A Discussion On How To Scotch The Quandary Of Claimants Post Deposit Of Amount Of Compensation In Claim Cases

In the early 1980s the position of litigants after being successful in the tribunal or the workman commissioner and pursuant to the deposit-of compensations the high court of Gujarat came across cases were these illiterate semi illiterate and minors would complaint about non receipt of the amount deposited. The High Court formulated a way for safeguarding the compensation amounts. This was penned as guidelines which 'may' be followed by tribunals while passing awards itself. These guidelines were handed over before four decades. These guidelines are being rigidly followed for all litigants. These guidelines were conceptualised in the case titled Muljibhai Ajarambhai Harijan v. United Insurance Company Limited^[1] (hereinafter referred to as, Muljibhai)

This write up is only a reminder that the guidelines were for safeguarding the interest and not to see that the injured or destitute go on visiting courts or tribunal for ages to come.

The literacy rate has gone high these days now people are not that illiterate as they were as in the year 1982. A fresh look at guidelines issued in the case of Muljibhai which where issued considering the plight of the poor illiterate litigants is necessary. The High Court in Muljibhai directed that the amounts which the Tribunal directs the insurance company to deposit should be invested. This was with the aim that illiterate, semi literate and minor children were not done injustice and money reached them. The guidelines issued in Muljibhai which the claims tribunal may follow while disposing of the claim applications arising under Motor Vehicles Act 1939 were passed so as to scotch complaints of misapplication of compensation money. While reading the operative portion of awards or judgments it is visualised that these guidelines are now mechanically followed and the word 'may 'is interpreted as 'shall' and the non permission to get loan and advance on the monies belonging to the person would be cumbersome in these days. The tribunal may direct in guidelines that the fixed deposit should be for different amounts for different period of time or more fixed deposits receipts be drawn so that some of them can be liquidated at regular intervals of time.

Facts in Muljibhai:

In the year 1982, Muljibhai was awarded compensation in Motor Accident Claim Application No.453 of 1978 by the claims tribunal at Nadiad. He was awarded a sum of Rs.14,000/- with interest. Against the award, appeal was preferred in the year 1980 and interim stay was also granted. After the amount was deposited application to withdraw amount came to be filed. The applicants were poor the High Court held that the need of money was not spelt out. Only with a view to see that the money is not squandered away or lost, the Court felt that one of the ways of protecting such applicants namely illiterate and semi literate and minor children was to direct investment of the amount awarded to them. The Court opined that it was the duty of the claims tribunal to see that the award which is awarded to the victim and therefore with this object in mind and as the compensation is calculated payable over number of years, and, as lump sum amount is ordered, the Court ordered that substantial amount be deposited in scheduled bank. The Court formulated what was known as guidelines which the claims tribunal may follow. The illiterate litigant namely Muljibhai approached the High Court for disbursement of some or certain amount from the compensation awarded and deposited by Insurance Company (IC). In this background the High Court of Gujarat in Muljibhai's case issued guidelines with a noble idea to protect the illiterate and poor litigants.

These guidelines issued in Muljibhai's Case were approved in the judgment titled General Manager, Kerala State Road Transport Corporation, Trivandrum Vs. Susamma Thomas and others^[2] (Susamma) the guidelines were directed to be followed. The Court in the year 1993 again used word 'may' and directed that the Tribunal should keep in mind the principles enunciated in Union Carbide Corporation v. Union OF India^[3] for appropriate investment and to safeguard the interest so that the amount be not fettered away. The court approved the guidelines issued in in Muljibhai and gave further guidelines these guidelines though use the word 'may' they are being followed mechanically in all cases as these guidelines are construed and understood to stipulate the term 'shall 'invest.

The Apex Court in A.V. Padma v/s. R. Venugopal^[4] (referred as Padma)held that the guidelines issued in Susamma were not such which mandatorily directed the tribunal to insist on investment, even if the litigant could satisfy that he was capable of handling the money awarded to him or the litigants. These discretions are to be strictly followed in the case of illiterate persons. The plight of litigants in Padma's case so as to get what is theirs legitimately awarded by court but the colour of money eluded them .The victim died on 21.7.1993. The High court enhanced the compensation in the year 2006 the insurance company deposited the money in the year 2008 these money were not permitted to be utilized. The Apex Court held that the High Court also lost sight of the fact that there was no need for keeping the compensation amount in long term fixed deposit. The long term fixed deposit orders are not a sine qua non they are only with a view to see that people who are illiterate and or who are not well educated their money are not frittered away and they get the benefit of compensation awarded. The tribunal should pass appropriate guidelines to the bank to see that the parties are not put to undue hardship.

