In the early 1980s, the position of litigants after they were successful in court or the worker’s commissioner and, according to the damages deposit, the superior court of Gujarat found cases where these semi-illiterate and minor illiterate would complain about not receiving of the deposited amount. The Superior Court formulated a way to safeguard the values of the damages. These were written as guidelines that “may” be followed by the courts while passing their own sentences. These guidelines were delivered before four decades. These guidelines are being strictly followed by all litigants. These guidelines were conceptualized in the case entitled Muljibhai Ajarambhai Harijan v. United Insurance Company Limited (hereinafter referred to as, Muljibhai)
This text is just a reminder that the guidelines were to safeguard the interest and not to ensure that the wounded or deprived would continue to visit courts or tribunals for a long time.
The literacy rate has increased nowadays, now people are not as illiterate as they were in 1982. A new look at the guidelines issued in the case of Muljibhai which was issued considering the situation of poor illiterate litigants is necessary. The Supreme Court in Muljibhai determined that the amounts that the Court instructs the insurer to deposit must be invested. With the objective that illiterate, semi-illiterate children and minors would not commit injustice and that money would reach them. The guidelines issued in Muljibhai that the claims court can follow while disposing of claims under the Motor Vehicles Act of 1939 were passed in order to hear claims of misapplication of compensation money. When reading the operative part of awards or judgments, it is seen that these guidelines are now mechanically followed and the word ‘may’ is interpreted as ‘should’ and not being allowed to obtain loan and advance on money belonging to the person would be uncomfortable these days . The court may rule in guidelines that the fixed deposit must be of different amounts for different periods of time or that more fixed deposit receipts be withdrawn so that some of them can be settled at regular intervals of time.
facts in Muljibhai:
In the year 1982, Muljibhai was awarded an indemnity in Motor Accident Claim No. 453 of 1978 by the claims court in Nadiad. He received an amount of Rs.14,000/- with interest. The appeal was judged against the sentence in 1980 and provisional suspension was also granted. After the deposit of the amount, the request for withdrawal of the amount was filed. The claimants were poor, the High Court found that the need for money was not explained. Just so that the money is not wasted or lost, the Court considered that one of the ways to protect applicants, namely the illiterate and semi-literate and minor children, was the direct investment of the amount allocated to them. The Court opined that it was the duty of the claims court to ensure that the sentence was awarded to the victim and therefore with this purpose in mind and that the compensation was calculated over several years, and, as a fixed amount was ordered, the court ordered that this substantial amount be deposited in a regular bank. The Court formulated what were known as guidelines that the claims court can follow. The illiterate litigator, namely Muljibhai, approached the High Court for the disbursement of a part or a certain amount of the compensation granted and deposited by the Insurance Company (IC). In this context, the Supreme Court of Gujarat in Muljibhai case issued guidelines with a noble idea to protect illiterate and poor litigants.
These guidelines published in Muljibhai case were approved in the judgment entitled General Manager, Kerala State Road Transport Corporation, Trivandrum vs. Susamma Thomas and others (Susamma) the guidelines were directed to be followed. The Court in 1993 again used the word ‘may’ and ordered that the Court should keep in mind the principles set out in Union Carbide Corporation v. union of india for proper investment and to safeguard interest so that the amount is not restricted. The court approved the guidelines issued in Muljibhai and gave additional guidelines to these guidelines, although it uses the word ‘may’ they are being mechanically followed in all cases as these guidelines are interpreted and understood to stipulate the term ‘he must ‘invest.
The Apex Court in AV Padma v / s. R. Venugopal (referred to as Padma)considered that the guidelines issued in Susamma it was not these that compelled the court to insist on the investment, even if the litigant could convince himself that he was able to handle the money granted to him or the litigants. These discretions must be strictly followed in the case of illiterate people. The situation of litigants in Padma’s case to get what is rightfully theirs granted by the court, but the color of the money eluded them. The victim died on 21.7.1993. The Superior Court increased the compensation in the year 2006 the insurer deposited the money in the year 2008 this money was not allowed to be used. The Apex Court found that the Superior Court also lost sight of the fact that there was no need to keep the compensation amount in a long-term fixed deposit. Long-term fixed deposit orders are not a sine qua non they only aim that illiterate and/or uneducated people with their money are not wasted and obtain the benefit of the compensation awarded. The court must issue adequate guidelines to the bank to ensure that the parties do not suffer undue hardship.
