SC Directs Direct Bank Transfer of Motor Accident Compensation: Streamlining Legal Procedure

Parminder Singh, the appellant, approached the Supreme Court of India seeking an enhancement of compensation awarded to him by the High Court of Punjab and Haryana at Chandigarh. The appellant had suffered grievous injuries, resulting in 100% permanent disability due to quadriplegia, in a motor vehicle accident in 2014 when he was 21 years old. He was pursuing studies to become a veterinary doctor and was also a state-level volleyball player. The Motor Accident Claims Tribunal (Tribunal) had initially awarded him ₹5,16,000/-, which was enhanced by the High Court to ₹15,25,600/-. Dissatisfied with the High Court's assessment, particularly regarding the lower assessment of income and failure to grant future prospects, the appellant filed the present appeal before the Supreme Court and SC allowed the appeal and further enhanced the compensation to ₹36,84,000/-. Considering his qualifications as a sportsman and his pursuit of veterinary studies the Apex Court found that the High Court had taken the appellant's income on the lower side. The Supreme Court assessed his income at ₹7,500/- per month, which was higher than the minimum wage for an unskilled worker at the time of the accident.

While enhancing the compensation, the Apex Court made observation on the "grant of furture prospects", "Loss of Income", "special diet", "minimum income", "permanent disability", "need for physiotherapy" etc., the Apex Court explicitly made observation on the compensation disbursement and and the Supreme Court issued the directions for "Streamlining Compensation Disbursement" in motor vehicle accident compensation and claim.

Supreme Court recognized that the traditional practice of depositing amounts in court and subsequent withdrawal is time-consuming and can cause inconvenience and loss. Highlighting the advancements in digital payment systems like UPI and the increasing number of people with bank accounts in India, the Court emphasized that these directions for direct bank transfer are not limited to motor accident cases but can be followed by Courts/Tribunals in any matter where payment is to be made from one party to another, while ensuring proper compliance.

The Apex Court drawing inspiration from previous cases related to land acquisition compensation where direct bank transfer was mandated, the Supreme Court issued the following directions for motor accident cases:

• Where the compensation is not disputed by the insurance companies, instead of depositing the amount before the Tribunal, a direction can be issued to transfer the amount directly into the bank account(s) of the claimant(s) with intimation to the Tribunal.

• To facilitate this, the Tribunals are directed to require the claimant(s) to furnish their bank account particulars along with requisite proof at an early stage, either during the pleadings or while leading evidence.

• At the time of passing the award, the Tribunal should direct that the compensation amount be transferred to the claimant's account(s) (or respective accounts if there are multiple claimants).

• If a claimant does not have a bank account, they should be required to open one, either individually or jointly with family members only.

•Claimants are mandated to update any changes in their bank account particulars with the Tribunal during the pendency of the claim petition. This should be ensured before the final award is passed.

• The bank account should be in the name of the claimant(s), or if a minor, through their guardian(s), and should not be a joint account with a non-family member.

• The transfer of the amount into the claimant's bank account, with the particulars furnished by them and mentioned in the award, will be treated as satisfaction of the award. Intimation of compliance must be provided to the Tribunal.

• In cases where the Tribunal directs a portion of the compensation to be kept in a fixed deposit (e.g., for minor claimants), this direction should be part of the award, and the bank will be responsible for ensuring compliance and reporting it to the Tribunal.

The ultimate goal of this procedural reform is to ensure the timely and efficient disbursement of compensation, achieving the real object of the beneficial legislation, which is to compensate for loss or injuries without unnecessary delay. The Court directed the Registry to circulate the order to all High Courts and judicial academies for implementation.

Coram: Justice J. K Maheswari and Justice Rajesh Bindal
Between: Parminder Singh Vs Honey Goyal And Others 2025 INSC 361
Date of Judgment: 18-03-2025