Introduction:
The Madhya Pradesh High Court has clarified that persons entitled to receive compensation in motor accident cases cannot be compelled to open bank accounts exclusively with Union Bank of India for the purpose of receiving the awarded amount or having compensation invested in fixed deposits. The Court held that claimants are entitled to receive compensation directly in their accounts maintained with any branch of any nationalised bank. It further clarified that administrative arrangements for processing payments through an online dashboard cannot be interpreted as imposing an additional banking requirement on accident victims.
Justice Vinay Saraf delivered the ruling while considering a petition challenging orders passed by the Motor Accident Claims Tribunal (MACT), which had restricted the disbursement and investment of compensation to arrangements involving Union Bank of India. The Court observed that neither the Supreme Court’s directions nor the administrative instructions issued by the Madhya Pradesh High Court required claimants to maintain accounts exclusively with that bank.
The issue arose from proceedings before a Motor Accident Claims Tribunal concerning the disbursement of compensation awarded in a motor accident claim. The Tribunal had initially passed an order concerning the investment of a portion of the compensation amount in a fixed deposit. However, by an order dated July 31, 2026, it recalled its earlier order to the extent that the amount required to be invested in a fixed deposit could be deposited only in an account maintained with Union Bank of India.
The Tribunal subsequently passed another order, stated to be dated August 5, 20, explaining the basis for imposing this requirement. It referred to directions issued by the Supreme Court in the suo motu proceedings titled Suo Motu (W.P. No. 7 of 2024) concerning the disbursement of compensation amounts. It also relied upon directions issued by the Chief Justice of the Madhya Pradesh High Court and communications received from the Registry regarding the online dashboard introduced for processing compensation payments.
Interpreting these directions as requiring the use of Union Bank of India, the Tribunal concluded that compensation could be transferred only to a claimant’s bank account maintained with that particular bank. This effectively required claimants to open accounts with Union Bank of India even where they already maintained accounts with other nationalised banks.
The petitioner challenged this interpretation before the High Court. It was contended that neither the Supreme Court nor the Chief Justice of the Madhya Pradesh High Court had issued any direction requiring accident victims to open accounts exclusively with Union Bank of India. According to the petitioner, the actual requirement was that compensation should be transferred directly to the claimant’s bank account maintained with any nationalised bank.
The dispute consequently raised an important question concerning the implementation of judicial and administrative directions relating to compensation disbursement. While courts and tribunals may adopt digital systems to ensure secure, transparent and timely payment of compensation, the use of a particular bank as part of the technical infrastructure does not necessarily mean that claimants must also become customers of that bank.
To clarify the position, the High Court directed the Principal Registrar to depute an officer or counsel from the Registry to explain the procedure prescribed for disbursement of compensation through the online dashboard. During the hearing, the Registrars appeared before the Court and clarified that neither the Chief Justice nor the Registry had instructed MACTs to insist that claimants open accounts with Union Bank of India.
The Court also examined a compliance report dated October 27, 2026, the relevant directions issued by the Supreme Court in the suo motu proceedings and the subsequent practice procedure framed by the Registrar General of the High Court. On examining these materials, Justice Saraf concluded that the administrative arrangements primarily concerned the integration of Tribunal bank accounts with the online dashboard and the secure processing of transactions. They did not impose any exclusive banking requirement on claimants.
The High Court accordingly set aside the impugned orders of the MACT and issued detailed directions explaining how compensation could be transferred and fixed deposits created, both through and outside the online dashboard. It clarified that claimants could receive compensation in accounts maintained with any nationalised bank, even though Union Bank of India was, at that time, the only bank integrated with the dashboard for creating fixed deposits through that system.
Arguments of the Parties:
Petitioner’s Arguments
The petitioner, represented by Advocate Akhil Godha, challenged the Tribunal’s decision to restrict the banking arrangements for disbursement of motor accident compensation to Union Bank of India. The principal contention was that the Tribunal had misunderstood the directions issued by the Supreme Court and the administrative instructions communicated by the Madhya Pradesh High Court.
It was submitted that there was no direction from either the Supreme Court or the Chief Justice of the Madhya Pradesh High Court requiring claimants to open bank accounts exclusively with Union Bank of India. The petitioner argued that the purpose of the directions was to ensure that compensation amounts were transferred directly to the persons entitled to receive them and that the payment process was conducted securely and transparently.
According to the petitioner, the requirement of direct transfer to a nationalised bank account could not be converted into an obligation to maintain an account with one particular institution. Claimants might already have functioning bank accounts with other nationalised banks. Requiring them to open an additional account with Union Bank of India would impose an unnecessary procedural burden, particularly on persons who had approached the Tribunal to obtain compensation following a motor accident.
The petitioner further contended that the Tribunal’s interpretation was inconsistent with the actual scope of the Supreme Court’s directions. The Supreme Court had contemplated direct transfer of compensation to the bank accounts of persons entitled to receive it. Where the Tribunal directed that compensation be deposited for investment, the amount was to be placed in a fixed deposit with a nationalised bank. Neither requirement, it was argued, authorised the Tribunal to insist that the claimant personally maintain an account with Union Bank of India.