. In light of these guidelines, what can traffic accident claims courts do to effectively follow the guidelines issued in the case of Muljibhai, Susamma and Padma to alleviate the difficulties of the applicants. A simple suggestion is made to be followed by the courts, even when compensation orders are not approved, namely, the Chairman of the Board (PO) of the Automobile Accident Claims Courts (MACT) must be vigilant and careful when recording the evidence of the Applicant or applicants?. When the claimant enters the witness stand, the PO can use its powers under u/s 165 of the Evidence Act 1872 to ask the litigant certain questions in order to verify his level of understanding. The PO must ask applicants certain questions in order to verify the status of their educational qualifications. These questions can also be in the form of answers, for example, what is the date of birth or date of birth of the deceased, where he studied, in what year he appeared in norm 10º or 12º exam and what the grades were, whether he graduated or not. Where does the litigant keep the money? in the bank or house, if he has a bank account, if he invests money in mutual funds, stocks and stocks, bonds, debentures, bonds, etc. Would these general questions and the complainant’s answers lead the PO to believe that the complainant falls into the illiterate, semi-literate or literate category? Questions regarding educational qualification would help the OP to decide whether the applicant or legal representative (Lrs) of the deceased is in a position to manage their financial affairs or not. Such questions would certainly lead to a definitive conclusion as to whether the deceased’s claimant/LRs fall into the category of illiterate, semi-literate or literate. Once the PO is in a position to decide that the claimant / LRs of the deceased fall into the illiterate, semi-literate or literate category, the court may approve the investment and disbursement order in accordance with the guidelines issued by the Constitutional Courts that in the future , would not be inconvenient for the litigant.
A reference to Padma in which again as in Muljibhai’s The case was confronted with an indemnity order that was invested in a fixed deposit and was not paid to the deceased’s heirs. The courts were instructed to resort to the procedure that was indicated in the guidelines relating to literate persons and directed to the main object was only and now must be considered the amounts are normally kept for the benefit of the claimants, neither the court, nor the banks, nor the company Act.
Nowadays, banks have even started to have such schemes that force the litigant to go to court to get the amount. Overburdened courts take a pedantic view and sometimes reject the action that a poor litigator who may genuinely need money is not getting the money when he really needs it. Nowadays, it seems that the purpose of the guidelines issued in Muljibhai are working to the detriment of claimants, overburdened courts face these disbursement requests repeatedly, and these requests remain pending and/or are rejected by the court, which creates more difficulties for the litigant than to resolve their issue. The guidelines are mechanically followed by the courts, causing more agony to litigants than the security for which the guidelines were formulated.
Suffered by the difficulties faced by litigants the Supreme Court of Allahabad in in the case entitled Smt. Rashmi Jain v. Smt. Seema Devi and 3 other people. (Rashmi) in Pparagraphs 21, 22 of the Rashmis judgment instructed the courts to follow the instructions of the Apex court and noted the following: –
“21. The Apex Court in the case of AV Padma et al. v. R. Venugopal, 2012 (3) SCC 378 in which the Apex Court held. Judgment rendered in General Manager, Kerala State Road Transport Corporation, Trivandrum v. Susamma Thomas and others, AIR 1994 SC 1631 in which Paras 5 and 6 of the Judgment of AV Padma reads as below: –
“5. Thus, sufficient discretion has been given to the Court not to insist on investing the compensation amount in long-term fixed deposit and to release even the full amount in the case of literate persons. and they are mechanically ordering in almost every case that the compensation amount be invested in a long-term fixed deposit. They are taking such a rigid and mechanical approach, not understanding and appreciating the distinction made by this Court in the case of minor, illiterate applicants and widows and in the case of semi-literate and literate people. It is necessary to clarify that the above guidelines were issued by this Court only to safeguard the interests of the plaintiffs, in particular minors, illiterate and others whose amounts are intended to be withdrawn for some fictitious reasons. The guidelines should not be understood to mean that the Courts should take a stand. o rigid when considering a request for release of money. The guidelines place the responsibility on courts to pass the appropriate orders after examining each case on its own merits.
