MACTs must exercise case-specific discretion and cannot mechanically deny premature release of compensation.

The petitioner, an injured claimant, was awarded compensation of ₹17,40,982 with interest at 8% per annum by the Motor Accident Claims Tribunal, West District, Tis Hazari Courts, in MACT No. 557/2021.

The liability was fastened on the insurers of two offending vehicles in equal proportions on account of composite negligence.

Under the Tribunal’s disbursement scheme, ₹3,40,982 was released and ₹14,00,000, with interest, was invested in staggered fixed deposits of ₹20,000 each.

The petitioner sought premature release of ₹8,00,000, stating that he had borrowed the amount from relatives and friends at interest and had deposited the title deed of his house as security.

The Tribunal rejected the application on the ground that there was no documentary proof of the loan or bank statement establishing the transaction.

The petitioner challenged that order before the High Court.

The Court relied on Kerala SRTC v. Susamma Thomas, (1994) 2 SCC 176, which lays down that investment of compensation in fixed deposits is intended to protect vulnerable claimants from exploitation or imprudent dissipation, but permits relaxation where the amount is required for treatment, livelihood, property or other genuine needs; it also recognises the claimant’s liberty to seek withdrawal in cases of emergency.

The Court further relied on A.V. Padma v. R. Venugopal, (2012) 3 SCC 378, which holds that the guidelines in Susamma Thomas are not to be applied rigidly or mechanically and that Tribunals must assess each claimant’s circumstances, age, financial background and genuine requirements before ordering continued investment.

The Court also referred to Bajaj Allianz General Insurance Co. Pvt. Ltd. v. Union of India, W.P.(C) 534/2020, order dated 16 July 2024, and observed that Rule 35 of the Central Motor Vehicles (Fifth Amendment) Rules, 2022 gives the Tribunal discretion to devise an appropriate scheme and determine whether compensation should be released wholly or partly.

The High Court held that the Tribunal had improperly converted the discretionary process of disbursing compensation into a detailed investigation into the claimant’s alleged loan transaction.

The claimant had already obtained an award, and no appeal affecting his entitlement to compensation was pending.

The protective purpose of fixed-deposit schemes under Susamma Thomas and A.V. Padma does not authorise a Tribunal to withhold compensation through a routine or mechanical insistence on documentary proof, particularly where the claimant asserts a substantial and plausible financial need.

Since the petitioner was an injured claimant who worked as a balloon vendor and might be semi-literate, the Court considered it appropriate to permit release while imposing a safeguard: an affidavit identifying the property whose title deed had been pledged and undertaking that the released amount would be used to secure its release.

The Court directed release of ₹8,00,000 to the petitioner’s designated bank account within two weeks by liquidating the requisite fixed deposits.

Release was made conditional upon the petitioner filing, before the concerned MACT within two weeks, an affidavit detailing the property and confirming that the amount would be used to obtain release of its title deed.

The balance compensation was directed to remain invested in accordance with the earlier order, and copies of the judgment were directed to be sent to the MACT and concerned bank for compliance.