.In light of these guidelines what the Motor Accident Claims Tribunals can do to effectively follow the guidelines issued in the case of Muljibhai, Susamma and Padma to ameliorate the hardship of claimants. A simple suggestion is made to be followed by the tribunals even when orders of compensation are not passed namely, the Presiding Officer (PO) of the Motor Accident Claims Tribunals (MACT) should be vigilant and careful at the time of recording of the evidence of the Claimant or claimants?. When the claimant enters into the witness box, the PO may use his powers vested u/s 165 of the Evidence Act1872 so as to put certain questions to the litigant so as to ascertain his level of understanding. PO should ask certain questions to the claimants so as to verify the status of his educational qualifications. These questions may be in form of question answers also e.g. what is the date of birth or date of birth of the deceased, where did he study, in which year he appeared in the standard 10^th or 12^th examination and what were the scores, whether he has graduated or not. Where does the litigant keep money? in the bank or house, whether he has bank account, whether he invests money in mutual funds, share & stocks, securities, debentures, bond etc. these general question and the answers of the claimant would lead the PO to believe that the claimant is falling under the category of illiterate, semi-literate or literate? Questions with respect to education qualification would help the PO to decide as to whether claimant or legal representative(Lrs) of the deceased are in a position to manage his / their financial affairs or not. Such questions would certainly lead to definite conclusion as to whether the claimant / LRs of the deceased fall/s under the category of illiterate, semi-literate or literate. Once PO is in a position to decide that the claimant / LRs of the deceased fall/s under the category or illiterate, semi-literate of literate, the tribunal can pass order of investment and disbursement accordingly which would be in tune with the guidelines issued by the Constitutional Courts which in future would not be cumbersome to the litigant.

A reference to Padma in which again like in Muljibhai's case was faced with direction of compensation which was invested in fixed deposit and was not disbursed to the heirs of the deceased. The tribunals were directed to resort to procedure which was indicated in the guidelines relating to literate persons and directed the prime object was only and should now be considered the amounts are kept normally for the benefit of the claimants neither the tribunal nor the banks nor the company act.

Now-a-days, the banks have even started having such schemes which perforce forces the litigant to come to the Court to get amount. The overburdened courts take pedantic view and at times dismiss the application in which poor litigant who may genuinely need money is not getting the money when he actual needs the said amount. These days, it appears that the purpose of guidelines issued in Muljibhai are working to the detriment of the claimants the over-burdened tribunals are faced with such disbursement applications time and again and these applications remain pending and/or are rejected by the tribunal which creates more hardship to the litigant then solving his problem. The guidelines are mechanically followed by the tribunals causing more agony to litigants rather then the safety for which the guidelines were framed.

Pained by the difficulties faced by litigants the High Court of Allahabad in ^[5]in case titled Smt. Rashmi Jain v. Smt. Seema Devi and 3 others. (Rashmi) in paragraphs 21, 22 of Rashmis' judgment has directed the tribunals to follow the directions of the Apex court and observed as follows:-

"21. The Apex Court in the case of A.V. Padma and others Vs. R. Venugopal, 2012 (3) SCC 378 wherein the Apex Court has considered. The Judgment rendered in General Manager, Kerala State Road Transport Corporation, Trivandrum Vs. Susamma Thomas and others, AIR 1994 SC 1631 wherein Paras 5 and 6 of A.V. Padma's Judgment reads as under:-

"5. Thus, sufficient discretion has been given to the Tribunal not to insist on investment of the compensation amount in long term fixed deposit and to release even the whole amount in the case of literate persons. However, the Tribunals are often taking a very rigid stand and are mechanically ordering in almost all cases that the amount of compensation shall be invested in long term fixed deposit. They are taking such a rigid and mechanical approach without understanding and appreciating the distinction drawn by this Court in the case of minors, illiterate claimants and widows and in the case of semi- literate and literate persons. It needs to be clarified that the above guidelines were issued by this Court only to safeguard the interests of the claimants, particularly the minors, illiterates and others whose amounts are sought to be withdrawn on some fictitious grounds. The guidelines were not to be understood to mean that the Tribunals were to take a rigid stand while considering an application seeking release of the money. The guidelines cast a responsibility on the Tribunals to pass appropriate orders after examining each case on its own merits.

