Madras High Court Issues Directions For Uniform Implementation Of Direct Bank Transfer Of Motor Accident Compensation To Claimants’ Accounts

The Court was hearing an appeal filed by Oriental Insurance Company challenging the quantum of compensation awarded by the Motor Accident Claims Tribunal in a fatal accident claim.

A Bench of Justice N. Sathish Kumar and Justice M. Jothiraman observed that “…a mechanism for disbursement of compensation in motor accident claims requires uniform and effective implementation so that the object of awarding compensation under the Motor Vehicles Act, 1988, which is a welfare legislation, is fully achieved.”

Advocate Vijayaraghavan N. appeared for the appellant, while Advocate S.P. Yuvaraj appeared for the claimants.

Background

The claim arose from the death of a man who was hit by a hydraulic mobile crane. The Tribunal had awarded compensation of ₹39,89,000.

The insurer confined its appeal to the deduction applied towards personal and living expenses, contending that the deceased was an unmarried bachelor and therefore 50% deduction ought to have been applied in terms of Sarla Verma v. Delhi Transport Corporation (2009).

The claimants did not oppose this submission. The High Court accordingly modified the award and reduced the compensation to ₹27,29,000, directing the insurer to deposit the modified amount within four weeks.

During the hearing, the insurer’s counsel also invited the Court’s attention to previous judgments on direct bank transfer of compensation, court fee and advocate’s fee in motor accident claims.

Court’s Observations

The Court referred to Oriental Insurance Co. Ltd. v. Rajesh (2016), where the Madras High Court had introduced NEFT/RTGS payment in motor accident claim jurisdiction to ensure that compensation reaches victims without delay or diversion.

The Court noted that the earlier decision was intended to address delays in cheque-based disbursement, third-party interference and hardships faced by rural and illiterate claimants.

It observed: “This would ensure timely payment, proper compliance with tax deduction at source under Section 194A of the Income Tax Act, prevent misuse of crossed cheques, eliminate unnecessary intermediaries, and reduce procedural delays.”

The Court also referred to Parminder Singh v. Honey Goyal (2025), where the Supreme Court indicated that where compensation is not disputed, the amount may be directly transferred to the claimants’ bank accounts with intimation to the Tribunal.

The High Court directed Tribunals to obtain bank account details from claimants at the pleading or evidence stage and, in any event, before passing the award.

The Court directed: “The Tribunal shall, at the stage of pleadings or at the stage of leading evidence, and in any event before passing the award, obtain from the claimant(s) their bank account particulars together with requisite proof (including the attested first page of the pass-book bearing photograph), and shall incorporate the verified account particulars in the award itself, along with the Tribunal's own e-mail ID for compliance communication.”

The Court further directed that the account should be pre-existing and located within the claimant’s ordinary place of residence. If no such account exists, a fresh account must be opened only at a bank branch within the claimant’s place of residence, and not at the convenience or address of counsel.

The Court directed that compensation must be disbursed to the individual accounts of claimants in the shares determined by the award. In case of a minor, the account may be operated through a guardian.

The Court stated: “The bank account shall stand in the name of the claimant(s) individually, or, in case of a minor, through the guardian; and in no case shall it be a joint account with any person who is not a family member.”

For minor claimants, the Court directed Tribunals to follow safeguards indicated by the Supreme Court, including retention of the minor’s share in a fixed deposit or Tribunal-directed investment until the majority, unless otherwise directed.

The High Court also directed that before confirming DBT of net compensation, Tribunals must verify whether any deficit or balance court fee has been accounted for.

The Court directed: “Before permitting/confirming Direct Bank Transfer of the net compensation, the Tribunal shall first verify and confirm that any deficit or balance court fee payable on the compensation as awarded/enhanced has been accounted for; no DBT [Direct Bank Transfer] of the entire awarded sum shall be certified as compliance unless this verification is completed.”

To avoid delaying payment to claimants, the Court said the court fee, advocate’s fee and other quantified costs should be deposited separately into the Tribunal’s bank account, while net compensation alone should be transferred to the claimant’s account.

The Court directed insurers and other liable respondents to send UTR numbers and deposit particulars to the Tribunal by email within 48 hours, followed by physical proof of deposit.

It further directed claimants to update any change in bank account particulars during the pendency of the claim petition.

The Court directed the Registrar General of the Madras High Court, after obtaining administrative orders from the Chief Justice, to issue a circular to all Motor Accident Claims Tribunals in Tamil Nadu and Puducherry for strict compliance.

The Court stated that the circular must ensure “the protection and timely disbursement of just compensation to claimants, in the interest of justice, equity and good conscience.”

Cause Title: The Manager, Oriental Insurance Co. Ltd. v. D Salsa & Others

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