Introduction:
The Madras High Court, in The Manager, The Oriental Insurance Co. Ltd. v. D. Salsa and Others, 2026 LiveLaw (Mad) 360, issued a comprehensive set of directions to streamline the disbursement of compensation awarded in motor accident claim cases. A Division Bench comprising Justice N. Sathish Kumar and Justice M. Jothiraman directed that compensation awarded by Motor Accident Claims Tribunals (MACTs) in Tamil Nadu and Puducherry should ordinarily be transferred directly to the claimants’ bank accounts through electronic modes such as NEFT or RTGS. The Court also directed the Registrar General of the High Court to circulate these guidelines to all Motor Accident Claims Tribunals after obtaining the necessary administrative approval from the Chief Justice.
The appeal before the Court arose from a challenge by an insurance company against the quantum of compensation awarded by the Motor Accident Claims Tribunal. The insurer contended that the Tribunal had incorrectly deducted only 25% towards the deceased bachelor’s personal and living expenses, whereas a deduction of 50% ought to have been made in accordance with settled principles governing compensation. Since the claimants did not oppose the contention, the High Court modified the compensation accordingly. However, while deciding the appeal, the Court took the opportunity to address the recurring practical difficulties faced in the disbursement of compensation and laid down uniform procedural safeguards for future cases.
Arguments of the Parties:
The appellant-insurance company argued that the Tribunal had committed an error while calculating the compensation payable to the claimants. It submitted that as the deceased was unmarried, 50% of his income ought to have been deducted towards his personal and living expenses instead of only 25%. On this basis, the insurer sought modification of the compensation awarded by the Tribunal.
The respondents did not seriously dispute the legal position regarding the applicable deduction for a bachelor. Consequently, the issue relating to the quantum of compensation did not remain contentious. During the course of hearing, the Court also considered broader issues relating to delays and procedural difficulties in the payment of compensation to successful claimants, particularly the need for an efficient, transparent and secure mechanism for disbursal of compensation.
Court’s Judgment:
The Madras High Court partly allowed the appeal by modifying the compensation in accordance with the settled legal principle that where the deceased is a bachelor, 50% of the income should ordinarily be deducted towards personal and living expenses. Since the respondents had not objected to the insurer’s contention, the Court revised the compensation accordingly.
More significantly, the Bench issued a detailed framework governing the electronic disbursement of compensation in motor accident claim cases. The Court directed that every insurance company, transport corporation and other person liable to satisfy an award shall deposit the compensation amount directly into the claimant’s verified bank account through NEFT or RTGS instead of following conventional procedures that often result in avoidable delay.
To facilitate this process, the Court directed Motor Accident Claims Tribunals to obtain the claimant’s bank account details before passing the award. The Tribunal must verify the account by obtaining supporting documents, including the first page of the passbook containing the claimant’s photograph, and incorporate the verified account details in the award itself along with the Tribunal’s official email address for future compliance.
The Bench emphasised that the bank account should ordinarily be one that existed prior to the filing of the claim petition and should be maintained at a branch located within the claimant’s place of ordinary residence. If the claimant does not possess such an account, a new account may be opened only at a bank branch situated in the claimant’s residential area and not at a location chosen merely for the convenience of the advocate or any other person.
The Court further directed that every claimant should file an affidavit confirming that the bank account details furnished are accurate and comply with the directions issued by the Court. The Tribunal must independently verify these details before delivering the final award. Any subsequent change in the claimant’s bank account must also be promptly communicated and verified before disbursement.
With respect to minor claimants, the Court reiterated that the safeguards evolved by the Supreme Court must continue to apply. The share of a minor should ordinarily remain invested in a fixed deposit or other Tribunal-approved investment until the minor attains majority or until otherwise directed by the Tribunal in appropriate circumstances.
The Bench also addressed the issue of court fees and clarified that before certifying direct electronic transfer of compensation, the Tribunal must ensure that any deficit court fee payable has been accounted for. To avoid unnecessary delay, the Court suggested that the court fee component may be deposited directly into the Tribunal’s designated account, while only the net compensation amount is transferred to the claimant. Advocate’s fees and other costs quantified in the award shall continue to be withdrawn in accordance with the existing procedure applicable to Tribunal deposits.
To ensure accountability, the Court directed insurers to communicate the Unique Transaction Reference (UTR) number and complete details of the electronic transfer to the Tribunal through email within forty-eight hours of making the deposit, followed by submission of physical proof of payment.
The judgment reflects the Court’s effort to modernise the process of compensation disbursal by promoting digital payment systems, reducing procedural delays and strengthening transparency. By prescribing uniform safeguards for verification of bank accounts, protection of minors’ interests and timely communication between insurers and Tribunals, the High Court has sought to ensure that compensation awarded under the Motor Vehicles Act reaches victims and their families promptly, securely and without unnecessary litigation.