Tribunals cannot mechanically deny literate claimants premature release of compensation fixed deposits.

The petitioner sustained grievous injuries in a motor accident on 4 October 2023 and subsequently filed a claim petition before the Motor Accident Claims Tribunal, Datia.

By award dated 24 September 2025, the Tribunal awarded compensation of ₹18,33,950 with interest, directing that ₹12,00,000 be kept in a five-year Fixed Deposit Receipt (FDR).

The petitioner later sought premature encashment of the FDR, stating that he had incurred substantial medical expenses, that his artificial-jewellery business had remained closed during his treatment, and that the amount was required for reviving and operating the business.

He also asserted that he was literate, an income-tax assessee, and financially capable of managing the compensation.

The Tribunal rejected the application by order dated 13 May 2026, leading to the present petition under Article 227 of the Constitution.

Whether the Tribunal erred in rejecting the petitioner’s application for premature encashment of the ₹12,00,000 FDR without properly considering his literacy, financial capacity, business requirements, and genuine need for the funds?

Whether the principles governing investment of compensation in long-term fixed deposits require such investment to be maintained rigidly in the case of a literate and financially capable claimant?

The Court exercised its supervisory jurisdiction under Article 227 of the Constitution of India.

It relied on General Manager, Kerala S.R.T.C. v. Susamma Thomas, (1994) AIR 1631, which laid down safeguards for protecting compensation amounts from being frittered away, particularly in the case of minors, illiterate claimants, and widows.

Applying the clarification in A.V. Padma v. R. Venugopal, (2012) 3 SCC 378, the Court held that long-term fixed-deposit investment is not mandatory in every case.

In the case of literate persons, the Tribunal has discretion to release the whole or part of the compensation, and should direct long-term investment only where, having regard to the claimant’s age, fiscal background, social circumstances, and other relevant considerations, such investment is necessary in the claimant’s larger interest.

Tribunals must therefore examine each request on its merits and must not mechanically insist on long-term deposits.

The Court found that the petitioner was a literate businessman and an income-tax assessee, and was therefore capable of making informed financial decisions.

His stated need to use the FDR proceeds for medical-related financial rehabilitation and revival of his artificial-jewellery business was supported by documents placed on record.

In light of A.V. Padma, the protective rationale behind compulsory long-term deposits did not justify a rigid restriction in the petitioner’s case.

The Tribunal’s rejection of the application, without adequately applying the distinction between vulnerable claimants and literate, financially competent persons, was therefore unsustainable.

It directed that the petitioner be permitted to prematurely encash and withdraw the entire ₹12,00,000 kept in the FDR pursuant to the award dated 24 September 2025.

The Claims Tribunal was directed to release the amount through the petitioner’s savings bank account, subject to verification of identity and completion of necessary formalities.

The miscellaneous petition and any pending applications were accordingly disposed of.