MP High Court: Compensation Can Go To Any Nationalised Bank Account, Not Just Union Bank Of India

The Madhya Pradesh High Court has ruled that accident victims awarded compensation cannot be forced to open a Union Bank of India account merely to receive their money or to have it invested in a fixed deposit.

Justice Vinay Saraf, sitting at Indore, set aside two orders of the Motor Accident Claims Tribunal, Neemuch, which had insisted that any amount to be invested in a fixed deposit receipt (FDR) could go only into a claimant’s account with Union Bank of India.

The revision was filed by Smt. Shahin and others, represented by Advocate Akhil Godha. He argued that neither the Supreme Court, nor the Chief Justice, nor the Registry of the High Court had issued any such instruction, and that compensation can be transferred to a claimant’s account in any branch of any nationalised bank.

The dispute arose in MACC No. 141/2024. On 31 July 2026, the Tribunal recalled its earlier order of 3 July 2026 to the extent that the FDR amount could be invested only through a Union Bank of India account. On 5 August 2026, it explained that the High Court had built an integrated online system for disbursement, and that a Chief Justice’s direction dated 25 September 2025 and a Registry letter dated 8 October 2025 required FDRs to be created only in that bank.

Considering the importance of the issue, the High Court asked the Principal Registrar to send an officer to explain the procedure. Registrar (Judicial) Anil Kumar and Registrar (I.T.) Surya Prakash Sharma joined the hearing through video conferencing. They told the Court that neither the Chief Justice nor the Registry had ever directed tribunals to insist on a Union Bank of India account. The direction, they said, was issued to comply with a Supreme Court order to transfer compensation directly into claimants’ accounts held with any nationalised bank, in any branch.

The Court also noted a compliance report dated 27 October 2026, which stated that “there is no administrative instructions, which mandate to create Fixed Deposit Receipt in any particular or specific bank.”

The bench examined the Supreme Court’s directions of 22 April 2025 in Suo Motu Writ Petition (C) No. 7/2024, which require tribunals to transfer money directly to claimants’ accounts and invest deposited sums in fixed deposits “with any nationalised bank.” It also reviewed the Registrar General’s practice procedure for the dashboard, which asked tribunals, not claimants, to hold accounts with Union Bank of India or State Bank of India.

Justice Saraf observed 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.” A claimant, the Court said, may open an account in any branch of any nationalised bank, and tribunals are then “under obligation to transfer the amount directly to the account of the claimant.”

The Court acknowledged one practical limitation. As things stand, only Union Bank of India is integrated with the dashboard for preparing FDRs, so FDRs created through it can be opened only with that bank. Integration of other nationalised banks is under way, and they will offer the service.

Disposing of the petition, the High Court directed that compensation will be transferred directly to the claimant’s account in any branch of any nationalised bank. If money is not disbursed through the dashboard, FDRs can be created in any branch of any nationalised bank. Where FDRs are made through the dashboard, they can for now be opened only in a Union Bank of India branch, but the claimant need not open any account there for this purpose. Once other banks are integrated, FDRs will be opened with them as well.

The impugned orders of 31 July 2026 and 5 August 2026 were set aside, and the Member of the Tribunal at Neemuch was directed to reconsider the claimant’s application in light of these directions.

Case Title: Smt. Shahin and Others vs. The New India Assurance Co. Ltd through Branch Manager and Others

Order Date: October 29, 2026

Bench: Justice Vinay Saraf