However, it appears that even in cases where there is no possibility or chance of the recipient of the feed being wasted due to lack of knowledge, illiteracy or susceptibility to exploitation, the investment of the indemnity amount in a long-term fixed deposit is directed by the Courts in a manner natural and routine, ignoring the object and spirit of the guidelines issued by this Court and the genuine demands of the plaintiffs. Even in the case of literate people, the Courts automatically order the investment of the compensation amount in a long-term fixed deposit, without registering this, taking into account the age or tax history or the strata of society to which the applicant belongs or other considerations, the Court considers it necessary to target this investment in the broader interest of the claimant and with a view to ensuring the security of the compensation awarded to him. Courts often resolve the claim for withdrawal of the claimant’s compensation amount mechanically and without proper application of spirit. This resulted in serious injustices and hardship for the claimants. The courts seem to think that, in light of the guidelines issued by this Court, in all cases the compensation amount should be invested in a long-term fixed deposit and under no circumstances can the Court release the full amount of compensation to the claimant, even if is required by him. Therefore, a change of attitude and approach by the courts is necessary in the interests of justice.
6. In this case, the victim of the accident died on 21.7.1993. The sentence was approved by the Court on February 15, 2002. The amount of compensation was increased by the Superior Court on 6.7.2006. Neither the Court in its judgment nor the Superior Court in its order to increase the compensation determined the investment of the compensation amount in long-term fixed deposits. The Insurer deposited the indemnity amount in the Court on 07/01/2008. In the request submitted by the appellants on 6.19.2008 for the withdrawal of the amount without insisting on the application of any portion of the amount in long-term deposit, it was expressly stated that the first appellant is an educated lady who retired as Superintendent of Karnataka Road Transport Corporation, Bangalore. It was also stated that the second appellant Poornachandraka is an M.Sc. Graduate and the third appellant Shalini was a Master of Commerce and Philosophy. It was stated that they were well versed in managing their lives and finances. The first applicant was already 71 years old and her health was not very good. She needed money for maintenance and also to build the existing house to provide a home for her second daughter, who co-owned with her. The second daughter lived in a rented house, paying an exorbitant rent that she could not pay due to rising costs. The petition further stated that the first applicant was obliged to provide shelter for his first daughter, Poornachandraka. It was noted that if the money were stuck in a nationalized bank, only the bank would benefit from the deposit, as they give negligible interest that could not be compared to the ever-rising costs of materials. It was also stated that the delay in the payment of the indemnity amount exposed the appellants to serious damage and economic ruin. Along with the application, the second and third appellants filed separate statements supporting the petition in the application and stating that they had no objection to the amount paid to the first appellant. In rejecting the appellants’ claim, the Court did not consider any of the aforementioned aspects in the application. Unfortunately, the Superior Court lost sight of these aspects and did not duly consider whether, in the facts and circumstances of the case, there would be a need to keep the amount of the indemnity in a fixed long-term deposit.
22 “Thus, it goes without saying that, in our case, Sri Shukla’s oral prayer must be considered, as the guidelines in AV Padma et al. (supra) were in the broader interest of the complainants. A rigid position must be given. now People, even rustic villagers, have a bank account that must be linked to Aadhar, so what is the purpose of keeping money in fixed deposits in banks where a person, who has been injured or lost his friends and relatives, is not able to see the color of the compensation. We feel that now is the time to set new guidelines with regard to disbursements. The guidelines in Susamma, which are being followed blindly, cause more problems these days for claimants, as do the Courts Overburdened with matters for every time they need some money, they have to move the Court where matters would remain pending and the Court of its own free will, as if money belonged. and to them, I would reject applications for grants, which is the case in most cases. The parties in exchange for their money have to go to court, more particularly the High Court, which is one reason for our pain. Susamma can be trusted in matters where claimants can prove and demonstrate that they can take care of their money. In our opinion, the Court can release the money with certain stipulations and that the guidelines must be followed, but not rigidly followed as precedents. Recently, the Supreme Court of Jammu and Kashmir faced a similar situation in the case of Zeemal Bano et al. Insurance company, 2020 TAC (2) 118. “
This shows that the Superior Court had to issue orders to release a certain amount of damages held in fixed deposit. The direction issued in the case entitled New India Assurance Co. Ltd. Hussain Babulal Shaikh and others, by the Bombay High Court may also be made aware of by the authorities. Recently, the Karnataka High Court issued guidelines for the payment of damages awarded under the Motor Accident and Land Acquisition issue, albeit during this pandemic.
