Motor Vehicles Act, 1988 — Claims Tribunal — Mode of payment of compensation — Direct payment to claimants — Legality Motor Vehicles Act, 1988 — Sections 168 & 173 — CPC, 1908 — Order XLI — Practice and procedure — Tribunal directing insurer to pay compensation directly to claimants — Held impermissible — Compensation must be deposited before Tribunal — Uniform national practice mandated by Supreme Court.

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Motor Vehicles Act, 1988 — Claims Tribunal — Mode of payment of compensation — Direct payment to claimants — Legality

Motor Vehicles Act, 1988 — Sections 168 & 173 — CPC, 1908 — Order XLI — Practice and procedure — Tribunal directing insurer to pay compensation directly to claimants — Held impermissible — Compensation must be deposited before Tribunal — Uniform national practice mandated by Supreme Court.

The Tribunal awarded compensation of Rs.1,88,000/- with interest at 7.5% per annum and further directed the insurer to pay the compensation amount directly to the claimants instead of depositing the same before the Tribunal.
— Para 2

Reliance was placed on the judgment of the Hon’ble Supreme Court in Bajaj Allianz General Insurance Company Private Limited v. Union of India and others, (2021) 17 SCC 530, wherein it was held that the insurer shall satisfy the award by depositing the awarded amount into a bank account maintained by the Tribunal by RTGS or NEFT and that such directions shall apply across the country to ensure uniform practice.
— Para 4

In view of the guidelines prescribed by the Hon’ble Apex Court, the direction issued by the Tribunal for direct payment to claimants was held unsustainable and liable to be modified.
— Paras 5 & 6

Accordingly, the award was modified directing the insurer to deposit the compensation amount before the Tribunal, while the quantum of compensation and other findings were left undisturbed.
— Para 6

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CASES REFERRED

1. Bajaj Allianz General Insurance Company Private Limited v. Union of India and others
   (2021) 17 SCC 530 — Paras 2.6 and 3 relied upon.

2. M.A.C.M.A. No.242 of 2024 (AP High Court) — Coordinate Bench decision following Bajaj Allianz case.

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FINAL HOLDING (as per judgment)

• Direction for direct payment to claimants — set aside.

• Direction to deposit compensation before Tribunal — confirmed.

• Quantum of compensation — not interfered with.

• Appeal — disposed of with modification only to mode of payment.

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ANALYSIS OF FACTS

Accident Claim Proceedings

• Claim arose out of M.V.O.P. No.26 of 2016.

• Tribunal awarded:

  • Rs.1,88,000/- as compensation

  • Interest @ 7.5% per annum from date of petition till realization.

• Tribunal further directed:

  • Insurer to pay compensation directly to claimants, instead of depositing before Tribunal.

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Ground of Appeal

The appeal was not against:

• negligence,

• liability, or

• quantum of compensation.

The challenge was confined only to the manner of disbursement, namely:

Whether the Tribunal was justified in directing the insurer to pay compensation directly to the claimants.

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ANALYSIS OF LAW

Supreme Court Mandate

The High Court relied entirely on the binding directions issued by the Supreme Court in:

Bajaj Allianz General Insurance Company Private Limited v. Union of India and others (2021) 17 SCC 530

The relevant directions extracted by the Court are:

Para 2.6
“The Insurer shall satisfy the award by depositing the awarded amount into a bank account maintained by the Tribunal by RTGS or NEFT. For this purpose the Tribunal shall maintain a bank account and record the relevant account details along with the directions for payment to the insurer in the award itself.”

Para 3
“We direct that the aforesaid directions will apply across the country so that a uniform practice is followed.”

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Legal Position Applied

• Tribunal has no discretion to deviate from the Supreme Court-mandated procedure.

• Direct payment to claimants:

  • defeats uniformity,

  • bypasses Tribunal supervision,

  • is contrary to binding precedent under Article 141 of the Constitution.

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COURT’S REASONING

• The Supreme Court directions are mandatory and nationwide in application.

• Any award directing direct payment to claimants is contrary to law.

• However:

  • The compensation amount fixed by the Tribunal was not under challenge.

  • Therefore, interference was limited only to the mode of deposit.

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RATIO DECIDENDI

A Motor Accident Claims Tribunal cannot direct the insurer to pay compensation directly to claimants. In view of the binding directions of the Supreme Court in Bajaj Allianz General Insurance Company Private Limited v. Union of India (2021) 17 SCC 530, the insurer must deposit the awarded amount before the Tribunal, and any direction contrary thereto is liable to be modified.

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OPERATIVE DIRECTIONS

• Impugned award dated 01.11.2022 in M.V.O.P. No.26 of 2016:

  • Modified only to the extent of mode of payment.

• Insurer directed to:

  • deposit compensation amount before the Tribunal,

  • after deducting amounts, if any, already deposited,

  • within four (04) weeks from receipt of order.

• Remaining portions of award:

  • confirmed.

• Costs:

  • No order as to costs.

• Pending miscellaneous petitions:

  • closed.

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LEGAL SIGNIFICANCE

• Reaffirms mandatory compliance with Bajaj Allianz (2021) 17 SCC 530.

• Ensures uniform national procedure in MACT awards.

• Clarifies that:

  • appellate interference may be limited solely to procedural illegality even when compensation is otherwise final.