The Supreme Court on Tuesday issued a directive to courts and tribunals across India, mandating insurance companies to transfer motor accident claim amounts directly to the claimants’ bank accounts. This move is aimed at eliminating unnecessary delays that plague the current system where funds are deposited with the tribunals first.
Justices JK Maheshwari and Rajesh Bindal, presiding over a motor accident claim case, highlighted the inefficiencies in the existing process, where claimants have to apply for withdrawal and often wait 15-20 days to receive their compensation. “The general practice followed by 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,” the bench stated.
The Supreme Court’s ruling also addressed the backlog of motor accident claims pending before tribunals, which has seen a significant increase over the years. According to a PTI report based on an RTI response, there were over a million claim cases pending by the end of the 2022-23 fiscal year, marking an increase of nearly 137,000 cases since 2019-20.
The justices referenced India’s advances in digital transactions, particularly through the Unified Payment Interface (UPI), which has seen exponential growth. They suggested that the integration of such efficient payment mechanisms could greatly benefit the process of disbursing compensations.
The bench also acknowledged that while the majority of the Indian adult population has bank accounts, there are special circumstances, such as awards to minors or directives for fixed deposits, that require specific handling. “When the amount is transferred by the insurance company to the account of the claimant(s), it shall be the responsibility of the bank to ensure that the specified portion thereof is kept in the fixed deposit. Compliance is to be reported by the bank(s) to the tribunal,” they added.
