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Synopsis

The Supreme Court has expressed concern regarding the mode of payment of compensation in motor accident cases, stating that the process can be streamlined by directly transferring the amount into the bank accounts of claimants so that insurance companies and claimants are saved from the hassles of court processes.

A bench of Justices J K Maheshwari and Rajesh Bindal noted that the general practice followed by insurance companies, where the compensation is not disputed, is to deposit the same before the tribunal. 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.

In its judgment, the court directed the payment of enhanced compensation of Rs 36.84 lakh to Parminder Singh, a state-level volleyball player who was pursuing studies to become a veterinary doctor, as he became 100 percent disabled and suffered from quadriplegia due to injuries sustained in an accident caused by a car driven in a rash and negligent manner in 2014.

"This is an era of technology, where now artificial intelligence is taking over. For conducting any bank transactions earlier we had to visit the bank branch in person and that too within the banking hours. Now all transactions can be affected 24x7, either sitting in the office or at home or even on mobile, while on the move. Practically the bank is in your mobile. Even cheques deposited in the banks for local clearance used to take couple of days. The outstation cheques took weeks together. Now, debits and credits in the accounts are instant with the help of technology," the bench said.

The bench also pointed out that the country has made remarkable progress in digital payment transactions. As per the website of the Ministry of Finance, Government of India, starting in F.Y. 2013-14 from 220 crores, transactions have increased to 18,592 crores in F.Y. 2023-24. The value of transactions has grown from Rs 952 lakh crores to Rs 3,658 lakh crores. Unified Payment Interface (UPI) is an indigenously developed digital payment system, which is easy to operate on a mobile.

The court pointed out that UPI transactions have grown from 92 crores in F.Y. 2017-18 to 13,116 crores in F.Y. 2023-24 at a CAGR of 129%. UPI transactions are likely to cross 20,000 crores in F.Y. 2024-25. It is a matter of common knowledge that under various government schemes, funds are directly transferred to beneficiaries' bank accounts. As per a rough estimate, about 80% of the adult population in the country has bank accounts.

Many matters come to the court where amounts are required to be paid to litigants. The normal practice used to be, and still prevalent, is to deposit the amount in court, which is then withdrawn by the litigant. This process is not only followed in cases involving large amounts but is also prevalent even in cases of small maintenance payments to wives, as fixed by the court either under Section 125 CrPC or Section 12 of the Domestic Violence Act, 2005, or any other statute. The withdrawal of the amount deposited in the court by any litigant certainly requires time and incurs expenses, the bench said.

The bench pointed out that in Haryana State Industrial Development Corporation Vs Pran Sukh and Others (2010), while considering a matter pertaining to the payment of enhanced compensation to landowners, the top court directed the transfer of the amount into their bank accounts.

Regarding compensation under the Motor Vehicles Act, the bench said that tribunals, either at the initial stage of pleadings or when evidence is led, may require claimant(s) to furnish their bank account details to the tribunal along with the requisite proof. This would enable the tribunal, at the time of passing the award, to direct that the compensation amount be transferred into the claimant's account, or if there are multiple claimants, into their respective accounts.

If there is no bank account, claimants should be required to open one, either individually or jointly with family members only. It should also be mandated that if there is any change in the bank account details of the claimant(s) during the pendency of the claim petition, they must update the same before the tribunal. This should be ensured before the final award is passed. It must also be ensured that the bank account is in the name of the claimant(s), and if a minor, through their guardian(s). In no case should it be a joint account with any person who is not a family member. The transfer of the amount into the furnished bank account, as mentioned in the award, shall be treated as satisfaction of the award. Compliance with this should be intimated to the tribunal, the bench said.

The court noted that in some cases where compensation is awarded to minor claimant(s) or otherwise, the tribunal directs that a certain percentage of the amount be kept in a fixed deposit. Such a direction can always be issued in the award itself for compliance by the concerned bank. When the amount is transferred by the insurance company into the claimant’s account, it shall be the bank's responsibility to ensure that the specified portion is kept in a fixed deposit. Compliance must be reported by the bank(s) to the Tribunal.

It is also a fact that a substantial amount of compensation in motor accident cases remains deposited in the tribunal, as claimants may not have approached the tribunal for its release for various reasons. Any delay by the tribunal in releasing compensation after the amount has been deposited, as directed, results in a loss of interest for the claimant(s).

"In case this process is followed, the gap would be bridged. 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(s), will be achieved and compensation can be disbursed without any delay," the bench said.

The court also pointed out that no uniform practice is followed regarding the deposit of amounts before the tribunal—whether the amount remains in the government treasury or is transferred to a bank and kept in an interest-bearing fixed deposit—so that claimants do not suffer a loss of interest due to any delay in disbursement after deposit in the tribunal.

As per a response to an RTI inquiry from the Insurance Regulatory Development Authority of India, towards the end of 2022-23, there were 10,46,163 claim cases pending before tribunals across the country. The number of cases had increased from 9,09,166 at the end of 2019-20, indicating an increase of 1,36,997 cases over three years. This is despite the fact that a large number of cases are regularly filed and decided, the bench said.

The court noted that directions are being issued for bank transfers of compensation in motor accident cases, but courts and tribunals can always follow this process in any matter where one party is required to pay an amount to another, ensuring proper compliance.

The bench directed its Registry to send a copy of the present order to the Registrars General of all high courts for placement before the Chief Justice of the respective high court for further circulation and compliance by the concerned tribunals and courts, as well as to the Directors of the National Judicial Academy and the State Judicial Academies.

Case Title: Parminder Singh Vs Honey Goyal And others