However, it is seen that even in cases when there is no possibility or chance of the feed being frittered away by the beneficiary owing to ignorance, illiteracy or susceptibility to exploitation, investment of the amount of compensation in long term fixed deposit is directed by the Tribunals as a matter of course and in a routine manner, ignoring the object and the spirit of the guidelines issued by this Court and the genuine requirements of the claimants. Even in the case of literate persons, the Tribunals are automatically ordering investment of the amount of compensation in long term fixed deposit without recording that having regard to the age or fiscal background or the strata of the society to which the claimant belongs or such other considerations, the Tribunal thinks it necessary to direct such investment in the larger interests of the claimant and with a view to ensure the safety of the compensation awarded to him. The Tribunals very often dispose of the claimant's application for withdrawal of the amount of compensation in a mechanical manner and without proper application of mind. This has resulted in serious injustice and hardship to the claimants. The Tribunals appear to think that in view of the guidelines issued by this Court, in every case the amount of compensation should be invested in long term fixed deposit and under no circumstances the Tribunal can release the entire amount of compensation to the claimant even if it is required by him. Hence a change of attitude and approach on the part of the Tribunals is necessary in the interest of justice.

6. In this case, the victim of the accident died on 21.7.1993. The award was passed by the Tribunal on 15.2.2002. The amount of compensation was enhanced by the High Court on 6.7.2006. Neither the Tribunal in its award nor the High Court in its order enhancing compensation had directed to invest the amount of compensation in long term fixed deposit. The Insurance Company deposited the compensation amount in the Tribunal on 7.1.2008. In the application filed by the appellants on 19.6.2008 seeking withdrawal of the amount without insisting on investment of any portion of the amount in long term deposit, it was specifically stated that the first appellant is an educated lady who retired as a Superintendent of the Karnataka Road Transport Corporation, Bangalore. It was also stated that the second appellant Poornachandrika is an M.Sc. degree holder and the third appellant Shalini was holding Master Degree both in Commerce and in Philosophy. It was stated that they were well versed in managing their lives and finances. The first appellant was already aged 71 years and her health was not very good. She required money for maintenance and also to put up construction on the existing house to provide dwelling house for her second daughter who was a co-owner along with her. The second daughter was stated to be residing in a rented house paying exorbitant rent which she could not afford in view of the spiralling costs. It was further stated in the application that the first appellant was obliged to provide a shelter to the first daughter Poornachandrika. It was pointed out that if the money was locked up in a nationalised bank, only the bank would be benefited by the deposit as they give a paltry interest which could not be equated to the costs of materials which were ever increasing. It was further stated that the delay in payment of compensation amount exposed the appellants to serious prejudice and economic ruin. Along with the application, the second and third appellants had filed separate affidavits supporting the prayer in the application and stating that they had no objection to the amount being paid to the first appellant. While rejecting the application of the appellants, the Tribunal did not consider any of the above-mentioned aspects mentioned in the application. Unfortunately, the High Court lost sight of the said aspects and failed to properly consider whether, in the facts and circumstances of the case, there was any need for keeping the compensation amount in long term fixed deposit.

22 "Thus, it goes without saying that, in our case, the oral prayer of Sri Shukla requires to be considered as the guidelines in A.V. Padma and others (supra) was in the larger interest of the claimants. Rigid stand should now be given way. People even rustic villagers' have bank account which has to be compusorily linked with Aadhar, therefore, what is the purpose of keeping money in fixed deposits in banks where a person, who has suffered injuries or has lost his kith and kin, is not able to see the colour of compensation. We feel that time is now ripe for setting fresh guidelines as far as the disbursements are concerned. The guidelines in Susamma which are being blindly followed, cause more trouble these days to the claimants as the Tribunals are overburdened with the matters for each time if they require some money, they have to move the Tribunal where matters would remain pending and the Tribunal on its free will, as if money belonged to them, would reject the applications for disbursements, which is happening in most of the cases. The parties for their money have to come to court more particularly up to High Court, which is a reason for our pain. Reliance can be placed on Susamma in matters where claimants prove and show that they can take care of their money. In our view, the Tribunal may release the money with certain stipulations and that guidelines have to be followed but not rigidly followed as precedents. Recently, the Jammu and Kashmir High Court was faced with similar situation in the case of Zeemal Bano and others Vs. Insurance Company, 2020 TAC (2) 118."

