The Supreme Court of India has issued wide-ranging directions to ensure the disbursal of large sums of compensation lying unclaimed before Motor Accident Claims Tribunals (MAC Tribunals) and Labour Courts across various states. The order was passed by a Bench comprising Justice Abhay S. Oka and Justice Ujjal Bhuyan in Suo Motu Writ Petition (C) No. 7 of 2024 initiated on the basis of a letter received from Shri B.B. Pathak, a retired District Judge from Gujarat.
Background
The letter, dated 25 May 2024, drew attention to the substantial amounts of compensation granted under the Motor Vehicles Act, 1988 and the Workmen’s Compensation Act, 1923 (now the Employees’ Compensation Act, 1923) remaining undisbursed. Following this, the Chief Justice of India directed the registration of a suo motu writ petition.
Notices were issued to various High Courts, including Gujarat, Allahabad, Bombay, Calcutta, Delhi, and Madras, requiring them to furnish details of undisbursed compensation amounts. The Gujarat High Court compiled and submitted a report consolidating responses from these jurisdictions. Senior Advocate Meenakshi Arora was appointed amicus curiae to assist the Court.
Magnitude of Unclaimed Compensation
The report revealed alarming figures:
- Gujarat: ₹282 crore (MACT) and ₹6.61 crore (Labour Courts)
- Allahabad: Approx. ₹239 crore (MACT) and ₹92.39 crore (Labour Courts)
- Bombay: ₹459 crore
- Calcutta: ₹2.53 crore
- Goa: ₹3.61 crore
Court’s Analysis and Concern
The Bench expressed deep concern that although compensation has been awarded, the entitled claimants have not withdrawn the funds, thereby being deprived of their lawful dues. The Court called this situation “very disturbing” and emphasized the need to find an effective solution.
Legal Framework and Observations
The Court referred to Sections 166 and 176 of the Motor Vehicles Act, 1988, which govern the filing of compensation claims and the rule-making powers of State Governments. The Court noted that many States have not exercised their rule-making powers under Section 176(a) and observed that High Courts could, in the interim, issue practice directions to fill this procedural gap.
Key Directions Issued
Until rules are formally framed, the Court directed all High Courts and Tribunals to ensure:
- Mandatory Collection of Claimant Details: Including names, addresses, Aadhaar, PAN, and bank details at the time of claim filing or notice issuance.
- Verification of Bank Details: Before disbursal, Tribunals must verify bank account credentials through certificates or cancelled cheques.
- Direct Bank Transfers: Compensation should be credited directly to the claimant’s verified bank accounts.
- Regular Update Requirement: Claimants must update the Tribunals of any changes in their contact or banking details.
- Fixed Deposit Instructions: Undisbursed funds should be invested in fixed deposits with nationalized banks, with automatic renewals.
- Digital Dashboard: State Governments must support the creation of an online dashboard to track pending compensation cases.
- Massive Outreach Drive: Legal Services Authorities, aided by local police and revenue officers, must trace unclaimed beneficiaries.
- Compliance Monitoring: State Legal Services Authorities must monitor and report progress within four months.
Implementation and Reporting
The High Courts have been directed to implement these measures expeditiously and submit compliance reports to the Supreme Court by July 30, 2025, specifying the status of undisbursed amounts. The matter will be listed next on August 18, 2025 for further directions.
The Court clarified that if existing rules or directions already address these concerns and are consistent with the present order, those may continue to operate. Additionally, High Courts are free to take further measures to ensure timely disbursal.
Citation: In Re: Compensation Amounts Deposited With Motor Accident Claims Tribunals And Labour Courts, Suo Motu Writ Petition (C) No. 7 of 2024, decided on April 22, 2025.