The distinction between the bank used by the Tribunal for processing transactions and the bank in which a claimant maintains an individual account was central to the petitioner’s challenge. The petitioner sought to demonstrate that the online dashboard was an administrative mechanism for facilitating disbursement and investment. Its technical integration with a particular bank could not automatically create a new eligibility condition for receiving compensation.
The petitioner also questioned the Tribunal’s reliance on the directions issued by the Chief Justice and the Registry. It was submitted that the administrative procedure had been introduced to facilitate secure payment transactions and integrate the Tribunal’s banking arrangements with the online system. It did not alter the rights of claimants or require them to shift their banking relationships to Union Bank of India.
The petitioner therefore sought judicial intervention to clarify that compensation could be transferred directly to an account maintained by a claimant with any nationalised bank. The challenge also required the Court to examine whether the Tribunal could insist on a particular bank when the governing directions did not expressly impose such a restriction.
Position Clarified by the High Court Registry
During the hearing, the High Court directed the Principal Registrar to arrange for an officer or counsel from the Registry to explain the procedure governing disbursement of compensation through the online dashboard. This step was significant because the Tribunal had relied upon administrative directions and communications from the Registry to justify its decision.
The Registrars appeared before the Court and clarified that neither the Chief Justice nor the Registry had issued any direction requiring MACTs to insist that claimants open accounts with Union Bank of India. They explained that the directions issued in compliance with the Supreme Court’s order contemplated the transfer of compensation directly into the bank accounts of claimants maintained with any nationalised bank.
The Registry’s clarification therefore addressed the central issue raised in the petition. It established that the Tribunal’s restrictive interpretation was not supported by the administrative instructions governing the dashboard.
The Court also considered the compliance report dated October 27, 2026, which clarified that there were no administrative instructions requiring fixed deposits to be created with a particular bank in every case. The report helped distinguish between the general banking requirements applicable to compensation disbursement and the technical limitations of the dashboard as it then existed.
Respondents’ Position and Administrative Explanation
The Tribunal’s impugned orders had relied on the Supreme Court’s directions in Suo Motu (W.P. No. 7 of 2024), directions issued by the Chief Justice of the Madhya Pradesh High Court and communications from the Registry concerning the online dashboard. The basis of the Tribunal’s approach was that the dashboard-related procedure required compensation to be routed through Union Bank of India.
However, the material placed before the High Court, including the explanation furnished by the Registrars and the compliance report, clarified that the administrative arrangements did not impose an exclusive account-opening requirement on claimants.
The relevant distinction was between the bank accounts maintained by the Tribunals for processing transactions through the dashboard and the personal bank accounts of the claimants receiving compensation. The fact that Union Bank of India had been integrated with the dashboard for a particular purpose did not mean that every claimant had to open an account with that bank.
The administrative explanation also brought out a distinction between direct transfer of compensation and investment of compensation in fixed deposits. Where the compensation was to be transferred directly to the claimant, the claimant could provide details of an account maintained with any nationalised bank. Where the amount was required to be invested in a fixed deposit outside the dashboard, any nationalised bank could be used.
A different practical position existed where fixed deposits were to be created through the dashboard. At the time of the judgment, only Union Bank of India had been integrated with the system for that specific function. Consequently, fixed deposits created through the dashboard could be opened with Union Bank of India. However, even in that situation, the claimant was not required to open a separate savings or other bank account with Union Bank of India merely to facilitate the fixed deposit.
The High Court’s consideration of these explanations enabled it to determine the actual scope of the administrative procedure and resolve the confusion that had resulted in the Tribunal’s restrictive orders.
Court’s Judgment:
The Madhya Pradesh High Court allowed the petition and set aside the impugned orders passed by the Motor Accident Claims Tribunal. Justice Vinay Saraf held that there was no requirement for claimants receiving motor accident compensation to open bank accounts exclusively with Union Bank of India. The Court clarified that the compensation could be transferred directly to an account maintained by the claimant with any branch of any nationalised bank.
The Court began by examining whether the Tribunal’s interpretation was supported by the directions issued by the Supreme Court and the administrative instructions of the Madhya Pradesh High Court. Since the Tribunal had relied upon these directions to restrict the banking arrangements, it was necessary to determine whether they actually imposed such a condition.
The Court noted that the Supreme Court, in the suo motu proceedings concerning the disbursement of compensation, had issued directions intended to ensure that amounts awarded to victims were paid in a direct and secure manner. The general requirement was that compensation should ordinarily be transferred directly into the bank accounts of the persons entitled to receive it.
The Supreme Court had also addressed situations in which a Motor Accident Claims Tribunal directed that compensation be deposited with the Tribunal rather than immediately disbursed. In such cases, the amount was required to be invested in a fixed deposit with a nationalised bank.
