Direct transfer of amounts to the Bank Accounts of litigants in all types of cases such as Motor Accident Claim Cases, Land Acuisition Cases, MCs, DVCs etc.,- Directions of Hon'ble Apex Court to prevent middlemen exploitation and delay in disbursement

Supreme Court of India

Parminder Singh vs Honey Goyal on 18 March, 2025

Author: Rajesh Bindal

Bench: Rajesh Bindal, J.K. Maheshwari

2025 INSC 361 REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO………………….OF 2025
(Arising out of S.L.P. (C) No. 4484 OF 2020)

PARMINDER SINGH … Appellant(s)

VERSUS

HONEY GOYAL AND OTHERS … Respondent(s)

JUDGMENT

Paras 14.3 onwards of the Judgment 

14.3 It is a matter of common knowledge that large number of motor accident cases are settled in Lok Adalats at the stage of Tribunal and some percentage at the appeal level. In the Lok Adalat recently held in the Supreme Court some matters were disposed of. 14.4 As per the practice now followed, the cases in which Insurance Companies are held liable to indemnify the insured and pay compensation to the claimant(s), the amount is calculated and the same is either deposited by these companies in the Tribunal or in some small percentage of cases, transferred in the accounts of the claimants, if directed by the Tribunal in the award. Some of the companies are quick in depositing the compensation whereas some take time. In some cases, there may be intimation to the claimants regarding the deposit of the amount with the Tribunal, whereas in some there is no notice. The fact remains that these are the awards, which are not challenged.

14.5 After the amount of compensation is deposited before the Tribunal, when the claimant(s) come to know about the same, they need to move an application for withdrawal of the same. Certainly, such an application will take some time in processing as the amount, which was deposited in the treasury has to be withdrawn from there. On an average the entire process takes about 15-20 days. Besides this, there may be delay in filing such application due to lack of knowledge of deposit. This process is besides the expenses to be incurred by the claimant(s). It is also a matter of common knowledge that with the increase in income level, the amount of compensation awarded by the Tribunal runs into lakhs of rupees and in some cases crores. The aforesaid process will certainly result in loss of interest to the claimant(s) for those 15-20 days and more in some cases, where the claimants had no knowledge about deposit of amount. The process of aforesaid disbursement by the Tribunal has its own risks of error or omission, especially considering the huge amount involved therein. Still there may be cases where the amount may remain with the Tribunal because of lack of knowledge to the claimant and/ or non- withdrawal thereof.

14.6 Apparently, no uniform practice is followed regarding deposit of the amount before the Tribunal, namely whether the amount will remain in government treasury or will be transferred in bank to be kept in interest bearing fixed deposit so that claimants do not suffer on account of interest for any delay in disbursement after deposit in Tribunal.

15. 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.

15.1 Our country has done wonders in digital payment transactions. As per the website of Ministry of Finance, Government of India, starting in the F.Y. 2013-14 from 220 crores, the transactions have increased to 18,592 crores in the F.Y. 2023-24. The value of the transaction has grown from ₹952 lakh crores to ₹3,658 lakh crores. Unified Payment Interface (UPI) is an indigenous developed digital payment system, which is easy to operate on a mobile. The UPI transactions have grown from 92 crores in the F.Y. 2017-18 to 13,116 crores in the F.Y. 2023-24 at CAGR7 of 129%. The UPI transactions are likely to cross 20,000 crores in the F.Y. 2024-25. It is a matter of common knowledge that now under various schemes of the Government, funds are transferred to the beneficiaries directly in their bank accounts. As per the rough estimate, about 80% of the adult population in the country have bank accounts.

16. A lot of matters come to the Court in which the amount is required to be paid to the litigants. Normal practice used to be, and still prevalent is to deposit the amount in court and thereafter to be withdrawn by the litigant. This process is not only followed in the cases where huge amount is involved but it is also seen prevalent even in the cases of payment of a small amount of maintenance to the wife, when fixed by the court either under Section 125 Cr.P.C. or under Section 12 of the Domestic Violence Act, 2005 or any other statute. Withdrawal of the amount deposited in the court by any litigant certainly needs time and also expenses.

Cumulative Annual Growth Rate 16.1 This Court in the case of Haryana State Industrial Development Corporation v. Pran Sukh and others 8 while considering a matter pertaining to payment of enhanced amount of compensation to the landowners, directed for transfering the same in their bank accounts. Relevant paras thereof are extracted below:

“With a view to ensure that the land owners are not fleeced by the middleman, we deem it proper to issue following further directions:

(i) The Land Acquisition Collector shall depute officers subordinate to him not below the rank of Naib Tehsildar, who shall get in touch with all the land owners and/or their legal representatives and inform them about heir entitlement and right to receive enhanced compensation.

