdrawal of the amount deposited in the court by any litigant certainly needs time and also expenses,” the bench observed, emphasizing the need to simplify the procedure. “Instead of following that process, a direction can always be issued to transfer the amount into the bank account(s) of the claimant(s) with intimation to the tribunal,” the court stated in its judgment.
By eliminating the need for claimants to navigate bureaucratic and procedural hurdles for withdrawals, the judgment aims to ensure quicker access to compensation. With over a million motor accident cases pending across the country, this move is expected to accelerate the resolution of claims and bring relief to countless accident victims and their families.
The judgment came while the court was hearing a petition seeking enhanced compensation in a motor accident claim. The bench increased the damages from ₹15.25 lakh to ₹36.84 lakh and directed that the enhanced compensation be directly credited to the claimant’s bank account.
The court highlighted that under the existing system, insurance companies typically deposit compensation with tribunals, requiring claimants to file withdrawal applications. The entire process takes several days, and in a scores of cases, compensation keeps lying with the tribunals where claimants are unaware of the judicial orders.
The judgment also pointed out the lack of a uniform practice regarding the deposit of compensation funds. “The process of aforesaid disbursement by the tribunal has its own risks of error or omission, especially considering the huge amount involved therein,” the court noted.
The Supreme Court referred to official data to underline the urgency of reforms in the compensation system. According to the Ministry of Road Transport and Highways, motor accidents continue to cause significant fatalities and injuries. Between 2018 and 2022, the country witnessed over 2.2 million accidents, leading to approximately 7.7 lakh fatalities and 2.1 million injuries.
Furthermore, an RTI response from the Insurance Regulatory Development Authority of India (IRDAI) revealed that as of 2022-23, there were 10,46,163 motor accident claim cases pending before tribunals nationwide -- a significant increase from 9,09,166 in 2019-20.
“The number of cases increased by 1,36,997 in just three years, besides the large number of cases regularly filed and decided,” noted the court, underscoring the pressing need for expeditious disbursement mechanisms.
Drawing attention to India’s technological advancements, the top court emphasised that the direct transfer of compensation aligns with the country’s progress in digital banking. “This is an era of technology, where now artificial intelligence is taking over…Our country has done wonders in digital payment transactions,” stated the judgment, citing the exponential growth of digital payment systems such as the Unified Payments Interface (UPI).
The court also referenced previous rulings mandating direct bank transfers, including Haryana State Industrial Development Corporation Vs Pran Sukh (2010) and a Punjab and Haryana high court judgment in 2011 that required land acquisition compensation to be directly credited to landowners’ bank accounts.
Issuing the direction for direct transfer of motor accident damages in the bank account of the claimant, the bench noted that 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 claimant, will be achieved and compensation can be disbursed without any delay.
“We may add that directions are being issued for bank transfer of the amount of compensation in motor accident cases, but the courts/tribunals can always follow this process in any matter, whenever any amount is to be paid by one party to another, however, ensuring proper compliance,” added the bench.
To ensure compliance, the court directed that a copy of its judgment be circulated to all high courts and relevant judicial academies. “The Registrars General of all High Courts shall place this judgment before the Chief Justices for further circulation and compliance by concerned tribunals/courts,” the bench ordered.
