Tribunals Should Order Fixed Deposits Only for Vulnerable Claimants: Minors, Disabled, and Illiterate Individuals: Punjab & Haryana High Court Clarifies Guidelines for Compensation

Punjab and Haryana High Court delivered a significant ruling in the case of Kamaljit Kaur & Ors v. Union of India and other connected cases. The court addressed the widespread practice by the Railway Claims Tribunal (RCT) of mandating fixed deposit investments for 90% of compensation amounts awarded. The High Court clarified the applicability of guidelines regarding the protection of compensation for vulnerable claimants, such as minors and those susceptible to exploitation, and allowed more discretion in other cases.

The appeals arose from the decisions of the RCT, Chandigarh, which directed that a substantial portion of compensation awarded to claimants be invested in fixed deposits for three years. The claimants contested this ruling, arguing that this blanket approach caused unnecessary hardship, particularly where no risk of exploitation existed. The appellants sought to have the compensation amounts released in full without the mandatory fixed deposit.

The core legal issue was whether the RCT’s orders to invest 90% of compensation in fixed deposits were justified in all cases. The court examined the principles laid down by the Supreme Court concerning the protection of compensation amounts from potential misuse, focusing on the applicability of such measures for different categories of claimants.

Citing multiple precedents, the court reiterated that the "doctrine of parens patriae" empowers courts to protect vulnerable claimants, such as minors, widows, and illiterate persons, from exploitation. However, it emphasized that the guidelines should not be applied rigidly and that each case should be considered on its own merits.

Justice Pankaj Jain, while delivering the judgment, noted that the RCT had been issuing similar fixed deposit directions in all cases, irrespective of the claimants' individual circumstances. The court underscored the need for a more pragmatic approach:

"The guidelines are not to be interpreted like statutes but need to be followed in a more pragmatic manner... Tribunals should order fixed deposits only in cases where the claimant is prone to being robbed of the compensation awarded."

The High Court referred to various Supreme Court rulings, such as Union Carbide Corp v. Union of India (1991), Kajal v. Jagdish Chand (2020), and A.V. Padma v. R. Venugopal (2012), to support the need for protecting vulnerable claimants while allowing discretion in other cases.

The High Court set aside the RCT’s blanket directive and ordered that fixed deposits should only be mandated in cases where the claimant is a minor, disabled, or otherwise vulnerable. In appeals involving minors, the court upheld the investment of compensation in fixed deposits until the minors reach the age of majority, or the guardians demonstrate a pressing need for early withdrawal.

Date of Decision: September 12, 2024