This shows that the High Court had to pass orders for release of certain amount of compensation kept in fixed deposit. The direction issued in case titled New India Assurance Co. Ltd. Vs. Hussain Babulal Shaikh and others^[6], by the Bombay High court may also be taken note of by the authorities. Recently Karnataka High Court framed guidelines for payment of compensation awarded under Motor Accident and Land Acquisition matter though during this pandemic.

The recent experience has demonstrated that the position which was sought to be eased before a decade has exaggerated now which can be visualized from the order passed by several High Courts where the courts below rather the tribunals have refused to part with the money whereby the problem of the claimant is unfortunately not eased but exaggerated a very nice reporting by LiveLaw and SCC in the case of (deceased) Sastish Chand Sharma and 3 others v. Manoj and another,^[7] shows that the directions of this Court have to be looked into and before any order of investment is passed the following be looked in to (a)the condition of the litigant (b) pendency of the litigation has also to be seen and not to blindly follow the guidelines in Muljibhai, Susamma or even Padma.

It is seen that the banks have started what is known as as motor accident claims annuity deposit (MACAD). Such schemes are started by Union Bank of India and State Bank of India and other lead banks where there is a stipulation that premature payment could be only made if the depositor obtained orders of court, the scheme did not have any facility for grant of advance against the fixed deposit and the fixed deposits would be renewed from time to time. This acts to the detriment of the litigant who has suffered the trauma of the accident and who thereafter also does not see the colour of the money legitimately belonging to him.

The Editor of SCC OnLine Blog while reporting the judgment in the case of National Insurance Company Limited v. Anuradha Kejriwal^[8] captioned "the parties for their money have to come to court more particularly up to High Court, which is a reason for our pain".The plight of litigant has also to be considered by the tribunals while considering the guidelines issued which start with the word "tribunals may" and, therefore, the tribunals may not pass mechanical orders or rather may desist from passing such orders like no loan and no disbursement without the orders of the tribunal.

The second aspect which requires to be highlighted is that the insurance companies and the banks deduct Tax Deducted at Source (referred as 'TDS') on the compensation amount as seen in the annuity scheme by Indian Bank on maturity held, would the amount be liable to TDS the ratio laid down by Gujarat High Court, in the case of Smt. Hansa gauri P. Ladhani v/s The Oriental Insurance Company Ltd.^[9], total amount of interest, accrued on the principal amount of compensation is to be apportioned on financial year to financial year basis and if the interest payable to claimant for any financial year exceeds Rs.50,000/-, insurance company/owner is/are entitled to deduct appropriate amount under the head of 'Tax Deducted at Source' as provided u/s 194A (3) (ix) of the Income Tax Act, 1961 and if the amount of interest does not exceeds Rs.50,000/- in any financial year, registry of this Tribunal is directed to allow the claimant to withdraw the amount (as directed in para No. II) without producing the certificate from the concerned Income-Tax Authority The aforesaid view has been reiterated by High Court of Judicature at Allahabad in a review application filed in Smt. Sudesna and others Vs. Hari Singh and another^[10] while disbursing the amount. In the case decided on 26.11.2020, which should be strictly adhered to before deducting TDS on the amount awarded and to be deposited by insurance Company.

Conclusion

This Article is only a reminder and to refresh the fact that the tribunals to be more vigilant as the money is belonging to a litigant and their applications may not remain pending and may not aid to the already overloaded courts where these matters are not considered in disposals and, therefore, also such applications are time and again neglected observations in the decision in Susamma and Muljibhai used the words 'may' people even rustic villagers have the bank accounts and, therefore, the authority may direct the bank officers to disburse the amount and regular intervals and take out multiple fixed deposit for separate years.

The compensation amount otherwise is of the litigant, therefore, time is now right for properly implementing guidelines as far as disbursement of amounts are concerned.