MACT Cannot Insist On Opening Account In Specific Bank For Disbursing Compensation Or Creating FDRs: Madhya Pradesh High Court

"Considering the directions issued by the Hon'ble Chief Justice and the Practice Procedure communicated by the Registrar General as well as the clarifications submitted by the Registrar (Judicial) and Registrar (IT), it appears that there is no such direction that for disbursement of the awarded amount or creation of the Fixed Term Deposit, the account is required to be opened in Union Bank of India." Madhya Pradesh High Court has held that Motor Accident Claims Tribunals cannot compel claimants to open accounts with a specific bank for disbursing compensation or creating fixed deposits under the Motor Vehicles Act, 1988, ruling that awarded amounts may be transferred to accounts maintained across any nationalised bank.

Justice Vinay Saraf delivered the verdict on October 29, 2026, clarifying that administrative dashboard procedures cannot be misconstrued to restrict a claimant's entitlement to receive compensation in their existing nationalised bank account.

The petitioners challenged orders dated July 31, 2026, and August 5, 2026, passed by the Motor Accident Claims Tribunal, Neemuch, whereby the Tribunal recalled an earlier release order and insisted that compensation amounts requiring investment in Fixed Deposit Receipts could solely be processed through accounts maintained with Union Bank of India. The Tribunal had premised its direction on the understanding that guidelines formulated pursuant to Supreme Court directives in Suo Motu W.P. (C) No. 7/2024 and High Court administrative circulars mandated transactions exclusively via Union Bank of India. Aggrieved by this mandate, the claimants invoked the revisional jurisdiction of the High Court.

Whether a Motor Accident Claims Tribunal can mandate claimants to open bank accounts exclusively with a specific nationalised bank for the release of compensation or creation of Fixed Deposit Receipts under the Motor Vehicles Act, 1988?

Whether the administrative integration of a specific nodal bank into the High Court's disbursement dashboard obligates claimants to maintain accounts with that particular bank to invest awarded funds?

The High Court observed that neither the Supreme Court nor the High Court administration had ever intended to constrain claimants to open accounts with a singular banking institution. Justice Saraf recorded that the Registrar (Judicial) and Registrar (I.T.) of the High Court, who appeared through video conferencing, clarified that no administrative instructions compel claimants to maintain accounts with Union Bank of India. The Court took note of the compliance report dated October 27, 2026, which confirmed the absence of any mandate directing fixed deposits to be created exclusively in a designated bank.

Supreme Court directions contemplate disbursement directly into claimant's nationalised bank account without institutional preference

The Court highlighted the comprehensive directions issued by the Supreme Court in Suo Motu W.P. (C) No. 7/2024, which formulated procedure to govern the disbursement of compensation under the Motor Vehicles Act, 1988 and the Employee's Compensation Act, 1923. The Supreme Court had mandated that Tribunals call upon claimants to furnish bank account details along with banker certificates or cancelled cheques, while explicitly stating that whenever a Tribunal orders investment, the funds shall be invested in fixed deposits with any nationalised bank with standing instructions for periodical renewal.

Examining the practice procedure formulated by the High Court Registry pursuant to the Supreme Court order, the Court pointed out that administrative directions required Tribunals to maintain institutional accounts with Union Bank of India or State Bank of India and submit necessary KYC details to generate sub-merchant IDs. The Court clarified that this institutional requirement on Tribunals was erroneously conflated by the Claims Tribunal as an obligation imposed upon individual claimants.

Integration of nodal bank on online dashboard does not mandate claimants to open accounts with that bank

The Court observed that while the online dashboard for disbursement is currently integrated with Union Bank of India for generating fixed deposits, that technological integration does not translate into a legal requirement for claimants to hold accounts there. Justice Saraf emphasized that the claimant is entitled to maintain an account in any branch of any nationalised bank, and upon furnishing those particulars, the Tribunal is statutorily obligated to transfer the awarded amount directly into that account.

The Court laid down comprehensive guidelines governing future disbursements, ruling that compensation amounts must be directly transferred to the claimant's bank account maintained with any branch of any nationalised bank. It clarified that where disbursement does not occur through the dashboard, Fixed Deposit Receipts can be opened in any branch of any nationalised bank. Even where disbursement proceeds via the dashboard, the awarded amount can be directly remitted to the claimant's account across any nationalised bank.

Claimants need not open separate accounts in nodal bank for creating dashboard-generated fixed deposits

Addressing the operational mechanics of the dashboard, the Court ruled that although Fixed Deposit Receipts generated through the automated dashboard can presently be opened only with Union Bank of India due to technical integration, claimants are not required to open any separate account with Union Bank of India for this purpose. The Court noted that the High Court is actively in the process of integrating other nationalised banks into the dashboard to expand coverage in due course.

Setting aside the impugned orders, the High Court directed the Member, Motor Accident Claims Tribunal, Neemuch to reconsider the claimants' application afresh in conformity with these procedural rulings and facilitate the disbursement and investment of compensation without insisting on the opening of an account with Union Bank of India.

Date of Decision: October 29, 2026