The Madhya Pradesh High Court has ruled that motor accident victims awarded compensation cannot be forced to open a bank account with Union Bank of India merely to receive their money or to have it invested in a fixed deposit. Justice Vinay Saraf, sitting at the Indore bench, set aside two orders passed by the Motor Accident Claims Tribunal in Neemuch. The tribunal had previously insisted that any amount slated for investment in a fixed deposit receipt must go exclusively through a claimant account held with Union Bank of India.
The revision petition was filed by Smt. Shahin and others through their counsel, who argued that neither the Supreme Court nor the Chief Justice or the Registry of the High Court had issued any instructions mandating a specific bank account. The counsel contended that statutory compensation can be transferred to a claimant account in any branch of any nationalised bank across the country.
Can motor accident tribunals force claimants to open accounts in a specific bank for fixed deposits?
Motor accident tribunals cannot force claimants to open accounts in a specific bank. The Madhya Pradesh High Court held that claimants may hold accounts in any nationalised bank, and tribunals are obligated to transfer awarded funds directly into those accounts without imposing restrictions requiring a particular financial institution.
The dispute originated in a motor accident claim case where the tribunal issued orders in July and August of 2026. The tribunal initially recalled an order regarding fixed deposit investments and subsequently explained that an integrated online system established by the High Court required fixed deposits to be created through Union Bank of India pursuant to administrative directions. Recognizing the systemic importance of the issue, the High Court directed the Principal Registrar to have administrative officers explain the procedure.
During the hearing, the Registrar of Judicial affairs and the Registrar of Information Technology joined through video conferencing and clarified that neither the Chief Justice nor the Registry had ever directed tribunals to insist on a Union Bank of India account for claimants. They explained that administrative directions were issued to comply with Supreme Court directives requiring compensation to be transferred directly into accounts held with any nationalised bank. Furthermore, a compliance report confirmed the absence of any administrative instructions mandating fixed deposit receipts in a specific bank.
Authority / Source | Stated Position on Bank Accounts | Scope of Application |
|---|---|---|
Supreme Court Directives | Compensation must be transferred directly to claimants in any nationalised bank. | Applicable nationwide to all accident claims tribunals. |
Tribunal at Neemuch | Insisted fixed deposit receipts be created through Union Bank of India accounts. | Restricted claimants to a single designated bank. |
MP High Court Bench | Ruled claimants can use any nationalised bank account for payouts. | Set aside restrictive tribunal orders across the state. |
The bench examined the Supreme Court directions issued in April 2025 in a suo motu writ petition, which mandate tribunals to transfer money directly to claimant accounts and invest deposited sums in fixed deposits with any nationalised bank. The Court also reviewed the practice procedure for the online dashboard, which requires tribunals rather than individual claimants to hold accounts with specific institutions for digital processing.
Justice Saraf observed that there is no legal requirement for a claimant to open an account in Union Bank of India for the disbursement of awarded amounts or the creation of fixed term deposits. While acknowledging a practical limitation wherein only Union Bank of India is currently integrated with the dashboard for digital fixed deposit preparation, the Court clarified that integration of other nationalised banks is actively underway.
Disposing of the petition, the High Court ordered that compensation must be transferred directly to the claimant account in any branch of any nationalised bank. Where fixed deposits are processed through the dashboard, they may temporarily be opened in Union Bank of India branches without requiring the claimant to maintain a personal account there. The impugned orders of the Neemuch tribunal were set aside, and the tribunal was directed to reconsider the application in accordance with these legal principles.