Supreme Court Mandates Direct Bank Transfers for Accident Claims to Cut Red Tape
Last Updated on March 18, 2025 by Amit Patra
In its attempt to streamline compensation for victims of accidents, the Supreme Court has instructed motor accident claim sums be credited into claimants’ bank accounts directly instead of sending them through tribunals.
The Justice JK Maheshwari and Justice Rajesh Bindal bench noted that the prevailing practice of insurance companies crediting undisputed compensation into tribunals and claimants having to make separate applications for withdrawal only leads to delays in what is already a traumatic experience for the victims.
“Rather than adopting that procedure, a direction can always be given to debit the amount into the bank account(s) of the claimant(s) with notice to the Tribunal,” held the Court in its order of March 18.
The Court provided a full framework in which claimants are required to provide bank details in the initial pleading phase. Procedural reform allows tribunals to require immediate transfers on award-making. The judgment explicitly requires claimants to keep bank information current during proceedings and the bank accounts in their name or, if they are minors, through guardians appointed by courts.
The bench pointed out some shortcomings of the system presently: the procedure is slow, no interest on deposits in tribunals, and processing of amounts in large number involves threats of omission and fault. The Court observed that payment directly would be “satisfaction of the award,” banks needing to issue compliance confirmation to tribunals.
Where fixed deposits or the cases of children were involved, the Court asked banks to apply tribunal orders and submit periodic reports of progress.
Having acknowledged the extensive extent of this procedure reform, the Supreme Court asked its Registry to send this order to all the High Courts as well as National and State Judicial Academies for implementation across the country.
The observation of the Court was while ruling on an appeal for enhanced compensation to a victim who was 100% disabled in a road accident in 2006 at the age of 21.
This change is a big move towards compensating road accident victims at an early and early stage, removing bureaucracy from the process, which generally piled agony over victims already battered by trauma and loss.