(ii) The concerned officers shall also instruct the land owners and/or their legal representatives to open saving bank account in case they already do not have such account.

(iii) The bank account numbers of the land owners should be given to the land Acquisition Collector within three months.

(iv) The Land Acquisition Collector shall deposit the cheques of compensation in the bank accounts of the land owners.” (2010) 11 SCC 175.

16.2 Referring to the aforesaid judgement of this Court considering the fact that even at the stage of acquisition of land, compensation is required to be paid to the landowners, High Court of Punjab & Haryana in the case of Haryana State Industrial & Infrastructure Development Corporation Ltd. V. Smt. Krishna Rani & another9 directed that even that amount should also be transferred in their bank accounts directly. Normal practice, which is followed in that process is that the compensation amount is deposited in the government treasury and the process of withdrawal is followed by the land owners. The relevant paras of that judgment are extracted below:

“Taking lead from the aforesaid directions issued by Hon'ble the Supreme Court and finding that harassment of the land owners is not only at the stage when enhanced amount of compensation is to be paid, rather, it is even at the stage when the award by the Collector is announced as for the payment of compensation, the land owners are to run after the Patwaris or the officials in the office of the Collector.

xxx xxx xxx …….. The land owners can be asked to furnish the details of their bank accounts in response to the notices issued to them under Section 9 of the Act and in all undisputed claims, the amount should directly be transferred by the Collector in R.F.A. No.1492 of 2008 dated 08.04.2011  the bank accounts of the land owners immediately after announcement of the award. This will not only save harassment of the land owners but also time and energy of the officials of the office of the Collector.

The aforesaid system should not only be restricted to the State of Haryana, rather, the same system should be followed even in the State of Punjab and Union Territory, Chandigarh, where also the Collector at the time of issuance of notices under Section 9 of the Act should ask the land owners to furnish the details of their bank account particulars and the Collector shall be duty-bound to directly transfer the amount of compensation in their bank accounts in all the undisputed cases.”

17. The case in hand pertains to the compensation awarded under the Motor Vehicles Act. The general practice followed by the 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. 17.1 For that purpose, the Tribunals at the initial stage of pleadings or at the stage of leading evidence may require the claimant(s) to furnish their bank account particulars to the Tribunal along with the requisite proof, so that at the stage of passing of the award the Tribunal may direct that the amount of compensation be transferred in the account of the claimant and if there are more than one then in their respective accounts. If there is no bank account, then they should be required to open the bank account either individually or jointly with family members only. It should also be mandated that, in case there is any change in the bank account particulars of the claimant(s) during the pendency of the claim petition they should update the same before the Tribunal. This should be ensured before passing of the final award. It may be ensured that the bank account should be in the name of the claimant(s) and if minor, through guardian(s) and in no case it should be a joint account with any person, who is not a family member. The transfer of the amount in the bank account, particulars of which have been furnished by the claimant(s), as mentioned in the award, shall be treated as satisfaction of the award. Intimation of compliance should be furnished to the Tribunal.

18. In some cases, where the compensation is awarded to minor claimant(s) or otherwise, the Tribunal directs for keeping a certain percentage of the amount in a fixed deposit. Such a direction can always be issued in the award itself to be complied with by the concerned bank. When the amount is transferred by the Insurance Company in the account of the claimant(s), it shall be the responsibility of the bank to ensure that specified portion thereof is kept in the fixed deposit. Compliance is to be reported by the bank(s) to the Tribunal.

19. It is also a fact that substantial amount of compensation in motor accident cases remains deposited in the Tribunal as the claimant(s) may not have approached the Tribunal for release thereof for various reasons. Delay for any reason in release of compensation in motor accident cases by the Tribunal to the claimant(s), where the amount is deposited in Tribunal, as directed, results in loss of interest to the claimant(s). In case the aforesaid 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.

20. We may add that directions are being issued for bank transfer of the amount of compensation in motor accident cases, but the Courts/Tribunals can always follow this process in any matter, whenever any amount is to be paid by one party to another, however, ensuring proper compliance.

21. The Registry is directed to send a copy of this order to (1) the Registrars General of all the High Courts for placing the same before the Chief Justice of the High Court for further circulation and compliance by the concerned Tribunals/Courts; and (2) the Directors of the National Judicial Academy and the State Judicial Academies.

22. Pending interlocutory applications (if any) shall stand disposed of.

..J. (J.K. MAHESHWARI) ……………….……………..J. (RAJESH BINDAL) New Delhi March 18, 2025.