The High Court understood these directions as establishing two important principles. First, where compensation was payable directly to a claimant, it should ordinarily be transferred to the claimant’s own bank account. Second, where the Tribunal directed investment of the amount, the fixed deposit should be created with a nationalised bank.
Neither principle, however, required the claimant to maintain an account exclusively with Union Bank of India. The reference to a nationalised bank did not mean that the Supreme Court had selected one particular institution for all compensation transactions.
The Court found that the Tribunal had incorrectly treated the administrative arrangements for the online dashboard as imposing a mandatory banking condition on the claimants. To determine the actual scope of those arrangements, the Bench sought an explanation from the Registry through the Principal Registrar.
The appearance of the Registrars before the Court and the clarification furnished by them were important to the decision. They confirmed that neither the Chief Justice nor the Registry had directed MACTs to insist upon claimants opening accounts with Union Bank of India. The instructions were intended to facilitate the direct transfer of compensation into accounts maintained by claimants with any nationalised bank.
The Court also examined the compliance report dated October 27, 2026. The report clarified that no administrative instruction required the creation of fixed deposits in any particular bank in all cases. This supported the conclusion that the Tribunal’s insistence on Union Bank of India had no basis in the administrative procedure.
Difference Between Dashboard Integration and Claimants’ Bank Accounts
A significant part of the judgment concerned the distinction between the technical integration of a bank with the online dashboard and the bank account that a claimant may use to receive compensation.
The Registrar General of the High Court had issued a subsequent practice procedure dealing with the online dashboard. On examining this procedure, the Bench noted that its primary purpose was to integrate the bank accounts of the Tribunals with the dashboard and facilitate secure processing of payment transactions.
In other words, the dashboard was an administrative and technological mechanism for handling compensation-related transactions. Its banking integration was intended to enable the Tribunals to process payments and fixed deposits efficiently. It was not intended to impose a new banking obligation on persons receiving compensation.
The Court therefore rejected the assumption that the integration of Union Bank of India with the dashboard meant that every claimant had to maintain an account with that bank. The technical arrangements adopted by the Registry could not be interpreted as restricting the choice of bank available to a claimant when the governing directions permitted the use of any nationalised bank.
This distinction is particularly relevant in motor accident compensation proceedings. Claimants may already have bank accounts through which they receive wages, pensions, financial assistance or other payments. Requiring them to open an additional account solely because of the technical arrangements adopted by a Tribunal could create unnecessary inconvenience and delay.
The Court’s clarification ensured that the administrative objective of secure and transparent disbursement would not become an additional procedural obstacle for accident victims.
Direct Transfer to an Account Maintained With Any Nationalised Bank
The Court expressly directed that compensation awarded by a Motor Accident Claims Tribunal must be transferred directly to the claimant’s bank account maintained with any branch of any nationalised bank.
This direction applies where the amount is to be paid directly to the claimant. The claimant is required to provide the details of the relevant bank account maintained with a nationalised bank, following which the Tribunal is under an obligation to transfer the amount directly to that account.
The Bench made the position clear by observing:
“it appears that there is no such direction that for disbursement of the awarded amount or creation of the Fixed Term Deposit, the account is required to be opened in Union Bank of India. The claimant may open the account in any branch of any Nationalized Bank and upon submission of the details by the claimant of his bank account maintained with the Nationalized Bank, the Tribunals are under obligation to transfer the amount directly to the account of the claimant”.
This observation establishes that the choice of a nationalised bank for receiving compensation rests with the claimant, subject to the applicable directions governing disbursement. The Tribunal cannot impose an exclusive Union Bank requirement by relying on the dashboard procedure.
The direction also reinforces the objective of direct payment. Instead of requiring claimants to route compensation through additional accounts or banking arrangements, the Tribunal must transfer the amount into the account details furnished by the person entitled to receive it.
Fixed Deposits Created Outside the Dashboard
The Court separately addressed situations in which the compensation amount was required to be invested in a fixed deposit but the transaction was not being processed through the online dashboard.
It clarified that where the amount was not being disbursed through the dashboard, the fixed deposits could be created in any branch of any nationalised bank. There was no administrative requirement restricting such investments to Union Bank of India.
This direction preserves the flexibility contemplated by the Supreme Court’s instructions. Since the requirement was to invest the compensation in a fixed deposit with a nationalised bank, the Tribunal could not introduce an additional restriction by selecting one particular bank without an applicable direction supporting that restriction.
The Court thereby made it clear that the ordinary procedure for creating fixed deposits outside the dashboard would remain open to nationalised banks generally.
Fixed Deposits Created Through the Dashboard
The Court also considered the practical limitations of the online dashboard at the time of the decision. It noted that Union Bank of India was then the only bank integrated with the dashboard for the purpose of creating fixed deposits through that system.
Consequently, where the compensation amount was to be invested in a fixed deposit through the dashboard, the fixed deposit could, at that stage, be opend only with Union Bank of India. The Court recognised this as a