Supreme Court Addresses Unclaimed Compensation Amounts in Motor Accident and Labour Cases (22 April 2025)

Introduction

Date of the Judgment: April 22, 2025

Citation: 2025 INSC 530

Judges: Abhay S. Oka, J., Ujjal Bhuyan, J.

What happens to compensation money when the rightful recipients don’t claim it? The Supreme Court of India took up this critical issue in a Suo Motu Writ Petition, addressing the significant amounts of unclaimed compensation lying with Motor Accident Claims Tribunals (MACT) and Labour Courts. This initiative aims to streamline the process and ensure that those entitled to compensation receive it promptly. The bench, comprising Justices Abhay S. Oka and Ujjal Bhuyan, issued a series of directions to High Courts and State authorities to address this widespread problem.

Case Background

The case originated from an email sent to the Supreme Court by Shri B. B. Pathak, a retired District Judge from Gujarat, on May 25, 2024. Shri Pathak highlighted that substantial amounts of compensation payable under the Motor Vehicles Act, 1988, and the Workmen’s Compensation Act, 1923, remained unclaimed with the MACTs and Labour Courts. Acting on this information, the Supreme Court registered a Suo Motu Writ Petition to address the issue.

Timeline:

Legal Framework

The Supreme Court referred to Section 166 of the Motor Vehicles Act, 1988, which provides for making an application for compensation to the MAC Tribunal.

Sub-Section (1) of Section 166 reads as follows:

“166. Application for compensation.—(1) An application for compensation arising out of an accident of the nature specified in sub-section (1) of Section 165 may be made — (a) by the person who has sustained the injury; or (b) by the owner of the property; or (c) where death has resulted from the accident, by all or any of the legal representatives of the deceased; or (d) by any agent duly authorised by the person injured or all or any of the legal representatives of the deceased, as the case may be: Provided that where all the legal representatives of the deceased have not joined in any such application for compensation, the application shall be made on behalf of or for the benefit of all the legal representatives of the deceased and the legal representatives who have not so joined, shall be impleaded as respondents to the application: Provided further that where a person accepts compensation under Section 164 in accordance with the procedure provided under Section 149, his claim petition before the Claims Tribunal shall lapse.”

The court also mentioned Section 176 of the Motor Vehicles Act, 1988, which confers rule-making powers on the State Governments.

Section 176 reads as follows:

“176. Power of State Government to make rules.—A State Government may make rules for the purpose of carrying into effect the provisions of Sections 165 to 174, and in particular, such rules may provide for all or any of the following matters, namely — (a) the form of application for claims for compensation and the particulars it may contain, and the fees, if any, to be paid in respect of such applications; (b) the procedure to be followed by a Claims Tribunal in holding an inquiry under this Chapter; (c) the powers vested in a Civil Court which may be exercised by a Claims Tribunal; (d) the form and the manner in which and the fees (if any) on payment of which an appeal may be preferred against an award of a Claims Tribunal; and (e) any other matter which is to be, or may be prescribed.”

Directions

The Supreme Court issued the following directions to be followed until the rule-making power is properly exercised by the Government:

• 
  While filing claim petitions, the following particulars must be included:
  • Names and addresses (local and permanent) of the injured persons or property owners, along with their Aadhar and PAN details, and email-id, if any.
  • Names and addresses (local and permanent) of all legal representatives of the deceased victim claiming compensation, along with their Aadhar and PAN details, and email-id, if any.
• 
  If the above details are not furnished, the MAC Tribunals should request the applicant(s) to provide the information when issuing notice.
• 
  While passing an interim or final order of compensation, the MAC Tribunals must ask the recipients to produce their bank account details, along with a banker’s certificate or a copy of a cancelled cheque.
• 
  Recipients of compensation must keep their bank account and email-id information updated.
• 
  In the event of a consent award, the MAC Tribunals may direct the deposit of compensation amounts directly into the bank accounts of the claimants, provided the consent terms contain all relevant account details.
• 
  The presiding Judges of the MAC Tribunals must verify the bank account details from the certificate issued by the banker to ascertain whether the account belongs to the compensation recipient.
• 
  The MAC Tribunals should pass orders to transfer the requisite amounts directly to the bank accounts of the recipients, and if there is a long gap, fresh account details should be obtained.
• 
  Whenever the MAC Tribunal orders the deposit of compensation amounts, it should direct the investment of these amounts in fixed deposits with any nationalized bank, with standing instructions to renew the same periodically.
• 
  Similar practice directions/rules should be framed for adjudications under the Workmen’s Compensation Act, 1923, applying the same directions as for claims under the Motor Vehicles Act, 1988.
• 
  The Central Project Co-ordinator of the e-court project or Registrar (Computer/IT) of the High Courts should create a dashboard to regularly upload information regarding the amounts deposited in connection with compensation granted under the 1988 and 1923 Acts.
• 
  All High Courts should issue administrative directions to the MAC Tribunals and Commissioners under the 1923 Act to initiate a massive drive to ascertain the whereabouts of the persons who have been held to be entitled to receive compensation, with the assistance of the District and Taluka Legal Services Authorities and para-legal volunteers.
• 
  State Governments should provide assistance to the Legal Services Authorities, local police officers, and revenue officers to trace the claimants.
• 
  The State Legal Services Authorities should monitor compliance with the directions and report within four months from today.

These directions will continue to bind the MAC Tribunals and the Commissioners under the 1923 Act until the rule-making power is properly exercised by the Government.

All High Courts are free to take measures in addition to what is directed under this order to ensure that the pending amounts reach the claimants.

The High Courts are directed to take up implementation of the directions at the earliest and submit compliance reports to this Court on or before July 30, 2025, so that further directions, if necessary, can be issued. The Registrar Generals, in their report, shall set out the details of the amounts still lying without disbursement.

If the Rules framed by the State Government or practice directions already issued are consistent with the above directions, the Rules or the practice directions, as the case may be, shall be followed notwithstanding this order.

Key Takeaways

• 
  Claimants Must Provide Accurate Details: It is crucial for claimants to provide accurate and updated contact information and bank account details to ensure they receive their compensation promptly.
• 
  Proactive Measures to Trace Claimants: Legal Services Authorities and State Governments will take proactive steps to trace claimants and ensure the disbursement of unclaimed amounts.
• 
  Streamlined Processes: These directions aim to streamline the process of disbursing compensation and reduce the accumulation of unclaimed funds in the future.

Development of Law

The ratio decidendi of this case is that High Courts and State authorities must take proactive measures to ensure that compensation amounts reach the rightful claimants. This decision aims to address the issue of unclaimed funds lying with MACTs and Labour Courts, ensuring that those entitled to compensation receive their dues promptly.

Conclusion

The Supreme Court’s Suo Motu Writ Petition addressing unclaimed compensation amounts marks a significant step towards ensuring that rightful claimants receive their dues. By issuing comprehensive directions to High Courts and State authorities, the Court aims to streamline the disbursement process and reduce the accumulation of unclaimed funds. This initiative underscores the judiciary’s commitment to social justice and the welfare of vulnerable sections of society.