Madras HC Cuts MACT Award, Issues 12-Point DBT Framework for Motor Accident Compensation
Reducing an insurer's liability from Rs 39.89 lakh to Rs 27.29 lakh on the bachelor-deduction question, a Madras High Court Division Bench seized the occasion to lay down binding direct-bank-transfer directions for all MACTs in Tamil Nadu and Puducherry.
A Division Bench of the Madras High Court, comprising Justice N. Sathish Kumar and Justice M. Jothiraman, on 8 July 2026 partly allowed an appeal by Oriental Insurance Co. Ltd. against a motor accident compensation award, reducing the total compensation from Rs 39,89,000 to Rs 27,29,000. The sole ground of modification was the applicable percentage of deduction for the personal and living expenses of the deceased, who died as an unmarried bachelor. Having settled that narrow quantum dispute — on which both sides were in agreement — the bench used the proceedings to issue twelve comprehensive directions governing direct bank transfer of compensation by all Motor Accident Claims Tribunals across Tamil Nadu and Puducherry.
The Accident and the Claim Before the MACT
On 15 January 2023, at around 5.30 hours, the deceased Kandipan was standing at Medavakkam Main Road, near Kovilambakkam Bus Stop, in front of a Bombay readymade shop in Chennai. A hydraulic mobile crane bearing registration number TN 18 AW 7992, driven rashly and negligently, dashed against him. He died at the spot.
His parents, sister, and brother — respondents 1 to 4 — filed a claim petition in MCOP No. 2197 of 2023 before the Motor Accident Claims Tribunal, VI Court of Small Causes, Chennai, claiming compensation of Rs 35,00,000. Respondents 3 and 4 (the sister and brother) were added later by amendment under MP No. 2 of 2025 dated 22 August 2025.
Before the Tribunal, the first respondent examined himself as PW1 and produced an eyewitness, Kannan, as PW2, along with 19 documents. The insurance company examined no witnesses and marked no documents.
The Tribunal, relying on the Supreme Court's decisions in Sarla Verma and Ors. v. Delhi Transport Corporation and Ors. [2009 (2) TNMAC 1], New India Assurance Company v. Somwati (Civil Appeal No. 3093 of 2020, dated 7 September 2020), Magma General Insurance Co. Ltd. v. Nanu Ram alias Chuhru Ram and Others [2018 (2) TNMAC 452 (SC)], and National Insurance Co. v. Pranay Sethi and Others [2017 (2) TNMAC 609], awarded total compensation of Rs 39,89,000 under four heads: loss of dependency (Rs 37,80,000), loss of consortium (Rs 1,76,000 at Rs 44,000 for each of the four claimants), loss of estate (Rs 16,500), and funeral expenses (Rs 16,500).
The Sole Issue: Bachelor Deduction at 25% or 50%
Oriental Insurance confined its appeal entirely to one issue: the deduction applied by the Tribunal for the personal and living expenses of the deceased. The Tribunal had applied a deduction of one-fourth, i.e., 25%, treating the deceased as a member of a family of four dependants. The insurer argued that under the settled law in Sarla Verma, the correct deduction for an unmarried bachelor with both parents alive, a married sister, and an independent adult brother is 50%, not 25%.
Counsel for the claimants did not object and conceded the submission. The court, following Sarla Verma, accepted the 50% deduction as applicable on these facts.
Revised Compensation Table
Applying a 50% deduction to the annual income of Rs 3,36,000, the annual contribution to dependants came to Rs 1,68,000. The multiplier of 15, which the Tribunal had applied and which was left unchanged, produced a loss of dependency figure of Rs 25,20,000. The remaining heads — loss of consortium at Rs 1,76,000, loss of estate at Rs 16,500, and funeral expenses at Rs 16,500 — were left unchanged. Medical expenses remained nil. The modified total came to Rs 27,29,000.
The bench directed Oriental Insurance to deposit this modified amount before the Tribunal within four weeks from the date of receipt of a copy of the order. Apportionment among the claimants was to follow the ratio already fixed by the Tribunal. No costs were awarded.
Why the Bench Addressed Disbursement Separately
During arguments, counsel for the insurer drew the court's attention to several judgments — of the Supreme Court and of the Madras High Court — dealing with direct bank transfer of compensation, court fees, and advocate's fees in MCOP matters. Multiple disbursement directions had already been issued in different proceedings, and counsel urged the bench to consolidate them into a single comprehensive framework.
The bench traced the history. A Division Bench of the Madras High Court had first introduced NEFT/RTGS payment for the MCOP jurisdiction in The Divisional Manager, The Oriental Insurance Company Ltd. v. Rajesh and Ors. [2016 (3) CTC 128 = 2016 SCC OnLine Mad 1913]. That bench had observed that the mandate under Section 168 of the Motor Vehicles Act, 1988 to award “just compensation” is fulfilled only when the awarded amount reaches the claimants without delay or diversion.” It had recommended direct electronic transfer to claimants' existing bank accounts to prevent misuse of crossed cheques, eliminate intermediaries, and reduce delays, and had issued comprehensive directions to MACTs.