Recent experience has shown that the position sought to alleviate before a decade ago is now exaggerated, which can be seen from the order passed by several High Courts where the courts below, rather than the courts, refused to give up the money. whereby the complainant’s problem was unfortunately not eased, but exaggerated a very good report from LiveLaw and SCC in the case of (deceased) Sastish Chand Sharma and 3 others v. Manoj and another, shows that the guidelines of this Court must be analyzed and before any investment order is approved, the following must be analyzed for (a) the status of the litigant (b) the pending litigation must also be seen and not blindly follow the guidelines in Muljibhai, Susamma or same Padma.
Banks are seen to have started what is known as an annuity deposit for auto accident claims (MACAD). These schemes are initiated by Union Bank of India and State Bank of India and other leading banks, where there is a stipulation that premature payment could only be made if the depositor obtained court orders, the scheme had no mechanism for granting advance against fixed deposit and fixed deposits would be renewed from time to time. This harms the litigant who suffered the trauma of the accident and who, from then on, also does not see the color of the money that rightfully belongs to him.
The SCC OnLine Blog Editor when reporting the judgment in the case of National Insurance Company Limited v. Anuradha Kejriwal subtitled “the parties for their money have to go to the courts, more particularly the High Court, which is one reason for our pain.”The litigant’s situation must also be considered by the courts when considering the issued guidelines that start with the word “courts can” and therefore courts cannot approve mechanical orders or rather, they can give up on approving such orders as no loans and no disbursement without court orders.
The second aspect that should be highlighted is that insurers and banks deduct Withholding Tax (referred to as ‘TDS’) on the compensation amount, as seen in the Indian Bank annuity scheme at maturity held, if the amount is responsible for TDS the proportion established by the Superior Court of Gujarat, in the case of Smt. Hansa gauri P. Ladhani v/s The Oriental Insurance Company Ltd., the total amount of interest, accrued on the principal amount of compensation, must be distributed from fiscal year to fiscal year and if the interest payable to the claimant in any financial year exceeds Rs.50,000 / -, the insurer / owner is / is entitled to deduct the appropriate amount under the heading ‘Withholding Tax’ as provided in u/s 194A(3)(ix) of the Income Tax Act of 1961 and if the amount of interest does not exceed Rs.50,000/- in In any financial year, the registration of this Court is intended to allow the applicant to withdraw the amount (as indicated in paragraph No. II) without presenting the certificate of the relevant Income Tax Authority. The aforementioned view was reiterated by the Supreme Court of Justice of Allahabad in a review of the request filed in Smt. Sudesna et al. Hari Singh and another when disbursing the amount. In the case decided on 11.26.2020, which must be strictly observed before deducting the TDS on the amount granted and to be deposited by the insurer.
This article is just a reminder and to update the fact that courts must be more vigilant as money belongs to a litigant and their claims cannot be left pending and cannot help the already overburdened courts where these issues are not considered in provisions and therefore such applications too are repeatedly overlooked in the decision in Susamma and Muljibhai he used the words ‘may’ people, even rustic villagers, have bank accounts and therefore the authority can instruct bank officials to disburse the amount at regular intervals and make several fixed deposits for separate years.
The compensation amount, otherwise, belongs to the litigant, so now is the right time to properly implement the guidelines with regard to the disbursement of amounts.
Judge Dr. Kaushal Jayendra Thaker is Head Judge of the Supreme Court of Allahabad
Views are personal