Daijiworld Media Network - New Delhi
New Delhi, Mar 19: In a landmark ruling aimed at expediting compensation disbursement and easing procedural delays, the Supreme Court has directed that all monetary awards in motor accident cases be directly transferred to claimants’ bank accounts. The directive is expected to streamline the claims process, reducing financial hardships for victims and alleviating the burden on insurance companies.
The Bench of Justice J.K. Maheshwari and Justice Rajesh Bindal emphasized that while the order pertains specifically to motor accident claims, courts and tribunals handling other monetary awards could also adopt this approach to ensure timely and transparent compensation. “Though issued in the context of motor accident cases, this directive can serve as a model for any case requiring financial disbursement, provided compliance is ensured,” the court stated.
Highlighting the urgency of uniform implementation, the Supreme Court instructed the Registry to circulate the order to all High Courts for further dissemination to subordinate tribunals and courts. The National Judicial Academy and State Judicial Academies have also been tasked with ensuring compliance.
Justice Bindal, citing official data from the Ministry of Road Transport and Highways, underscored the severity of the issue, revealing that between 2018 and 2022, India recorded over 22 lakh road accidents, leading to 7.7 lakh fatalities and 21 lakh injuries. With accident claim filings and case disposals nearly at par, the backlog remains a significant concern.
According to an RTI response from the Insurance Regulatory and Development Authority of India (IRDAI), over 10.46 lakh motor accident compensation claims were pending before various tribunals at the end of 2022-23, marking an increase of 1.37 lakh cases in just three years. The court noted that the traditional process of insurance companies depositing compensation with tribunals, followed by claimants filing withdrawal applications, typically resulted in delays of 15-20 days. This not only led to additional expenses but also caused financial strain due to the loss of interest on awarded amounts. Many claimants remained unaware of deposited funds, further prolonging the process.
Justice Bindal emphasized how technological advancements have revolutionized banking, enabling instant transactions via artificial intelligence and digital payment systems. India's rapid adoption of digital payments, with UPI transactions surging from 92 crore in 2017-18 to 13,116 crore in 2023-24, reflects a shift toward efficiency. Government schemes now transfer funds directly to beneficiaries, with approximately 80% of adults having access to bank accounts.
Recognizing the applicability of direct transfers beyond accident claims, the court pointed out that similar challenges exist in maintenance payments under Section 125 of the CrPC and the Domestic Violence Act, 2005. The withdrawal process for court-deposited amounts remains time-consuming and costly.
To facilitate direct transfers, the court suggested that tribunals require claimants to provide bank account details at the pleading or evidence stage. In cases where claimants do not have an account, they must open one before the final award. Accounts should be in the claimant’s name only, or for minors, operated through legal guardians. In specific cases, tribunals may direct a portion of the compensation to be placed in fixed deposits, with banks ensuring compliance and reporting to the tribunal.
The Supreme Court’s directive is expected to bring much-needed efficiency to compensation disbursement, reducing delays, minimizing bureaucratic hurdles, and ensuring that victims receive their due relief without unnecessary financial and procedural burdens.