In 2022, a misappropriation of compensation funds in the MCOP jurisdiction led to the constitution of a Special Bench in Suo Motu W.P. No. 12935 of 2021. That bench directed all MACTs to maintain designated bank accounts, required insurance companies and transport corporations to deposit award amounts directly into MACT accounts, mandated immediate investment in fixed deposits for a minimum of 91 days on a rotational basis across five selected nationalised bank branches within 5 kilometres of the court premises, and required eventual disbursement to claimants through their pre-existing accounts.
The Supreme Court in Parminder Singh v. Honey Goyal [(2025) 9 SCC 539] had gone further, directing that tribunals obtain bank account particulars from claimants at the pleading or evidence stage, incorporate those particulars in the award itself, and direct direct transfer at the award stage rather than routing funds through the Tribunal deposit process. That judgment had also specified that no bank account should be a joint account with any person who is not a family member, that minor claimants' shares should be retained in fixed deposits, and that compliance with transfer should be reported to the Tribunal. The Registrar General of the Madras High Court had issued a circular in ROC No. 55584/2025/S.Ct. dated 2 July 2025 for strict compliance with that Supreme Court judgment.
The Supreme Court had also, in Re: Compensation Amounts Deposited With Motor Accident Claims Tribunals And Labour Courts [2025 INSC 530], set out specific provisions to be incorporated in procedural rules: requiring claimants to furnish Aadhaar, PAN, and bank details at the filing stage; mandating that MACTs call for these details before passing interim or final orders; and directing that consent awards be disbursed directly to claimants' bank accounts.
The Twelve Directions
Drawing these strands together, the bench issued twelve directions addressed to all MACTs in Tamil Nadu and Puducherry:
Direction 1 requires all insurance companies, transport corporations, and other liable respondents to deposit awarded or enhanced compensation by NEFT/RTGS directly into the claimant's bank account as confirmed in the award itself, in terms of Parminder Singh and the Registrar General's circular of 2 July 2025. Deviation requires the Tribunal to record reasons.
Direction 2 requires the Tribunal to obtain the claimant's bank account particulars, with proof including the attested first page of the passbook bearing a photograph, at the pleading or evidence stage, and in any event before passing the award. Those verified particulars must be incorporated in the award along with the Tribunal's own e-mail ID for compliance communication.
Direction 3 specifies that the bank account must be a pre-existing account situated in the claimant's own territory or place of ordinary residence. Where no such account exists, a fresh account is to be opened only at a bank branch within the place of ordinary residence, and in no circumstance at the instance, convenience, or address of the counsel or practitioner. The bench grounded this in paragraphs 6 and 11(i) of the 2016 Oriental Insurance v. Rajesh decision and in paragraphs 22 to 24 and 49 of the order dated 17 March 2022 in Suo Motu W.P. No. 12935 of 2021.
Direction 4 requires the Tribunal to obtain an affidavit from the claimant during trial affirming that the bank account details comply with Direction 3, and to verify compliance before conclusion of trial and before passing the award.
Direction 5 mandates that the account stand in the claimant's individual name, or, in the case of a minor, through a guardian. Joint accounts with non-family members are prohibited. Where there are multiple claimants, disbursement is to be made to their respective individual accounts in the shares determined by the award.
Direction 6 addresses minor claimants: the Tribunal must retain a minor's share in a fixed deposit or Tribunal-directed investment until majority, or as otherwise directed in the award, and the concerned bank is responsible for compliance and must report to the Tribunal.
Direction 7 requires the Tribunal to verify that any deficit or balance court fee payable on the awarded or enhanced compensation has been accounted for before certifying direct bank transfer of the full sum.
Direction 8 separates the compensation payment from the costs component. The insurer is to deposit court fees, advocate's fees, and other quantified expenses directly into the Tribunal's bank account, separate from the net compensation transferred to the claimant. The bench noted that this mirrors the practice prevailing in Kerala.
Direction 9 requires the Tribunal, upon such deposit, to appropriate the court fee component to the State Government's credit and to permit claimants' counsel to withdraw the advocate's fee and expenses as quantified in the award through the usual procedure for payment out of Tribunal deposits.
Direction 10 requires the depositing insurer or respondent to furnish the UTR number and deposit particulars to the Tribunal by e-mail to the ID specified in the award within 48 hours, followed by physical proof of deposit, in the format and procedure already directed in Suo Motu W.P. No. 12935 of 2021.
Direction 11 requires claimants to update any change in bank account particulars before the Tribunal during the pendency of the claim petition, and requires the Tribunal to verify the current particulars before passing the final award.
Direction 12 directs the Registrar General of the Madras High Court, after obtaining necessary administrative orders from the Chief Justice, to issue a circular to all MACTs in Tamil Nadu and Puducherry for strict compliance with all twelve directions.
Order
CMA No. 2064 of 2026 was partly allowed. The judgment and decree dated 24 February 2026 in MCOP No. 2197 of 2023 on the file of the MACT, VI Court of Small Causes, Chennai, was modified. Oriental Insurance Co. Ltd. was directed to deposit the modified compensation of Rs 27,29,000 before the Tribunal within four weeks from receipt of a copy of the order. Apportionment was to follow the ratio already fixed by the Tribunal. No costs were awarded, and the connected miscellaneous petition was closed. The twelve DBT directions were issued separately for implementation across all MACTs in Tamil Nadu and Puducherry.