SC mandates direct transfer of motor accident compensation to claimants’ accounts
In a significant ruling aimed at eliminating procedural delays and easing burden on accident victims, the Supreme Court has mandated that compensation in motor accident cases be directly transferred to claimants’ bank accounts. The directive, the court noted, could serve as a model for all cases involving monetary awards.
The Bench of Justice JK Maheshwari and Justice Rajesh Bindal asserted: “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."
The judgment aims to replace the often cumbersome disbursement process with a streamlined, transparent mechanism. For ensuring uniform implementation, the Supreme Court directed its Registry to circulate the order to all high courts for compliance by tribunals and courts.
Speaking for the Bench, Justice Bindal cited official data revealing that over 22 lakh road accidents occurred in India between 2018 and 2022, leading to 7.7 lakh deaths and nearly 21 lakh injuries. With a proportionate number of claims before motor accident tribunals, the pendency remains high.
An RTI response from the Insurance Regulatory Development Authority of India indicated over 10.46 lakh motor accident compensation claims were pending at the end of 2022-23, recording a rise by 1.37 lakh cases in three years.
The traditional system required insurance companies to deposit compensation with tribunals, forcing claimants to file withdrawal applications — resulting in 15-20 day delays, additional expenses and loss of interest. Some claimants remained unaware of deposited funds, prolonging their ordeal.
Justice Bindal cited government figures showing a surge in digital transactions from 220 crore in 2013-14 to 18,592 crore in 2023-24. UPI transactions alone grew from 92 crore in 2017-18 to 13,116 crore in 2023-24. With nearly 80 per cent of adults holding bank accounts, now government schemes are ensured via direct fund transfers.
Justice Bindal added the courts frequently deal with cases requiring payments, including maintenance under the Domestic Violence Act, where withdrawal of court-deposited amounts remained costly and time-consuming.
To facilitate implementation of its ruling, the tribunals might require claimants to provide bank account details at the pleading or evidence stage. If account did not exist, claimants must open one and update details before the final award. Accounts must be in the claimant’s name or, for minors, operated through guardians — never jointly with non-family members.
For minor claimants or special cases, tribunals may direct a portion of compensation to be placed in fixed deposits, with banks ensuring compliance and reporting it to the tribunal.
