Supreme Court Directs States to Expedite Disbursement of Unclaimed Accident and Labor Compensation

The Supreme Court of India has taken suo motu cognizance of a critical issue affecting thousands of accident victims and laborers across the country – the alarming accumulation of unclaimed compensation amounts lying idle with Motor Accident Claims Tribunals (MACTs) and Labor Courts. This landmark intervention came after the Court received an email from retired District Judge Shri B.B. Pathak highlighting how crores of rupees meant for victims remain undistributed.

The Court’s investigation revealed staggering figures of unclaimed compensation: Gujarat alone had Rs. 282 crore in MACTs and Rs. 6.61 crore in Labor Courts; Allahabad reported Rs. 239 crore in MACTs; Bombay showed Rs. 459 crore; while Calcutta had Rs. 2.53 crore lying unclaimed. These amounts represent hard-won compensation for victims of road accidents and workplace injuries who, for various reasons, never received what was rightfully awarded to them.

Expressing deep concern over this systemic failure, the Supreme Court noted, “The fact that so many successful claimants have been deprived of compensation is very disturbing. It is necessary to find a solution.” The bench comprising Justices Abhay S. Oka and Ujjal Bhuyan emphasized that these are not just statistics but represent real people who have suffered tragedies and are being denied their legal dues.

Read also: https://judgmentlibrary.com/supreme-court-restores-higher-compensation-in-fatal-accident-case-key-legal-analysis/

The Court examined the legal framework under the Motor Vehicles Act, 1988 and Workmen’s Compensation Act, 1923, particularly focusing on Section 166 which allows accident victims or their legal representatives to claim compensation. The judges observed that many states haven’t properly exercised their rule-making powers under Section 176 of the MV Act to establish clear procedures for claim applications and disbursements.

To address this gap, the Supreme Court issued comprehensive directions that all High Courts must implement immediately. These include mandatory collection of claimant details like Aadhar and PAN numbers, bank account verification procedures, and direct transfer of compensation amounts to beneficiaries’ accounts. The Court specifically ordered, “The MAC Tribunals, while passing orders of withdrawal/disbursement, shall, in the ordinary course, pass an order of transfer of the requisite amounts directly to the bank account of the person/s entitled to receive compensation.”

Recognizing that many claimants might be unaware of their awarded compensation or unable to navigate complex procedures, the Court directed state legal services authorities to launch special drives to trace beneficiaries. It mandated creation of digital dashboards to track unclaimed amounts and ordered regular investment of deposited funds in fixed deposits to prevent value erosion.

The judgment also addresses technological solutions, directing that “The Central Project Co-ordinator of e-court project or Registrar (Computer/IT) of the High Courts…shall create a dashboard on which the information regarding the amounts lying deposited in connection with the compensation granted under 1988 or 1923 Acts shall be regularly uploaded with all details.”

Read also: https://judgmentlibrary.com/supreme-court-upholds-compensation-award-in-fatal-road-accident-case-key-legal-analysis/

For cases where claimants cannot be immediately located, the Court ordered that amounts be invested in fixed deposits with standing instructions for automatic renewal until claimed. This protects the real value of compensation against inflation and ensures funds remain available when rightful claimants come forward.

The Supreme Court set strict timelines for compliance, requiring all High Courts to submit implementation reports by July 30, 2025. The matter will be next heard on August 18, 2025 to review progress. The Court clarified that its directions don’t override existing state rules that already address these concerns adequately.

This suo motu intervention represents a significant step toward ensuring that compensation mechanisms actually benefit victims rather than becoming bureaucratic black holes. By mandating systemic reforms, digitization of tracking processes, and active beneficiary outreach, the judgment aims to transform how India’s accident and labor compensation systems function at ground level.

Petitioner Name: In Re: Compensation Amounts Deposited with Motor Accident Claims Tribunals and Labour Courts.
Respondent Name: State of Gujarat and Others.
Judgment By: Justice Abhay S Oka, Justice Ujjal Bhuyan.
Place Of Incident: Pan-India.
Judgment Date: 22-04-2025.
Result: allowed.

Don’t miss out on the full details! Download the complete judgment in PDF format below and gain valuable insights instantly!

Download Judgment: in-re-compensation-vs-state-of-gujarat-and-supreme-court-of-india-judgment-dated-22-04-2025.pdf