The Madhya Pradesh High Court has clarified that motor accident compensation claimants are not required to open bank accounts with Union Bank of India merely to receive their compensation. Justice Vinay Saraf held that claimants can receive compensation directly into accounts maintained with any branch of a nationalised bank, while the bank used for a fixed deposit receipt (FDR) may depend on the disbursement method.
In its October 29, 2026 order, the Indore Bench set aside two orders passed by the Motor Accident Claims Tribunal (MACT), Neemuch, which had restricted the investment of compensation in fixed deposits to Union Bank of India.
Background
The petitioners, Smt. Shahin and others, challenged the Tribunal's orders dated July 31 and August 5, 2026. The Tribunal had directed that the amount requiring investment in a fixed deposit could be placed only with Union Bank of India.
The restriction was based on the understanding that the Supreme Court's directions and subsequent administrative instructions of the Madhya Pradesh High Court required compensation-related transactions to be routed through Union Bank.
The petitioners argued that neither the Supreme Court nor the High Court had mandated that claimants must maintain accounts with a particular bank. They submitted that compensation should be transferable to accounts held with any nationalised bank.
Justice Vinay Saraf sought clarification from the High Court Registry regarding the procedure governing compensation payments. Registrar (Judicial) Anil Kumar and Registrar (IT) Surya Prakash Sharma explained that the administrative instructions did not require claimants to open accounts with Union Bank of India.
The Court also examined the Supreme Court's directions in Suo Motu W.P. (C) No. 7 of 2024, which provide for compensation transfers to claimants' bank accounts and investment of amounts deposited with tribunals in fixed deposits with any nationalised bank.
The High Court noted that the administrative procedure primarily required the use of a digital dashboard for payment transactions and prescribed banking arrangements for the tribunals themselves.
The Court distinguished between transferring compensation to a claimant's account and creating a fixed deposit through the dashboard. It clarified that the claimant's bank account need not be maintained with Union Bank simply because the dashboard currently supports FDR creation through that bank.
The Court observed:
"The claimant may open the account in any branch of any Nationalized Bank and upon submission of the details by the claimant of his bank account maintained with the Nationalized Bank, the Tribunals are under obligation to transfer the amount directly to the account of the claimant."
It further explained that when compensation is disbursed outside the dashboard, fixed deposits can be created with any nationalised bank. However, when the dashboard is used to create an FDR, Union Bank remains the available option under the existing integration.
The Court clarified that other nationalised banks were in the process of being integrated into the system.
Allowing the challenge to the extent indicated in its directions, the High Court set aside the Tribunal's orders dated July 31 and August 5, 2026, and directed the MACT, Neemuch, to reconsider the claimant's application in light of its clarification.
The Court specified that compensation could be transferred directly to an account maintained with any nationalised bank and that opening a Union Bank account was not mandatory for the claimant merely to facilitate an FDR through the dashboard.
Case Details
Case Title: Smt. Shahin and Others v. The New India Assurance Co. Ltd. Through Branch Manager and Others
Case Number: Civil Revision No. 1066 of 2026
Judge: Justice Vinay Saraf
Decision Date: October 29, 2026
